Hotel Tab

The developers of the proposed downtown convention-hotel complex are asking for $116 million in public funding, but they refuse to guarantee that the jobs they create won't be mimimum-wage

Sister Mary Ann McGivern, a St. Louis activist and freelance writer, told the TIF Commission that a tax-subsidized project that generates low-paying jobs ends up costing the government in the long run. "Will the management firm give back enough to the city in return for these tax benefits?" she asked the commissioners. "That deal will define whether the employees will earn enough to pay taxes and support the schools, the police, the fire department and city government or, alternatively, place a drain on city resources in terms of routine and catastrophic health-care costs, subsidized housing and crisis intervention at home when work grievances pile up or an employee is fired. The cost of subsidizing unsustainable work is steep."

The city must insist on the neutrality agreement because Marriott has already rejected the union's request for the company to do so, said Kenneth Ilg, a spokesman for the Hotel Employees and Restaurant Employees. "What we're looking for is certain commitments," Ilg told the commissioners, "commitments that they won't interfere with people's rights, rights that are guaranteed to them as United States citizens to form a union. Marriott has refused to do that. We're asking that they commit to providing a living wage and benefits at this hotel. We share your goals, but we want to do it right."

The original legislative intent for TIF projects was to provide incentives that would lure businesses to blighted inner-city areas where they otherwise would not locate. For its part, Marriott -- whose assets top $6.5 billion -- usually targets areas with large tourism potential. The company owns 95 hotels comprising 45,718 rooms (average room rate: $133) in cities such as New York, Los Angeles, San Francisco and Miami. Consider the following statement made on Marriott's Web site in its "financial review" of 1998: "The company concentrates on larger upscale and luxury properties in urban, airport and resort convention locations."

As an example, Marriott will build a 717-room, full-service hotel in Tampa, Fla., adjoining the Tampa Convention Center. The cost of that hotel was about $104 million, the financial document says. "Ancontinued on next pagecontinued from previous pageessential part of the economics of this transaction is financing assistance in the form of a large subsidy from the City of Tampa in the approximate present value of $16 million. As a result of the city's significant involvement, the company's net investment in the hotel is estimated to be $88 million, or $124,300 per room."

The point? Marriott's building in a Midwestern sleeper like St. Louis probably wouldn't have happened without the kind of subsidies being offered.

The city's administration is acutely aware of St. Louis' market potential. "I will be the first to say that over the last 20 years, the public leadership and the business leadership of this city has over-promised and under-performed on a lot of significant public projects," Mike Jones, chief of staff for Mayor Clarence Harmon, told the TIF commissioners.

"But there is no single project within any city in America that turned that city around. Redeveloping cities and communities is a sustained effort over time. Building this hotel is just one part of that effort," Jones continued. "Relative to this project and the amount of public support going into it, I say we're not subsidizing this hotel; we will make an investment of equity into a public project and expect a return on that investment obviously in the form of jobs and becoming a catalyst for other investments.

"Would this activity happen if we did not make this investment?" Jones asked. "The answer to that is no."

The meeting ended with the TIF Commission unanimously approving the $33 million TIF subsidy -- without any requirement on the employee pay scales or the neutrality agreement. The battle will resume when the proposal hits the city's Board of Aldermen.

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