By Jason Islas
Staff Writer

March 21, 2012 -- The development agreement for a new hotel expected to revitalize the northeastern edge of Santa Monica's Downtown barely squeaked by a City Council divided over the question of wage rates for hotel workers.

After a motion proposing nearly $15 an hour for all employees (including those who accept tips), failed, the Council slowly whittled down the proposed wage over the course of several substitute motions. Eventually, the council approved the development agreement with wages set at $12.50 an hour or $11.25 with health benefits.

Council member Kevin McKeown, who supported the $15 an hour wage, said he experienced “an extreme dismay” at the council's decision to “further institutionalize the working poor in Santa Monica” by passing the lower wage.

In response, Council member Pam O'Connor said something inaudible from the dais, prompting Mayor Richard Bloom to play mediator between the two before O'Connor asked staff to point out that, in fact, the DA does contain a living wage provision, even if McKeown wasn't satisfied with it. Both McKeown and O’Connor have a long history of tense relations over their political positions.

Overshadowed by the wage debate was the project itself -- a proposed 284-room hotel that would occupy the landmark Santa Monica Professional Building at 710 Wilshire Boulevard and an adjacent six-story building on Seventh Street.

The project also includes 15,600 square feet of ground-floor restaurant and retail space, a rooftop swimming pool and a four-level subterranean parking structure.

Some council members feared that the living wage requirement could sink a project City and Downtown officials hope will revitalize a moribund corner of Downtown. Mayor Richard Bloom noted the project is expected to create more than 200 jobs and $3 million in annual tax revenues for the City.

“I think this project is extremely important to our city,” Bloom said. “My fear is that by supporting the higher rate... it will be the death knell for this project.”

“I'm 95 percent sure we won't have a hotel,” Council member Bob Holbrook said in reference to the proposed $15-an-hour wage.

City Manager Rod Gould said that the rates proposed by staff -- $11.89 an hour, or $10.64 an hour with health benefits -- were the result of careful calculations. The wages should be higher than non-union hotels in the same price range, but not high enough to hinder the hotel's ability to compete.

Council member Bobby Shriver called the idea that increasing the wages would make the enterprise unprofitable “whimsical,” though he ultimately supported the prevailing motion.

When the project went before the Planning Commission in February, the Commissioners voted to recommend that the Council increase the living wage provision in the DA, a sentiment echoed by union leaders and community members at Tuesday's Council meeting.

In a letter from to the Council, former Mayor Paul Rosentstein, a former union electrician, called the proposed amount “embarrassing.”

Members of Unite Here 11, the hospitality workers union, spoke at Tuesday's meeting, asking for a minimum of $15 an hour for workers.

Not all those who spoke were in favor of the City setting living wages in DAs, saying such a decision could set a bad precedent.

Laurel Rosen, the president of the Santa Monica Chamber of Commerce, warned that the council “should not take action that acts as a disincentive” to the tourism industry.

The final DA, with its slightly revised wages, also includes a provision to set a goal for local hiring, as well as increasing the minimum number of parking spaces, from 385 to 290.

It remains to be seen, however, if the developer will accept the new terms.