The Austin Chronicle

City Cuts Fee Waivers to Marriott Builder; Labor Groups File Workplace Complaints

By Mike Kanin, June 21, 2013, News

After months of back and forth over the issue of how much the development corporation behind a new JW Marriott Hotel at Third and Congress should pay construction workers on the project, labor rights groups have stopped playing (relatively) nice. On June 14, the Workers Defense Project and the local chapter of the International Brotherhood of Electrical Workers unleashed a flood of wage and job-safety complaints against Indi­ana-based White Lodging Services Corp.

Hours later, city management informed White Lodging that the city was discontinuing its fee waivers associated with the project. The immediate issue for the city is over prevailing wages and how the firm can calculate them. More broadly, the debate features no small amount of confusion that, digested in nearly any way, could threaten the city's reputation for how it does business.

In June 2011, White Lodging agreed to pay prevailing wage to construction workers on the project as part of an economic incentives contract. In exchange, the city offered up some $3.8 million in fee waivers. Shortly after Council action, White Lodging received an email from former Assistant City Manager Rudy Garza, telling them that they could use average construction pay to get their prevailing wage calculations – which allows for significant savings over paying prevailing wages to every worker, which is what WDP and others had understood was required under the contract.

Workers Defense got word of the discrepancy and began filing complaints early this year. That prompted city Contract Management Department Director Rosie Truelove to send out a series of communications to White Lodging that eventually demanded that they pay back wages to 13 form carpenters on the job, with a June 4 deadline, in order to stay in compliance with the contract (see "Then There's This: White Lodging's Steal of a Deal," June 14). The conflict was furthered by what Truelove called "an incomplete response" from the company when the city sought information that would allow it to go over the project books.

The simmering dispute came to a full boil on Friday, June 14. That morning, WDP's Greg Casar and IBEW's Philip Lawhon filed two more complaints over the wages paid to construction workers. Casar also filed complaints with the city's Code Com­pli­ance Department over inadequate rest breaks, and with the federal Occupational Safety and Health Administration about a lack of water on site.

And, that afternoon, Assistant City Manager Anthony Snipes sent a letter to White Lodg­ing demanding a return of an undisclosed amount of fees already waived for the project and informing the developer that the city would cut off any future anticipated fee waivers.

That ruling produced a predictably sharp statement Monday from White Lodging. "On August 16, 2011, White Lodging received written confirmation from the City Manager's office that it will meet the city's prevailing wage requirement by adhering to specific wage rates identified in the written confirmation," said White Lodging President and CEO for Investments & Development Deno Yian­kes. "White Lodging has and will continue to meet those requirements. The written confirmation from the city was the basis for White Lodging beginning construction on the hotel. Now, after construction has begun, the city has changed its mind on the written confirmation White Lodging received. We look forward to continuing the discussion and remain confident the city will honor its word and not engage in bait-and-switch tactics when it comes to economic development incentives."

The statement included a timeline of proceedings from White Lodging's perspective and repeated their conclusion that: "An analysis showed that the additional cost of strictly applying the public sector prevailing wage to a private project would exceed the incentive passed by council." Yiankes has asked City Council to put the item on an agenda as soon as possible to reconsider the city's position. It remains unclear whether or not this will happen.

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