Taxpayers Stuck For Construction Workers’ Wage Increase

By Bill Oakey – March 24, 2016

This seems to be week for “Holy Cow! Did I Read That Right?” news stories. Here’s one I woke up to this morning. Are you ready for this?

Capital Metro Gives Developer a “Wage Waiver,” (A New Breed of Fee Waiver)

Capital Metro and the Endeavor Real Estate Group negotiated a deal for the construction of the 10-acre Plaza Saltillo development downtown. When the dust settled after Tuesday night’s board meeting, the developer walked away winning their original offer of $11.39 per hour minimum wage for the workers. And yet the workers won also, because they will be getting paid $13.03 per hour. That’s because Capital Metro agreed to “share” part of the difference with money that would otherwise belong to the taxpayers. The shared portion will be 50% of the wage increase  The net taxpayer loss is estimated to be $500,000.

Capital Metro will be leasing the 10-acre tract of land to the developer for 99 years. The “shared” portion of the workers’ wage increase will come in the form of a subsidy in reduced lease payments.  The lease subsidy benefits the developer the same way that a fee waiver would. So, I suggest that we label this groundbreaking event the dawn of the “wage waiver.” History will remember that the era began on Tuesday March 22, 2016.

The Tuesday night board meeting played out with the typical drama of an Austin showdown between a developer, government officials and citizen activists. Members of the Workers Defense Fund were justifiably upset because the agreement lacks sufficient worker safety provisions and many workers will be denied worker’s compensation insurance. According to an article in the Austin Monitor, the Workers Defense Fund may oppose the zoning change for the development when it goes to the City Council.

And what will the developer have an opportunity to ask for at the zoning hearing?

Fee waivers, of course!

So, Where Does All of This Leave the Taxpayers?

The worst thing about this first “wage waiver” is the dangerous precedent. $500,000 is “only a little bit of money” out of a big contract. But what about the next contract and the one after that? Every developer that goes into a construction and lease deal will want the same thing. Think about the massive complex of buildings being planned for the land owned by Central Health. What we witnessed this week was the opening of Pandora’s Box.

Pandoras-box

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One thought on “Taxpayers Stuck For Construction Workers’ Wage Increase

  1. Gonzalo Camacho

    Is that the only tax funds given away by Cap Metro to the private sector?

    “Rick Reed, a private lawyer working on the deal on Cap Metro’s behalf, said that Endeavor had agreed to pay a minimum wage of $13.03 an hour.” So this gentleman lied to the public?

    What about traffic impact and improvements the developer will have to make to the roadway system and how will it impact the I-35 service road? “…800 new residential units, 110,000 square feet of retail and a 120-foot-tall office tower.” How many square feet in the office tower? Is traffic generated by the location cross the rail tracks? Sounds to me it will be a traffic mess.

    Reply

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