Local labor activists push back against city financing in proposed hotel project

Local labor representatives have come out in force against potential city funding in the development of the Hotel Heron in Old Town.

A proposal spearheaded by the Alexandria Economic Development Partnership (AEDP) would have the city take some of the tax revenue generated by the Hotel Heron project at 699 Prince Street to pay the project’s bond trustees.

Interior demolition was already underway when the pandemic scared off hotel investment, but an AEDP report indicates that with the city’s loss of hotels over the last few years there isn’t enough of a local market to meet the potential tourism demands if and when that rebounds. A report from AEDP to the City Council said the investment was low risk because the only city money put into the project would be taxes generated from the hotel.

During initial City Council discussions earlier this month, city leaders seemed amenable to the project, although wanted to see progressive standards set and compensation adequate enough for laborers and hotel workers to afford to live in Alexandria. A project presentation also boasted that it would create 19 full-time jobs and 90 part-time jobs.

In the days since the meeting, organizers from various labor groups around Alexandria told ALXnow they expect city involvement in financing the project to come with stronger guarantees of fair pay and treatment of employees.

“The Council should oppose this project,” said Bert Bayou, Director of African Communities Together. “As an organizer of African immigrants in Alexandria, I believe that this money should help keep people in their homes. Creating bad jobs does the opposite, exacerbating the housing crisis and leading to further poverty and hardship.”

The push for higher wages comes after more than a year of protests against evictions following job loss during the pandemic.

“Living in Alexandria is expensive — even if you are making decent wages,” said Southern Towers tenant and organizer Sami Bourma. “If the Council approves this project, they should be ashamed of themselves. They should be standing up for workers like me and creating jobs that help us, not a bunch of part-time jobs that families can’t survive on.”

“Approving this project would be an insult to Alexandria workers,” said Sam Epps, Political Director of UNITE HERE Local 25. “How can the Council justify using taxpayer dollars to subsidize a project that creates just nineteen full-time jobs? Workers coming out of this brutal pandemic deserve better.”

Stephanie Landrum, president and CEO of AEDP, said the project will not only be a sorely needed revenue boost for Alexandria, it will also be a showpiece historic renovation. The building was previously the Hotel George Mason at the entrance to Old Town.

“Tourism is a vital part of Alexandria’s economy,” Landrum said. “Supporting the renovation of a historically significant building at such a prominent location in our historic district today and positioning ourselves to meet and even grow hotel demand as it rebounds is an important tactic in Alexandria’s pandemic recovery. This project also has returned the building to the City’s real estate tax rolls for the first time in at least a generation. The previous office tenant was a nonprofit with a federally-granted tax exemption.”

Landrum said the project was first approved several years ago and demolition started in March 2020, but the developers approached AEDP for help with a funding shortfall caused by the pandemic. The proposed city’s financing also takes up a relatively small portion of the project’s overall cost, so an increase in pay for staff would require the developer to secure funding elsewhere — a prospect that seems unlikely given the need to turn to the city for help in the first place.

“Those challenges continue, which means that any increase in cost, increases the gap needed to be closed by an equal amount,” Landrum said. “Without identifying additional capital or resources, substantive cost changes make the project not feasible.”

Landrum also said the hotelier was chosen as a partner in part because of their paid benefits to employees, wage transparency, opportunities for growth, and their other pro-worker policies already in place.

In regard to public funds being used for the project, Landrum said there’s no city policy in place that requires labor agreements when public funds are used.

“The Council will be discussing this as they consider their own construction and investment projects, as they do not currently require labor agreements, and we would expect that once a policy is in place for the City, it logically will extend to projects they chose to financially participate in,” Landrum said.

Landrum also said AEDP worked with city staff and the developer along previously established city requirements and changing those last-minute as the project comes forward could put it in jeopardy. The explanation is a little complicated, so it’s presented in full below:

For the Hotel Heron project, AEDP, the City staff, and the developer engaged with the state and negotiated this deal according to the terms and requirements that are currently in place. Meaningfully changing a policy for an approved and welcomed project has created a challenging situation that has put the viability of the project in peril. Our role is to explain the impacts of these changes, advocate for the approval of this great project on its merits and work with our elected leaders to set new policies that are clear for new projects moving forward.

To your question about feasibility, labor requirements, prevailing wages, collective bargaining agreements all have implications on a project’s bottom line, so any business or developer needs to understand those costs at a project’s inception to be able to adequately budget for them.

Ultimately, there are no provisions at the state or local level that require labor agreements to qualify for this incentive program. Under Virginia law, the City does not have the power to set its own prevailing wage, but we do support efforts to create one at the state level, as outlined in the City’s legislative agenda for the upcoming year. The conversation about including this requirement is under discussion because we are considering public investment- as explained above, and discussed with recent projects like Landmark Mall, staff’s role is to provide information about the feasibility of making changes, and to outline any costs or implications those changes might have on the project, so that Council can make informed policy and project decisions.

If the City Council wishes to make labor agreements a condition of our participation in this state incentive program, it is up to council members to follow the usual decision-making process to hear from City stakeholders, debate the pros and cons of that decision, and adopt and communicate any resulting requirements. And, of course we would follow applicable laws, regulations, and requirements when pursuing projects, as we currently do.

Alyia Gaskins was the City Council member who first raised questions about fair compensation for employees during the City Council discussion and said she hasn’t fully decided how she will vote but treatment of workers on the project will play a role in her vote.

Since my first Council meeting, I have raised issues from wage theft to worker protections to how economic development benefits small businesses. Unions are about more than wages and benefits they are also about working conditions and the right to have discussions about issues that impact you. The reason I am so focused on preserving the rights of workers is because I believe they are in the best position to articulate what is fair compensation. I don’t presuppose my judgment on these cases so I cannot answer the question about how it will impact my vote. We have time before Saturday. I look forward to working with the developer to find a solution. Ultimately, we have to get to a point when we have greater predictability for all in the development process.

Project zoning and the city’s financing role are scheduled for a vote at the City Council meeting tomorrow, Saturday.