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Friday, March 18, 2016 by Caleb Pritchard

Plaza Saltillo project draws fire from labor advocates

The Capital Metropolitan Transportation Authority’s plan to redevelop 10 acres of largely empty land near downtown Austin has drawn criticism from labor advocates.

The Workers Defense Project organized a rally of dozens of activists at the front door of Cap Metro’s headquarters on Thursday morning to pressure the board of directors to include stronger allowances for construction workers in its master development agreement with Endeavor Real Estate Group, the firm that has signed on to build out the Plaza Saltillo tract in East Austin.

“We have been organizing for quite a while to let Capital Metro board members know that we need living wages, worker’s comp, and (Occupational Safety and Health Administration) training on these sites,” construction worker Alejandro Gut­i­er­rez Vega told the gathered crowd through a translator.

He was among several speakers who called on the board to include in its agreement with Endeavor standards that are in line with the WDP’s Better Builder Program, which includes those items mentioned by Gutierrez Vega as well as independent on-site monitoring of working conditions.

City Council Member Pio Renteria also spoke at the rally, as did Council Member Delia Garza, who sits on Cap Metro’s board as well.

“We must take steps to ensure that the workers that help build our city are able to continue to live here and to share in Austin’s prosperity,” Garza told the crowd.

Council Member Ann Kitchen, another Cap Metro board member, was also present at the rally and voiced support for the activists’ cause.

Soon after the rally wrapped up, the board of directors convened inside for a work session to hear more about the draft agreement with Endeavor and its partner, Dallas-based Columbus Realty Group. Richard Reed of the law firm DuBois, Bryant, & Campbell laid out the details of the proposed deal he helped broker between Cap Metro and Endeavor.

The list of worker protections largely aligned with the demands of the labor advocates except for a few glaring differences. Reed said Endeavor agreed to a minimum wage for construction workers of $11.39 an hour, falling short of the $13 per hour that WDP’s Bo Delp told the Austin Monitor he would prefer to see.

The deal would also require independent monitoring, but Endeavor would be in charge of selecting the third-party firm that would inspect its site and issue regular reports on the conditions there.

“I can go ahead and tell you what those reports say,” Delp said after the meeting. “They’re going to say that Endeavor is doing a great job, because they’re employed by Endeavor.” Delp argued that Cap Metro should insist on issuing its own request for proposal to hire the monitor.

During the work session, both Kitchen and Garza indicated their support for the $13 hourly wage. Garza asked how much it would cost Endeavor to implement that. Reed told her that it would be the difference of approximately $1.05 million during the project’s expected two-and-a-half-year time frame.

When Garza asked Endeavor principal Jason Thumlert how much money his firm expects to make off the project, he said he couldn’t make that projection. “We don’t know what the revenue is that the project will generate,” he explained. “We don’t have any leases in place.”

While the worker benefits remain open to debate ahead of the board’s vote on the agreement at its meeting on Monday, once they are locked in, they will not change. Less certain is the annual rent that Endeavor will pay to Cap Metro during the proposed 99-year lease. Reed explained that the first year’s rent could be $1.625 million and then increase at a fixed rate for five years. After that, the rent will be increased based on variables linked to the site’s performance. The rent will never decrease, Reed said.

However, that initial number could end up being lower. Endeavor is seeking zoning variances from Council in order to exceed existing height restrictions. If those efforts fail, Reed said, the first year’s rent will be revised downward.

Garza questioned why the Cap Metro board would vote on the agreement before Council could make its crucial contributions. She was told that postponing the decision would disrupt Endeavor’s timeline. Thumlert said that the zoning issues could take several months to resolve. To assuage her, Reed suggested that contingency plans could be built into the draft agreement ahead of Monday’s vote.

If the board ultimately approves it and Council gives the all-clear to the variance requests, Endeavor will start work on the massive project. It will add as much as 800 new units, a six-story office tower and 110,000 square feet of ground-level retail between East Fourth and East Fifth streets, just east of I-35.

Fifteen percent of the units will be subsidized for residents living at half the area median family income, and the project will also likely include a senior housing component. Work is scheduled to begin in 2017 and wrap up in 2020.

Photo: Council Member Pio Renteria speaks at the Workers Defense Project rally. Photo by Caleb Pritchard.

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Key Players & Topics In This Article

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

Capital Metro: The city’s urban transportation system.

Plaza Saltillo: Capital Metro's 11-acre tract in East Austin is slated to be developed by Endeavor Real Estate Group after a 20-year process.

Workers Defense Project: A nonprofit advocacy group that provides resources to ensure low-income workers fair employment.

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