Hotel developer White Lodging will have to pay the city $3.8 million in fees after Austin City Council took no action to amend a 2011 fee-waiver ordinance at its Aug. 8 meeting.
"We're extremely disappointed, and we're going to explore our options," said Deno Yiankes, president and CEO of investments and development with White Lodging.
In June 2011, City Council approved an ordinance to allow White Lodging, a hotel development company constructing the JW Marriott Austin downtown, to waive $3.8 million in fees if the company followed certain regulations, including the city's prevailing wage policy.
The fees that were waived included those related to temporary use of public right-of-ways.
After the ordinance was approved, White Lodging officials went to the city for clarification on the prevailing wage policy when development officials found that implementing the plan would not be cost beneficial.
An assistant city manager approved an alternate wage calculation for the developer; White Lodging has been paying workers according to that calculation. However, the fee waivers were revoked in 2013 for failing to meet requirements of the original ordinance.
One option the city considered Aug. 8 was to amend the ordinance to require an average wage rate instead of the prevailing wage.
Emily Timm, policy director with the Worker Defense Project, spoke against the possible amendment at the council meeting and in favor of the original ordinance.
"I believe that upholding the original agreement with White Lodging is the best possible outcome for low-wage workers in the construction industry," Timm said. "For a truly sustainable construction industry, we need to raise the floor for lowly paid workers but not at the cost of the few good, highly paid jobs that remain in the construction industry."
Yiankes said the issue being debated at the meeting was just a "miscommunication" and that the city should adhere to its agreement.
"Why isn't the City Council and city manager doing what they said they would do?" Yainkes said. "If I can't trust a document from a city manager that tells me this is what we can do and move forward in good faith on a multi-hundred-million dollar project, how am I to believe Marc Ott when he sends me a letter that says we're not violating it?"
Mayor Lee Leffingwell said that if the city maintains its current interpretation of the ordinance, it does not mean that a prevailing wage will be paid.
"There's another alternative, and that is White Lodging chooses to not accept the fee waivers at all, in which case the prevailing wage will not apply, period," Leffingwell said.
Councilman Mike Martinez said he wanted to stick with the original intent of the ordinance and to the prevailing wage standard.
"I somewhat agree with [the mayor]. No one is going to win," Martinez said. "Prevailing wage is not going to be applied. White Lodging and the folks that are supporting White Lodging are not going to feel good about doing business with Austin."