Aug. 13–Last week, the Austin City Council should have learned a lesson in putting clear conditions on incentives it offers to lure development. Those on the receiving end of those incentives should have learned a lesson in paying close attention to those conditions.
That’s about as positive a note as the ball of confusion over $3.8 million in incentives granted to White Lodging Development Services, then withdrawn last week, will yield. The incentives were aimed at encouraging White Lodging to construct a 1,000-plus room hotel at Second Street and Congress Avenue. The decision to withdraw the incentives ended a battle over how the company compensates its construction crews. The company insisted that it was complying with the terms of the incentives agreement; workers groups insisted that the wage structure violated the terms of the agreement.
Here’s the impact of the decision: White Lodging loses the incentives but is no longer obliged to pay construction workers based on wage standards set up in the agreement.
The confusion dates back to a meeting in June 2011, when the council inserted a last-minute provision requiring that White Lodging pay the city’s “prevailing wage” in return for the $3.8 million in incentives. The lodging company agreed but later discovered that wages would wipe out the incentives. Instead of taking the agreement back to the council, White Lodging asked then-Assistant City Manager Rudy Garza if the city would be agreeable to a pay structure that would have some workers earning more than the prevailing wage but some making less. Garza, who has since left the city, agreed.
Workers and their advocates objected to the agreement, touching off a two-year battle over the incentive plan.
The council vote last week followed a sometimes confusing look at how incentive deals are struck and structured and how they can unravel. What was ultimately won and what was ultimately lost remains unclear. For the moment, there are only points of view:
–Gregorio Casar of the Workers Defense Project conceded that low-rung workers would not benefit directly from the council vote. Nonetheless, the vote was one for transparency, Casar, the organization’s business liaison, declared. (Translation: This was a moral victory.)
–Richard Suttle Jr., White Lodging’s lobbyist, told the American-Statesman’s Marty Toohey that his client is disappointed but exploring all options. (Translation: You haven’t heard the last of this.)
–Gary Farmer, president of the Greater Austin Chamber of Commerce, scolded the council for going back on its word. “I think it’s imperative the city live up to its agreements, honor its word and zealously protect its reputation. I think the council failed to do that,” said Farmer. (Translation: Businesses are going to think twice in the future about locating here).
–Council Member Mike Martinez offered this assessment: “Nobody is gonna win.” (No translation required).
Before the vote, Deno Yiankes, White Lodging’s president and CEO of the Investments and Development Division, told the council that the company paid more than the federally defined prevailing wage when all the 2,000 construction workers were taken into account, and the company was also willing to pay all workers at least $11 an hour.
That wasn’t good enough for the Workers Defense Project or their council allies. Council Member Bill Spelman said the council’s intent was clear: All workers should be paid the prevailing wage.
If a deviation from that standard was required, it should have been made by the entire council — and not by a ranking city staff member interpreting policy. But mistakes were made by both sides, including the city, whose assistant city manager approved a revised deal with White Lodging. It’s too bad that a compromise could not have been worked out, given the mistakes and confusion.
Martinez noted that the city needs a clearly worded standard on wage requirements in future incentive agreements.
That would be a positive outcome but one that comes too late to be of any help to either White Lodging or the construction workers, or citizens sorting through what happened.
It is a situation reminiscent of lines in the Robert Southey poem, “The Battle of Blenheim”:
“But what they fought each other for
I could not well make out;
But everybody said,” quoth he,
“That ’twas a famous victory.”
