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Council OKs prevailing wage as part of economic development deals

Friday, October 25, 2013 by Michael Kanin

The City Council on Thursday voted to make Austin the second city in Texas to mandate prevailing wages for construction workers as part of its economic development process. Mayor Lee Leffingwell was the only Council member to oppose the measure.


The discussion and vote, a four-hour conversation, solidifies what has become an automatic late night discussion over how the city proceeds with its development incentive awards.


The other city with such a requirement for companies seeking tax abatements and other incentives is Texas City, according to Council Member Mike Martinez.


The move came over the objections of local business leaders, who worried that the change would drive down the desirability of Austin as a place for business relocation. Leffingwell also continued to echo that concern, one he called a “job killer” at a Council work session Tuesday.


The vote is another victory for the Workers Defense Project. That organization has pushed the prevailing wage issue to the front of Council debates over economic incentives over the past few years. That effort, most notably, ended in no small amount of confusion over prevailing wages as defined by a deal to waive $3.8 million in fees for a new JW Marriott Hotel at Third Street and Congress Avenue. The confusion around that deal – there is now a lawsuit – may well have pushed some Council members to offer clarity in policy.


Martinez played the lead role in Thursday’s passage. Amid plaudits for key staff – including aide Laura Williamson – he praised the change. “This is not about trying to stop, stifle, or hurt job growth or the economy,” Martinez said. “In fact, it’s the exact opposite. It’s about creating the jobs that we need here in Austin, with the companies that we need here in Austin that understand these values that are imparted in this policy.”


The rules reset how Council members evaluate incentive deals. It changes a matrix that both establishes entry requirements for development deals, and a path for interested firms to get up to 100 percent property tax abatements.


Business interests and labor activists agreed on much of what was on Council’s table. That includes a new $11 an hour wage floor for participating companies. That, as Council Member Bill Spelman noted, left prevailing wages as the sticking point.


Council Member Chris Riley ultimately provided the solution. He moved to include the prevailing wage section of the matrix in an exceptions process that had been developed for the wage floor. That caught a five-member majority (with Spelman and Leffingwell voting no), and eventually passed along with the rest of the item.


Leffingwell and the Austin Chamber of Commerce’s Dave Porter, meanwhile, worried that the exceptions process – with its unveiling of potential candidates – could sink interest in the city’s economic investment policy.


Riley also assured that projects in the city’s pipeline would not be subject to the new rules with a grandfathering amendment. Staff said there are 10 deals currently in the pipeline.

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