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Santa Monica, CA: Hotel Stalled Over Living Wage Concerns
Santa Monica Daily Press
Ashley Archibald

January 27, 2012
View the Original Article


CITY HALL — The Planning Commission stalled a development agreement for a new hotel Wednesday night amid concerns that the public had not yet had a chance to review information about a controversial living wage provision that became available just before the hearing.

The supplement to the proposed development agreement spelled out an hourly wage of $10.64 per hour for workers with certain health benefits and $11.89 per hour for workers without those benefits.

Those numbers came from a wage study conducted by PKF Consulting which was commissioned by Alexander Gorby, who owns the property slated to be developed.

The report looked at hotels in Santa Monica as well as those farther afield in Los Angeles for comparison.

The study was dated Jan. 6, but commissioners nor the public saw it until the day of the hearing, a fact which didn't fly with several members of the commission.

"To the extent that there's a lot of people here to comment tonight on this issue, it's a disservice to them not to be able to take a look at this," said Commissioner Jennifer Kennedy.

The project in question is a 164,000 square foot hotel planned for the 700 block of Wilshire Boulevard.

It will have 285 rooms and just under 16,000 square feet of retail and restaurant space.

At the heart of the design is the Santa Monica Professional building, a former medical office building which received landmark status in 2005.

Nineteen people lined up to speak on the development agreement, several to applaud the treatment of the landmarked building, which the developer, who has yet to be selected, will be required to rehabilitate for the estimated cost of $11 million.

The remainder were unionized hotel workers in Santa Monica fighting for an established living wage for the future hotel, and, on the other side, representatives of the Santa Monica Chamber of Commerce, which held that the provision would cripple the hotel's ability to compete in a crowded playing field.

Workers argued that a living wage should mean that a person working at the hotel could afford to live in Santa Monica, which would be a near impossibility at around $11 per hour.

"A living wage should reflect the cost of living in Santa Monica," Rachel Torres, a research analyst with Unite Here! Local 11, a union that represents more than 20,000 hotel, restaurant, airport, sports arena and convention center workers in Southern California, said Thursday.

To use Los Angeles or even other communities on the Westside to reflect wage conditions in Santa Monica misrepresents the cost of living in the beachside town, she said.

"It's a big deal when a lot of new hotels open," she said. "It's lowering the wage scale."

The hotel is one of three planned for Santa Monica, which relies heavily on the tourism industry. The tax charged on hotel stays generated close to $34 million for City Hall in 2010, and according to the Santa Monica Convention & Visitors Bureau $1.2 billion is generated by tourism each year in Santa Monica, with over 10,000 jobs supported by visitors.

Staff never intended for the living wage to represent what income level is needed to make it in Santa Monica, confirmed planner Jing Yeo.

Several members of the Chamber of Commerce spoke against the provision in its totality, saying that it would increase the cost of doing business and thwart City Hall's attempt to gather more tax revenue.

"Furthermore, we believe this level of municipal involvement in prescribing the operational practices of private enterprise would set an unsettling precedent not only for future hoteliers, but as well for all employers looking to invest in our community," said Ron Davis, chairman of the Chamber of Commerce.

Other members and business owners echoed the sentiment, saying that it would impair business at a difficult time.

Attorney Ken Kutcher, representing Gorby, pointed out that of the 40 hotels in Santa Monica, only four or five are unionized. Adopting a living wage provision could hurt the new hotel's ability to compete with the unrestricted hotels.

Commissioners chose to push the entire application until they and the public had a change to parse through the language of the living wage proposal and accompanying study.

The matter will come back Feb. 15, at which point commissioners also want a fleshed out plan for a local hiring provision, a shortened timeline to get building permits, additional public art and some fixes to perceived design flaws.