Workers’ Group Urges Reform of Austin’s Incentive-Giving System

In recent years, Austin has become a generous incentive-giver to corporations – but not all companies keep up their end of the deal. On Wednesday the labor advocacy group Workers Defense Project released documents it says prove that an Indiana-based hotel developer violated a $3.8 million incentive deal with the city by failing to pay workers a prevailing wage during construction of a 34-story Marriott hotel in downtown Austin.

In 2009 the city gave White Lodging $3.8 million in tax incentives. In early fall of 2012, the Electrical Workers Union tipped off the city about White Lodging’s noncompliance. Workers Defense, which represents workers in wage theft cases, also got involved.

During a press conference Wednesday, across from the Marriott construction site, Workers Defense highlighted an email in which one of the hotel’s two general contractors, Hardin Construction, tells a subcontractor “…there is no prevailing wage scale for this project.” The organization released the email along with the city’s June 2009 agreement, which grants White Lodging the incentives, but stipulates that the company must pay a prevailing wage to claim the waivers.

Workers Defense also released an affidavit signed by a carpenter who said he was paid $12 per hour instead of the prevailing wage of $13.25 per hour at the work site.

The organization said the time is ripe for reforming the city’s incentive-giving system. Labor advocates don’t just want the Marriott to make good, they also want the city to write stricter enforcement policies and consequences into its active and future contracts with companies receiving any public money or waivers.

Susan Moffat of Liveable City, who also participated in the press conference, said it shouldn’t be up to the workers to monitor the city’s deals with companies, but that city staff should be proactive in enforcing contracts. “Liveable City is deeply troubled by the apparent lack of supervision for a contract involving nearly $4 million in public revenue,” she said. “If we as a city continue to forgo substantial amounts of public revenue to benefit private corporations as in this case, the least we can do is ensure the other party is living up to its end of the contract.”

Since 2007, Austin has offered 11 companies incentive deals, which will total $73 million, according to Austin’s 2012 annual report on economic growth incentives.

In a memo on Jan. 11 the city announced it plans to audit the company’s downtown Marriott project. White Lodging’s noncompliance with the tax incentive conditions would result in the company having to reimburse the city for any waived fees it’s already claimed, according to the memo, and forfeit the rest of the incentive money. The memo also says the city will continue to monitor the site to ensure compliance as the project progresses.

White Lodging released a statement saying it is committed to its contract with the city and is working “to comply with the conditions of the fee waivers.”

“We are also committed to achieving the goals related to the prevailing wage issue,” the statement says. “Not only are we adhering to the agreement, we are exceeding the prevailing wage targets average by at least 15%.”

Gregorio Casar, business liaison for Workers Defense, said it’s important that companies honor their agreements with city officials. “If we’re going to be giving millions and millions out in tax breaks to companies it better be for a good reason that brings exceptional community benefits to Austinites.”