Aug. 22, 2008 - A developer that wants to build a luxury hotel in downtown Milwaukee's Park East area hopes to get $2 million in city financial help, according to a group of labor union supporters.

As a result, Dallas-based Gatehouse Capital Corp. and the hotel's operator, San Francisco-based Kimpton Hotels, should provide decent health care benefits to the hotel's future workers, union supporters say.

Members of two groups, Unite Here and Citizen Action, will stage a rally Saturday in support of that goal. Gatehouse hopes to develop the 184-room Kimpton Palomar Hotel, along with 65 condominiums, on the block bordered by W. Juneau and W. McKinley avenues, and N. Old World 3rd and N. 4th streets.

The two groups say Gatehouse is seeking $2 million in city financial assistance for the $145 million project.

The city would borrow that money, with the Palomar's property taxes used to pay back that amount plus interest payments on the debt.

"Members of Unite Here and Citizen Action are concerned that this developer may choose to accept the subsidy yet still provide inadequate health benefits for hotel workers, undercutting area hotel standards and pushing hotel workers onto public assistance," the groups said in a statement.

Gatehouse plans to build the Palomar project with union labor, said Jeff Cohen, chief operating officer, in a statement.

Gatehouse also plans to provide prevailing wages to the hotel employees and benefits "that are as good or, in fact, exceed union operating requirements," Cohen said.

But the union's request for higher health care benefits for hotel employees would make the project unfeasible, Cohen said.

"Further, despite repeated meetings with the union, we have yet to understand what specific economic benefit goes to the employee above what we have always offered," Cohen's statement said. "If the city would like to have the project operated as a union facility, it will need to provide the funds necessary, as it is simply not supported by the economics in this market."

Gatehouse, backed by Texas billionaire investor Thomas Hicks, hopes to begin construction on the two-year project in November if it can secure financing.

The 22-story development would include a parking structure and 20,000 square feet of retail space.

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