Dispute may stop construction of major hotel

Dispute may stop construction of major hotel
A conflict between development company R.C. Hedreen and the hospitality workers' union may jeopardize construction of a major hotel near the Washington State Convention Center in downtown Seattle.

The labor union, Unite Here Local 8, contends the development is too big and could negatively affect Seattle by bringing too many low-wage jobs downtown.

Hedreen, the Seattle-based real estate company, accuses the union of raising objections as a negotiating ploy for making the new hotel a union workplace, an allegation that a union official denies.

Hedreen has raised the stakes in the dispute by threatening to cancel the hotel and put a less ambitious development on the site unless the union stops trying to block the project at city hall and put up financing.

Hanging in the balance is construction of a 1,700 room hotel on the site of Seattle's current Greyhound bus terminal. If completed, the hotel would be the largest convention hotel north of San Francisco, with as many as 1,200 employees and an estimated $591 million in annual hotel, restaurant and shopping revenue to Seattle's economy. Hedreen officials say their project would contribute up to $200 million for the planned expansion of the Washington State Convention Center.

Seattle needs a larger convention center and more hotel rooms, tourism officials say. According to the Washington State Convention Center, last year Seattle lost $693 million because the city didn't have the enough meeting and hotel space.

Hedreen officials say that they might walk away from their $450 million hotel project, dubbed Ninth & Stewart, and instead build small office and apartment buildings on the site because of union politicking.

Unite Here Local 8, a labor union of 4,000 hospitality workers, has taken its fight over Ninth & Stewart to Seattle City Hall.

Unite Here organizer Jasmine Marwaha said the union isn't raising objections as a way to organize Ninth & Stewart workers.

"I like to not sort of characterize it as fighting the project," she said. "We are asking questions."

"How is this really going to impact the city if we have 1,000 workers making poverty wages?" she said.

The union's arguments resonate with City Councilmember Mike O'Brien. He said Ninth & Stewart is "a great private development" that will generate many permanent jobs as well as construction work. But, he said, it's important to understand how low-paying jobs put "a bunch of pressure on the city" by further taxing social services.

The average, non-union hotel worker in Seattle makes only $23,000 a year, according to Marwaha, compared to $30,000 plus benefits for union workers.
Hedreen's plans to include around 150 units of affordable housing in the Ninth & Stewart project in exchange for being allowed to build a bigger hotel. In a rare move, the housing would be built on site, so some hotel workers could live there.

Marwaha said that even with reduced rents, hotel employees won't be able to live in the apartments in the hotel. The apartments would be set aside for people who make 80 percent of the Seattle median income. That's $51,550 for a two-person family.

Hedreen Director of Design and Development Shauna Decker said it's misleading to say that hotel employees will not be able to afford the rents at the Ninth & Stewart apartments. The project will create "a vast array of jobs" from executives to maids. Plus, the apartments would be for people who make "up to" 80 percent of the area's median income, meaning lower-paid workers could live there.

It's a strange position for Dick Hedreen, a Seattle native, who began working as a general contractor around 50 years ago and said he has had generally good relationships with labor.

"I was a contractor for 30 years and we always built union," he said, adding that he has hired a union contractor, Seattle-based Sellen Construction, to build Ninth & Stewart.

Hedreen said he will not be bullied into making Ninth & Stewart a union hotel, but said there are ways the two sides can come to terms on a financial agreement.

"It'll be a non-union project unless the union comes up with financing," he said. Hedreen said he and the union are in talks over Unite Here providing pension funds for the debt financing for Ninth & Stewart.

David Freiboth, executive secretary of the M.L. King County Labor Council, is talking to Hedreen on behalf of Unite Here. He declined to comment on negotiations with Hedreen.

For the project to move forward, the city has to vacate an alley. Hedreen is proposing to replace the alley with a through-block connection that will be open to the public.

Decker said Hedreen hopes to start construction in about a year, though that depends on delays and appeals, "and we have indications (the project) will be appealed." It might be easier to build a smaller project that doesn't require the alley vacation. The trade off would be no affordable housing, fewer jobs and less tax revenue.

"It would really be a shame to lose out on all that benefit," Decker said.

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