Tag Archives: Plaza Saltillo

KEYE-TV News Story On Taxpayer Wage Subsidies – Can We Close Pandora’s Box?

By Bill Oakey – April 21, 2016

Huge thanks to KEYE’s investigative reporter, Walt Maciborski, for prying open this disturbing chapter in Austin’s taxpayer battle against special-interest fee waivers. The story was aired on the 10:00 PM edition of the KEYE news on Wednesday evening. You can watch the video here. The text of the story appears below. But first, one small bit of conjecture. How did this little gem of an issue slide by all of the members of Capital Metro’s Board of Directors? The original contract had called for a construction workers’ wage of $11.39 per hour. But a resolution passed at the Travis County Democratic Convention sparked them to reconsider the living wage portion of the contract. The wage went up to $13.03, to be paid for in part by you and me. While some of us were probably in bed asleep, the new contract was hammered out with lots of special-interest spin. That’s just an educated guess. It sets a bad precedent. But boxes can be opened and boxes can be closed. Pandora’s is no exception.

Close Pandora's_box

Activist says taxpayers paying $500K to get East Austin mixed-use project done

The Plaza Saltillo development project in East Austin is finally on track to be a reality. But are taxpayers picking up part of the bill?

Capital Metro and Endeavor Real Estate Group hammered out a last-minute deal for a 10 acre mixed use housing complex at 5th and Comal streets.

A key part of the deal was to get the workers a living wage of at least $13.03 an hour, a jump from the original plan to pay workers $11.39 an hour.

“The problem is that this new agreement specifies that 50 percent of this difference between $11 and $13 is going to be subsidized by the taxpayers,” AustinAffordabilty.com blogger Bill Oakey said.

That difference is about $500,000.

Oakey says this is a great project for the city and East Austin but he thinks it’s a bad deal for taxpayers.

“And I call that a wage waiver which is a lot like a fee waiver that is commonly given to developers,” Oakey said.

We called Capital Metro to go on camera so we could ask them to explain the costs of this new deal and if this is a fee waiver for the developer. They refused to go on camera. But they gave us a statement.

They say, “Capital Metro’s 50 percent cost share for the living wage increase to $13.03 will be funded only from rent increases on the additional height in the office building over 99 years.”

Capital Metro also says this is new revenue it “will receive from office space (which) is new, un-projected revenue. In the end, it is revenue that Capital Metro didn’t have before, to be applied to transportation costs.”

“Right now we’re headed for trouble,” Oakey said.

He isn’t buying it. He says it’s still money that’s coming from the taxpayer pool to make this project happen and he fears it could get worse.

“To me it’s the precedent that is the most alarming,” Oakey said. “It’s opening Pandora’s Box. And I’m afraid that other taxing entities like the city and the county might follow this dangerous precedent. I’m asking our local officials to please close Pandora’s Box and do not continue this wage waiver subsidy with taxpayer money.”

Musical accompaniment (plus a comedy recording) for this blog posting:

  1. “Bus Driver’s School” – Bob Newhart, from the album, “The Button-Down Mind Strikes Back,” 1960
  2. “Bus Stop,” – The Hollies, 1966
  3. “Magic Bus” – The Who (rare long version), 1968

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