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Santa Monica, CA: Living Wage Sets Precedent for Hotels
Santa Monica Daily Press
Ashley Archibald

February 17, 2012
View the Original Article

CITY HALL — After long negotiations, the Planning Commission secured a living wage provision for a new luxury hotel, one that potentially sets a precedent for future hotel development in the city.

The development agreement recommended to the City Council Wednesday night requires a living wage for hotel workers that don't earn tips, a provision which owner Alexander Gorby opposed because he felt that it put his hotel at a competitive disadvantage.

To address Gorby's concerns, staff worked in two caveats — not only would the living wage expire 20 years after the development agreement was signed, it would become null and void if new hotels do not get a similar provision in their development agreements.

"It puts projects on notice that this will be required," said Chair Pro Tem Gerda Newbold.

The point evolved as part of a broader discussion of community benefits, essentially the price that developers pay to build taller or more densely than zoning allows.

While benefits like student internships at the site and a preference to keep financial institutions out of the bottom floor retail space passed with little comment from commissioners, additional attention was paid to the dovetailing relationship between a local hiring and living wage provisions.

A living wage promises an hourly rate comparable to other hotels in the area to those working at the site, and local hiring sweetens the deal by locking those benefits in for Santa Monicans.

It only makes senses that Santa Monicans should share in the cash created by a project that couldn't be built without City Hall's support, said Commissioner Ted Winterer.

"To me if you're going to create a scenario to create that wealth, share it with the people in our community that are more financially challenged," Winterer said. "The living wage and local hiring is a powerful tool to get people in our community to live a little bit better."

Prospective workers at the hotel planned for 710 Wilshire Blvd. will be promised $10.64 per hour with health benefits or $11.89 per hour without health benefits if the City Council approves the agreement between the property owner, Gorby, and City Hall.

The living wage comes with two potential backdoors.

As written, that wage will only be promised for 20 years after the agreement is inked, inclusive of the time it takes to build the 285-room hotel and rehabilitate the historic Santa Monica Professional building that shares the site.

Secondly, the requirement won't get off the ground unless a similar provision is included in future hotel development agreements including the three currently in the float-up stage — the Fairmont Miramar, Courtyard by Marriott and Hampton Inn.

The 20-year expiration date presented a problem to commissioners, who noted that if the clock on the living wage started ticking when the development agreement was approved, workers might only be promised a decent wage for 10 to 15 years after the hotel was completed.

A better date would be to start the countdown when the hotel received its certificate of occupancy or, preferably, connect living wage to the life of the project.

"It looks like a way to get out of the whole thing, or reduce its impact," Winterer said.

Furthermore, the agreement only promises a living wage to employees that don't receive tips as a normal part of their jobs, meaning that bartenders, room service staff and bell boys will be out of luck.

Rachel Torres, an analyst with the hotel union Unite Here! Local 11, argued against the division between tipped and not-tipped workers and told commissioners that the provision couldn't deliver on the promise of a living wage.

It gives the City Manager the freedom to lower wages by 10 percent without authorization by the City Council, ignores sick leave and contains no language about what kind of work loads go with a wage.

"A living wage provision that does not have living wages is a detriment to our city," Torres said.

The Planning Commission voted to recommend the development agreement with its suggestions to the City Council, where it will go for final approval.