Austin Marriot’s $3.8M in Tax Incentives May be Unjustified as Prevailing Wage-Dodging Evidence Mounts

Computer-generated rendition of the Austin Marriot by White Lodging

In Austin, the malcontent and audit stemming from tax incentives given to the developers of the new Downtown JW Marriot  is centered on prevailing wages.  Local labor groups such as the Workers Defense Project have evidence that not all workers are being paid properly.  The developer, White Lodging, says they had an agreement with the city to pay some workers above the prevailing wage and others below.

White Lodging’s claims are based on a Summer of 2011 email in which a high-ranking city official appears to approve to the plan.  According to The Austin-Statesman, the official was then-Assistant City Manager Rudy Garza:

A member of White Lodging’s Austin development team points to summer 2011 as the starting point for today’s disagreement. Near the end of the meeting at which the City Council approved the tax-incentive package, White Lodging did agree to follow the prevailing-wage scale the city uses when it hires construction workers. That scale is set by the federal government, which does county-by-county surveys to determine what a carpenter or electrician or plumber typically makes.

White Lodging says after it agreed to the deal, the company and city officials quickly determined the terms were untenable, and that if all electricians, pipe fitters and sheet metal contractors were paid prevailing wages, the increased costs for those three jobs alone would exceed what White Lodging saves with the incentives.

In an email exchange provided by White Lodging, Deno Yiankes, White Lodging’s president and CEO of investments and development, told then-Assistant City Manager Rudy Garza that the company planned to pay most employees above prevailing wages but some below it, and that the average would be workers making 19 percent more, satisfying “the intent of the prevailing wage commitment.” Garza replied: “It is clearly encouraging that you are not focused on meeting the bare minimum … you are good to go.”

Former 2012 Austin Mayoral candidate Brigid Shea now believes White Lodging is passing the blame.  Shea made the unnecessary tax incentive deal between the city and White Lodging a focal point of her unsuccessful bid for the mayor’s chair:

The ordinance is clear about what they’re required to do,” Shea said. “For them to now blame Rudy Garza is a complete crock.”

The Workers Defense Project has been collecting evidence on the issue. This includes workers showing they are being paid $12 an hour when prevailing wage mandates $13.20 as well as emails from the general contractor in which they tell a company interested in working on the project that, “there is no prevailing wage scale for this project.”

According to Greg Casar, an organizer with the Austin-based Workers Defense Project

“The Marriott is just another chapter in the story of Austin’s broken tax-incentive system.”

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