Commission: 710 Wilshire Needs Higher Wages

A proposal to set a living wage of $11.89 for hospitality workers at a future hotel at the corner of Seventh Street and Wilshire Boulevard isn't high enough, Santa Monica's Planning Commission said Wednesday night.

It's recommending the City Council increase the amount before signing a development agreement with the landowner, Alex Gorby, who has said he is personally opposed to living wages but is willing to implement them and other concessions in exchange for approval to build the over-sized hotel.

If ultimately approved by the council, the agreement will allow the development of a 285-room hotel and 15,600 square feet of first-floor retail outlets and restaurants at the prominent Wilshire corner.

As drafted, it calls for a living wage of $11.89 per hour for workers who don't receive health benefits and $10.64 for those who do. Living wages are typically higher than state minimum wages and are supposed to provide workers with enough income to afford housing, clothing, food and other essentials.

Commissioners said the wage proposed in the draft agreement is unfair to workers who will serve guests paying upward of $285 a night for rooms. They also said $11.89 isn't enough for a person to live comfortably in pricey Santa Monica.

But Ken Kutcher, an attorney representing Gorby, said the proposed wage is fair and on par.

"The wage rate is about 50 percent above the current mininum wage," he said. "It is a wage rate that corresponds directly to the wage rates paid to hotel employees in the LAX area."

The commission said it wasn't willing to say by how much the wage should be increased, but said whatever amount is set will set a precedent for future development agreements with hotels.

"This is in fact an incredibly major step," said commissioner Richard McKinnon.

Development agreements are traditionally negotiated on a project by project basis, he said, but this year, "we will be asking for [living wage components] in each development agreement that comes after."

One year ago, the City Council indicated strong support for the development agreement, including a living-wage provision. There's already a living-wage ordinance in Santa Monica, but like those of most cities in California and across the country, the ordinance is limited to subsidized private companies and projects.

"A living wage provision that does not have living wages is a detriment to our city," said Rachel Torres, a research analyst at Unite Here Local 11, a hospitality workers union for employees in Los Angeles and Orange County.

She has previously suggested that the wage should be closer to to $14 or $15.

• Related: Planning Agency's Not Sold On 710 Wilshire's Provisions

Commissioners also take issue with a clause in the agreement that states the living wage requirement would expire within 20 years—the term of the agreement—when the landowner has said it could take up to 10 years to build the project.

They said they were hesitant to ask too much of the developer, who has cautioned that too having to make a lot of concessions would lessen his incentive to build. Consultants have estimated that the project could be profitable at a margin as slim as 10 percent.

"If you put too much of a burden on this hotel it can't compete [with other Santa Monica hotels]," said Kutcher.

Also stated in the draft agreement, the developer will:

• Provide paid internships to Santa Monica students and will target those from low income households.
• Spend $11 million to rehabiliate the Santa Monica Professional Building as part of the project. It has been landmarked as an historic site.
• 20 bicycles for hotel guests to use.
• Pay a $244,000 fee to improve transportation infrastructure in the area.
• Build to LEED Silver certification or equivalent.

“There’s not a lot of room for us to push back on this project ... we probably can’t push on both,” said commissioner Ted  Winterer, after some of his colleagues had suggested they wanted to increase the transportation fee.