Council vote could threaten convention hotel

December 14, 2007
Backers of the $250 million convention hotel project slated for downtown are raising alarm bells about a City-County Council resolution they say would kill the deal between the city and developers.

The resolution, sponsored by Democratic council member Joanne Sanders, requires the hotel to have a "labor peace agreement" to get city financing. The Bond Bank in January committed up to $48.5 million in financing for the deal but has not signed an agreement with the developers, locally based REI Real Estate Services and Merrillville-based White Lodging Services Corp.

Sanders said the resolution would just require the hotel operator to follow national law giving workers the right to organize. She said the measure is necessary to ward off strong-arm tactics employers use to block unionization.

John Livengood of the Greater Indianapolis Hotel and Lodging Association said the language would virtually require the hotel to be staffed by union workers after it opens.

The resolution said a labor agreement is needed to ensure "the smooth operations of the hotel without any labor strife." It said any agreement must be made with the hotel "labor organization most active" in Indiana.

Livengood said that would be Unite Here, a union that's been working to organize industry workers in Indianapolis and paid for significant advertising supporting several Democrats in the recent city City-County Council elections. Unite Here did not immediately respond to a telephone message.

The resolution also states that by having a labor agreement, the hotel would gain access to $600 million in convention business with groups that do business through INMEX, a not-for-profit meeting planning organization associated with Unite Here.

But others say the higher cost structure of running a union hotel likely would cause REI and White to pull out.

"That would kill the deal," said Rob Hunden, president of Hunden Strategic Partners, a hotel consulting firm. "It's a significant material change to the deal and it's a significant increase in cost."

Republican council member Scott Schneider said the council debated this requirement in May and rejected it, but that Democrats are bringing it up again as an "11th hour attempt ... to pay off their big labor constituency" before Republicans take power in January.

The Indianapolis Convention & Visitors Association also opposes the resolution, which is scheduled for a vote on Monday. Messages left with representatives from REI and White Lodging were not immediately returned.

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