|By Marty Toohey, Austin
American-StatesmanMcClatchy-Tribune Regional News
Feb. 27, 2013--The developer of a downtown JW Marriott is trying to stop Austin's investigation of allegations that the company is violating a $3.8 million economic development agreement.
White Lodging development's politically influential lawyer, Richard Suttle Jr., wrote a letter Monday to City Council members asking them to end the city staff's inquiry, which hinges on whether the developer is properly paying its construction workers. The city agreed to waive $3.8 million in fees in exchange for White Lodging paying its construction workers a "prevailing wage," but the company and the city staff are now interpreting that requirement differently. If the city staff ultimately decides White Lodging violated the agreement, the city could require the company to pay the additional $3.8 million.
Suttle also asked the council to amend the deal to explicitly reflect the company's reading of it. While negotiating the deal, White Lodging insisted it could not build the Marriott without the incentives, and in his letter, Suttle contends the council could not have actually intended to add a requirement so expensive that it made the incentives "essentially worthless to White Lodging."
It's not clear what position the council will take on the Marriott incentives. Council Member Mike Martinez had suggested the prevailing wage requirement, and he told the American-Statesman on Tuesday that "prevailing wage is, by definition, what it is, and I don't think there are other interpretations" other than the city's. But, Martinez said, "while it might have been brought in at the last minute, my intentions were not to completely erase the fee waivers."
"I want workers treated fairly, but I don't want to jeopardize a 1,000-room downtown hotel that's now a huge hole in the ground," Martinez said. "It's something the council needs to weigh. I'm not sure what the answer is."
Council Member Laura Morrison was unequivocal. "I voted against the fee waiver the first time, and I'm certainly not going to support an even weaker version," she said.
The Marriott has become a cause celèbre of activists who say the city has been unnecessarily giving up public money to lure jobs and businesses they contend would come to Austin anyway. The city's economic development office, among others, says that view does not take into account the economic benefits of projects like the Marriott.
Suttle's letter states that after the council and White Lodging struck their deal, the company was instructed to work with then-Assistant City Manager Rudy Garza to comply with the prevailing wage requirement, which is set by the federal government based on what various types of construction workers make in a particular community.
The company then determined that paying a prevailing wage to all construction workers would cost more than the entire $3.8 million in waived fees. It decided instead to pay an average prevailing wage -- some workers would make less than a prevailing wage, but some would make more because of the state of Austin's labor market. In an Aug. 16, 2011, letter, Garza endorsed White Lodging's approach, writing, "You are good to go."
But late last year the local electrical workers union complained that White Lodging was not paying prevailing wages. The city staff began its audit, writing to the council that it was already worried Garza's advice was contrary to the terms the council approved.
Absent council action, it does not appear the city staff's investigation will stop.
"What kind of message would it send if the city's new position is allowed to stand?" Suttle wrote to the council. "That one cannot rely on the written position of the city made through an assistant city manager responsible for the department overseeing the subject?"
Greg Casar, an organizer with the Austin-based Workers Defense Project, said White Lodging "tried to make a deal with Austin taxpayers, and now that they've been caught not doing what they agreed to, they want to change the deal."
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