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Scrapping the $77 million Westin Hotel at Sacramento International
 Airport's New Terminal Ripples Through Economy
By Dale Kasler, The Sacramento Bee, Calif.McClatchy-Tribune Regional News

April 5, 2009 - It was the icing on the cake, a six-story, four-star Westin hotel crowning the new terminal at Sacramento International Airport.

By scrapping it last month, Sacramento County officials carved a $77 million hole out of an already troubled economy.

With union halls bulging with idle workers, Sacramento will be deprived of badly needed construction jobs and about $23 million in wages. The ripple effects will last for years: Without a hotel, there's no need for employees to run it. The cost: $3.5 million in annual payroll.

Nicknamed "the Big Build," the terminal project itself remains a monster, with a $1.1 billion budget and an army of construction workers that will grow to 1,200 over its four-year run. The project, which will replace the old Terminal B, began last fall.

But the hotel, which was supposed to get under way in August, was a meaningful piece of the Big Build. Its deletion shows how much damage can occur -- especially in a weak economy -- when a big project is scrubbed or scaled back.

"That was one of the jobs that we had on the books," said Greg Larkins, president of Local 340 of the International Brotherhood of Electrical Workers in Sacramento. About 20 percent of its members are unemployed.

The pain isn't confined to Sacramento. Contractors from the East Bay to Chicago will lose out, as will a Denver hotel management firm. A Minneapolis investment bank forfeits an $8 million fee.

"All of them -- their piece of the pie will be a little smaller," said R. Clay Paslay of Paslay Management Group, a Texas airport construction management firm consulting on the project. "It's all of those things that go into a building -- the electrical, the mechanical, the steel, the roofing systems."

Electrician Eric Graham, 46, could use the work. Until three months ago, the Stockton resident was wiring the new CalSTRS headquarters in West Sacramento, making $26 an hour through an apprentice program co-sponsored by the IBEW. Now he's collecting recyclable bottles and cans, making $40 a week to supplement his unemployment benefits.

"I'm an electrical worker," he said. "There's no work. What am I supposed to do?"

Daniel Belau, business representative with the Glaziers and Glassworkers union, said the hotel cancellation is the latest in a series of disappointments, following the suspension of work on the Elk Grove Promenade mall and Thunder Valley Casino's hotel. The Thunder Valley project is set to resume in mid-April -- one-third smaller than first planned.

Many in the industry hope federal stimulus money will get business going again in Sacramento. The state just raised $3.2 billion for infrastructure projects.

But for now, construction remains weak. Projects are being downsized or worse.

The airport is a prime example. Earlier, the county postponed a $160 million parking garage. It also deferred a new $23 million baggage system for the other terminal.

On March 10, the Board of Supervisors, agreeing with airport staff, voted reluctantly to kill the hotel. Reason: Declines in air travel meant the hotel didn't pencil out. Set to open in 2012, it wouldn't break even until 2036.

But for union electrician Michael Masciovecchio, out of work since January, the county's thinking rings hollow.

"In any airport I've been to, there's always been a hotel," said Masciovecchio, 37, of Citrus Heights, who's been unsuccessfully applying for work at Sears, Home Depot and other retailers.

Masciovecchio is hopeful about the resumption of the Thunder Valley project, but it's a struggle to stay optimistic: "I just know I'm sitting at home waiting for somebody to start building something."

With 185 rooms and a distinctive stair-step roof designed to preserve the view from the control tower, the new Westin was going to be twice as large as the airport's now-demolished Host Airport Hotel.

"It's a great customer service to be able to have," said airport spokeswoman Cheryl Marcell. The county might revive the hotel some day, but at a different site.

The hotel would have employed 78 full-time workers, county officials said. Sage Hospitality Resources, a Denver firm that would have run the facility, declined to comment for this story.

The decision to eliminate the hotel came relatively late in the game. Although construction on the hotel wouldn't have started until late summer, millions of dollars in materials had been ordered, county officials said.

"We had ordered all of the steel," said Leonard Takayama, the airport's deputy director for special projects. Canceling the order will cost the county a penalty in an amount to be determined, he said.

Suppliers are having to regroup, too.

Architectural Glass & Aluminum, an Alameda subcontractor, was about to start fabricating $4 million worth of glass for the hotel windows.

"We lose profit that we planned on," said John D'Amario, vice president for sales. "Our work force effectively gets cut in half."

AGA is still supplying glass for the terminal but will require 20 fewer workers than expected.

Officials with general contractor Austin Walsh, a joint venture of two firms from Chicago and Dallas, couldn't be reached for comment.

County officials said the hotel would have cost $57.7 million, including about $3.9 million for furniture and other trimmings. There would have been an additional $20 million in "soft costs" for architects, consultants and so on.

Total cost, including interest on the construction bonds: $114 million. Cancellation means Minneapolis investment bank Piper Jaffray loses an estimated $8 million in bond underwriting fees, said Amanda Thomas, airport deputy director for finance and administration.

The biggest losers, though, are surely Sacramento's construction workers. With the hotel scrapped, 30 to 40 construction jobs will evaporate completely, said airport spokeswoman Karen Doron. For those who do work, many will have their hours cut.

Officials said the hotel's construction budget included about $23 million for labor -- money that would have flowed rapidly through the economy.

"Those dollars go right back into the economy of the community," said Matt Kelly of the Sacramento Sierra Building Trades Council. "When tradespeople are working Â… they are making that house payment that maybe they were behind on. They are putting those new tires on the car, getting new shoes on their children, buying a new coat for the wife."

Now they're scrimping. Rio Linda sheet metal worker Bud McKinney, 55, who was working on the UC Davis Medical Center expansion until a December layoff, canceled his cable TV, sold an old pickup and began running his fireplace instead of his furnace.

"I'm down to hot dogs instead of steak," said McKinney, a vice president at Sheet Metal Workers Local 162.

McKinney isn't sure he'll find work anytime soon. In December, he was 63rd in line at the union hall to get called back to work. Four months later, he's only moved up to No. 56.

Call The Bee's Dale Kasler at (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com.

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To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/.

Copyright (c) 2009, The Sacramento Bee, Calif.

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