UNITE-HERE Hypocrisy On Hotel Incentive Programs

Cross-posted from OC Daily

A militant, politically left-wing union that for years has denounced tax subsidies for luxury hotel development in Anaheim is embracing just such subsidy program in Santa Ana due to the city council’s inclusion of mandatory “labor peace agreements” for participating hotels.

For the last four years, leaders of the militant hotel workers union UNITE-HERE Local 11 have attacked members of the Anaheim City Council for their support for subsidizing four-diamond hotel development using a portion of the transient occupancy tax (TOT) generated by those hotels. Lambasting them as corporate “giveaways” to “rich developers” has been a staple of their political campaigns and an organizing tool for their successful drive to push Anaheim into adopting by-district elections.

“While UNITE-HERE Local 11 supports the creation of jobs, it should not be done at the expense of taxpayers,” UNITE-HERE official Martin Lopez told the Anaheim City Council during a 2009 vote on an early version of the subsidy for the GardenWalk Hotels project. Lopez is now running against Anaheim Councilwoman Lucille Kring in newly-created District 4.

After the Anaheim City Council approved a revised economic assistance agreement with the GardenWalk developers in May 2013, the union’s satellite advocacy group OCCORD (Orange County Communities Organized for Responsible Development) filed a lawsuit to invalidate the agreement – litigation that has help up the project ever since.

Bad in Anaheim, Good in Santa Ana
Next door in Santa Ana, however, UNITE-HERE believes “strongly” in the city using TOT taxes to subsidize four-diamond hotel development. The difference?

Click here to read the rest of the article on OC Daily.

40 comments

  1. Sick of Politics

    Unbelievable. So in Anaheim, the plan is bad. But it’s ok for Santa Ana!

  2. While I would agree that this is hypocrisy to the fullest extent, it is worth noting that Santa Ana lacks what Anaheim has – a convention center and Disneyland.

    For example, does anyone really believe that Disney will refrain from building its newly planned four-diamond hotel should the Anaheim City Council refuse the subsidy request?

    Paraphrasing a quote from the Voice of OC article on Disney’s subsidy request, what kind of business minded individual attending a convention would choose Disney’s proposed four-diamond hotel over The Montage in Laguna?

    Anaheim’s proposed subsidies lack a fair bit of logic in that the hotel market, currently, is on the upswing. We have emerged from the economic recession and tourism is arguably stronger now than at any point in the past decade. Given that the foundation of Anaheim’s economy is build on tourism, and the city does everything in its power to ensure that tourists are happy, should not developers come here without incentives?

    A subsidy is designed to, theoretically, ease financial barriers that would otherwise prevent investment. Given the now under-construction Star Wars Land and the convention center expansion, demand from developers should come naturally in Anaheim. If it does not, then perhaps four-diamond hotels simply are not meant to be built here. Plus, it would be a shame to grant subsidies for the construction of hotels for which theoretical consumer demand might never become a reality. Anaheim doesn’t exactly have the best track record when it comes to predicting consumer demand (ARCTIC, anyone?).

    Unite-Here often acts in the best interest of its members. That is the purpose of a union, and for that reason they should absolutely exercise discretion in choosing which causes they wish to support.

    Hypocrisy? Yes.
    A mistake in the eyes of its members? Probably not.

    • Sick of Politics

      If tourists aren’t going to stay in Anaheim, why would they stay in Sanata Ana?
      Judging by how well the Grand Californian does, tourists will absolutely stay in Anaheim. The policy is in place, so how do you say yes to the other applicants and no to Disney? I’d guess a denial might lead to a lawsuit?

      The only difference between the two deals is that Santa Ana’s includes a labor agreement. There’s nothing stopping unite here from engaging the new employees of the 4 star hotels in Anaheim and fighting for them to join the union. If Anaheim had included a labor agreement, those groups wouldn’t be screaming that’s it’s a give away because they’d be party to the give away. They’re not fooling anyone.

    • “For example, does anyone really believe that Disney will refrain from building its newly planned four-diamond hotel should the Anaheim City Council refuse the subsidy request?”

      Do you know that they wouldn’t? Do you know that absent the Hotel Incentive Policy, that Disney wouldn’t have a more attractive destination for a monetary investment of that size?

      I’ve been hearing comments like that for quite a while when it comes to Disney in Anaheim: “Oh, Disney would have built it anyway.” It reminds me of the Democrats running our state who refuse to believe tax and regulatory policies have any impact on companies’ decisions about where to invest, expand or locate.

      “Paraphrasing a quote from the Voice of OC article on Disney’s subsidy request, what kind of business minded individual attending a convention would choose Disney’s proposed four-diamond hotel over The Montage in Laguna?”

      With all due respect to the gentleman Adam Elhmahrek found to deliver to skeptical quotes, how can he or you make such a blanket declaration? Judging from the high occupancy rates of the Grand Californian and the Disneyland Hotel, there are many, many people who would rather book a 4-Diamond hotel by the park rather than truck the family from Laguna Beach to Disneyland every day. If one is a cardiologist in town for the American Heart Association convention, staying at the coming JW Marriott at GardenWalk is far more convenient than the Montage.

      Some of these criticisms are simply grasping at straws. I read that VOC article and wondered whether Adam pushed back even slightly on Alan Reay’s arguments, or just jotted them down and printed them because they fit the narrative.

      • Well this is definitely a lot to respond to!

        Firstly, do you honestly mean to imply that Disney would develop the plans for the hotel, develop concept art, deliver it to all media outlets, and then entirely abandon the idea because Anaheim refuses to grant them a subsidy for a hotel for which construction will not even begin until 2018?

        Do you honestly mean to imply that Disney will choose another destination besides Anaheim to build a hotel for the Disneyland resort? This one I might have interpreted incorrectly, given that you could have been referring to reinvestment in their other resorts.

        If so, then perhaps you need to acknowledge Disney’s past decisions and analyze them for yourself. Disney does whatever it takes to appease guests and increase attendance (though those two goals often clash with one another). If they can’t get a subsidy for it, you can be damn sure they’re going to do it anyways. Did anyone really think that they would refuse to build Star Wars Land if the city refused to exempt them from a gate tax? They would skip out on a multi-billion dollar opportunity because the city refuses to grant them tax breaks? That line of logic is entirely absurd.
        Disneyland was the first. It is a world-renown destination that Disney would, under no circumstances, threaten the reputation of.

        Not only that, but Disneyland is now also threatened by the grand-opening of Universal’s Hogwarts. For those families that can afford to attend both parks while on vacation in Southern California, it is a good bet that they’re willing to spend the extra money to stay in a four diamond hotel that represents the true “Disney-experience”. The opportunity to build such a hotel, with or without a subsidy, is too good an opportunity to pass up either way. Is it a coincidence that Disney is all of a sudden interested in the construction of a four diamond hotel? They see that demand exists amongst those staying in their resort (especially given increases in foreign tourists coming to the parks), they’re likely going to build it regardless of a subsidy, and arguing otherwise has no basis in the realities of the tourism economy.

        • “Firstly, do you honestly mean to imply that Disney would develop the plans for the hotel, develop concept art, deliver it to all media outlets, and then entirely abandon the idea because Anaheim refuses to grant them a subsidy for a hotel for which construction will not even begin until 2018?”

          The city council passed the Hotel Incentive Policy nearly a year ago, Daniel. That’s certainly plenty of time to put that information together.

          “Did anyone really think that they would refuse to build Star Wars Land if the city refused to exempt them from a gate tax?”

          We get it: it is an article of faith on your side that Disney and business in general will chug along and invest and build and create jobs regardless of the incentives or disincentives created by government. Arguing the point with you is what is absurd because you will hold fast to that belief regardless.

          What is striking is the absolute certainty with which you speak about what Disney will or will not do – as if you actually possessed that knowledge.

          “The opportunity to build such a hotel, with or without a subsidy, is too good an opportunity to pass up either way.”

          So good an opportunity that ZERO 4-diamond hotels have been built in Anaheim in 15 years. And since the Hotel Incentive Policy was adopted, THREE 4-Diamond hotels are in the works.

          • *sigh*

            Matt, do you REALLY not understand business to even the slightest degree? Or have you simply failed to understand how tourism works?

            Do you realistically think that Disney would notify media outlets of it’s planned construction, with the aforementioned outlets not even noting Disney’s subsidy proposal, and then simply cancel it if that subsidy is not granted? THEY HAVE A REPUTATION TO UPHOLD. Does it make sense for Disneyland to give you a free popcorn if you happen to drop your purchased popcorn? No. They do it to UPHOLD THEIR REPUTATION. Disney, as a corporation, relies entirely on public perception of their business activities. Is it any coincidence that they have tried, tirelessly, to cover up their utilization of the H1B visas? Why don’t you write an article about that? Or is Disney off-limits for your attacks?

            In your own words, “Arguing the point with you is what is absurd because you will hold fast to that belief regardless.”

            I’m sorry, you expected investors to develop four-diamond hotels amidst a collapsing tourism economy? Perhaps you have forgotten that 15 years ago, the world was reeling after 9/11. Have you also forgotten what has happened to the global economy over the past 15 years?
            Between 2001-2012 there were four years where investment in hotels may have occurred, likely less. I’m thinking 2004 to MAYBE the beginning of 2007.
            We went from travel fears regarding terrorism to the greatest economic collapse since the Great Depression. And you wonder why no one was investing in the construction of four-diamond hotels?

            And now, finally, investors have witnessed an influx in foreign tourists. They have witnessed some of the highest hotel occupancy rates ever recorded. And you’re surprised that, now, they want to invest in the construction of four-diamond hotels?

            NOW it is too good an opportunity to pass up. Just five years ago, an investor would have needed much more than a 70-30 TOT subsidy to even fathom the construction a four-diamond hotel in Anaheim.

            Disney did not randomly decide randomly that they’re willing to undergo the largest park expansion since the opening of California Adventure. NOW is the time to commit resources to the expansion. The global economy is strong, tourism rates continue to increase, and the next phase of the business cycle is not yet in sight.

            Disney’s activities, and investment as a whole, are beyond the control of local government. If you can’t understand that then my continued efforts to convince you otherwise are entirely useless.

            Thus far, you have attacked me. Your only evidence of me “being incorrect” is the fact that investors became interested in the construction of four-diamond hotels after the Hotel Incentive Policy was adopted. The Hotel Incentive Policy only worked to attract investment because tourism is on the rise. To imply that it was the only factor involved in attracting interest is naive.

            • Mr. Robbins, I have not attacked you. You have that territory reserved to yourself. I have questioned your apparent belief in your own omniscience, which has not gone over well with your high regard for your own opinions.

              • Can I not imply the same about you?
                I do believe we are quite similar in that we both hold firm beliefs and refuse to back down from a debate!

                I will say that both of us have made reasonable arguments. While we differ in opinions, the simple fact of the matter is that this is a contentious topic. You have been at this game much longer than I have, and I do appreciate a good debate with someone that has been playing for a long time!

                It was fun! ;D

              • I will leave it at this:

                In our current economic state, subsidies should not be a necessary measure in attracting investments.

                If this were 2002, I would absolutely throw all of my eggs into the subsidy basket. 2008? Again, all of my eggs.

                But this is 2016, and we are in the middle of an economic boom. Financial tax reimbursements on behalf of Anaheim should not be a necessary step in the development of a more luxury-tourist oriented business model.

                FDIs to the U.S. now exceed a quantity greater than that of any year in the past two decades. Domestic investments are also once again increasing, despite a sharp decline in the years following the recession. Firms ,irrefutably, want to invest in the United States.
                Americans have once again stopped saving, and are instead utilizing their income for the consumption of goods and services – always good for tourism.

                Foreign tourist rates have hit all-time highs, international travel to the United States is expected to increase at a rate of 3.1% through 2020.

                Travel expenditures have hit all-time highs.

                Hotel revenues have hit all-time highs.

                Given these factors, I fail to see why subsidies are a necessity for the hospitality industry. There is literally nothing indicating that the industry is struggling, nor is there anything indicating that investors would be remiss if they were to invest without subsidies.

                Leaving local politics and a differing of opinions aside, perhaps this info is worth investigating.

                Thanks for the fun and I look forward to the future!

    • “Unite-Here often acts in the best interest of its members.”

      Do they? It would be more accurate to say UNITE-HERE pursues the institutional self-interest of the union. From this April 9, 2016 LA Times article on the hotel living wage deal struck by UNITE-HERE in Los Angeles under which hotels already represented by UNITE-HERE, SEIU, etc. get an exemption from the living wage requirement:

      Proponents of the carve-outs acknowledge that they may make business owners more amenable to unionization. But they say their central purpose is to offer union members flexibility to negotiate a superior package of employee benefits in which lower hourly wages can be offset by other perks, such as health insurance.

      “I wouldn’t even say it’s an incentive,” Unite Here Local 11 President Tom Walsh said of the effect of the exemptions on hotel owners. “It just perhaps will cause them to be less resistant to unionization.”

      In other words, unless a hotel worker joins UNITE-HERE, the “living wage” ordinance undermines their ability to make a living. Boy — they really care aboute working men and women, don’t they?

      UNITE-HERE is a business. It is in the membership business. It works for deals that increase membership, and therefore revenue into its coffers.

      That is the self-interest it is pursuing by jumping into the anti-STR fight. UNITE-HERE is using Anaheim residents. The union talks about the impact on neighborhoods, but its real concern is the housekeeping crews servicing these STRs aren’t paying dues to UNITE-HERE. SEIU almost struck its own deal with Airbnb, but it fell apart because UNITE-HERE squawked about being left out. The two unions have now pledged to work together to find a deal. If that happens, UNITE-HERE will drop Anaheim anti-STR activists like used coffee grounds.

      • Btw I enjoy the new moderation prior to my comments being posted 😉

        I’m sorry, but you actually proved my point. I did not say that Unite-Here cares about the working men and women. I said that they care about their members. Which is literally exactly what the living wage efforts in LA accomplished.

        Again, you proved my point. There is only one way to increase membership to a union – do things that make other workers want to join it. And in order to do that, what actions do they take? They fight for causes that benefit their members.

        Lastly, if Unite-Here’s input in the STR debate sways the city council, then it perfectly encapsulates the concept that our city leaders work for outside interests, not for those of the residents. The debate is about the residents. If outside interests want to jump on the bandwagon then so be it.

        • “I did not say that Unite-Here cares about the working men and women. I said that they care about their members.”

          The thing is, Daniel, UNITE-HERE says they care about working men and women — not just their members. Or maybe you think dishonest propaganda and saying whatever one needs to say to accomplish one’s goal are legitimate organizing tools. If so, perhaps you should reflect a bit more deeply on who you and your fellow anti-STR activists have allied yourselves with – especially if you think the union really does care about how the proliferation of STRs impacts your neighborhoods. If Airbnb strikes a deal with them on unionized housekeeping, do you really think UNITE-HERE will be manning the ramparts with you?

          “There is only one way to increase membership to a union – do things that make other workers want to join it.”

          That’s true in a right-to-work state…which California isn’t. Here, unions can increase membership, to give you one example, by means of “labor peace agreements,” under which someone can’t get a job unless one joins the union – even if the person doesn’t want to join.

        • “Lastly, if Unite-Here’s input in the STR debate sways the city council, then it perfectly encapsulates the concept that our city leaders work for outside interests, not for those of the residents. The debate is about the residents. If outside interests want to jump on the bandwagon then so be it.”

          And by your logic (if it can be called that), your alliance with outside interests (i.e. UNITE-HERE and OCCORD) perfectly encapsulates the concept that you actually work for outside interests, not for those of the residents. If I can present your reasoning via imagery, it would be of the snake eating its tail.

          • Okay I can’t avoid the topic anymore, especially with SUCH personal comments coming my direction hahahahaha.

            You need to do some SERIOUS research on the STR debate and how the alliances arose before you start making assumptions, especially such bold ones. Because you literally do not have a single clue as to what is going on. I would suggest that perhaps you do just a teensy bit of digging (isn’t that all that journalistic integrity requires nowadays?), and base your conclusions on that.

            It’s hilarious because you literally have no idea about how anything fell into place and, yet, you seem to pretend that you do. So congratulations on being one of the more ignorant bloggers currently attempting to discuss the topic.

            Hell, I despise OCCORD and it’s unquestionably “illegal” 501C classification. Partisan? I think not. Seriously, the god damn interim Chair of OCCORD worked for UNITE-HERE Local 11.
            If you knew anything about me then perhaps you would know that. Again, instead of doing research (albeit, I’m a bit of a private person) you make assumptions. Therefore I will again say, congratulations on your ignorance. It’s adorable.

            For Christ’s sake, you don’t even know that Martin Lopez isn’t running for City Council anymore. So dig Matt, DIG!

      • Also, I’m curious if you’re aware that Unite-Here Local 11 leadership is not even contractually allowed to attend Anaheim city council meetings wherein hotel subsidies are being discussed.

        Perhaps you didn’t notice, but the last city council meeting involving subsidies was entirely void of union representation (minus the Teamsters, of course).

        • ^ correction to the above:

          Unite Here Local 11 is not permitted to discuss anything Disney related at the city council meetings, not subsidies in general. My apologies for the error

        • “Also, I’m curious if you’re aware that Unite-Here Local 11 leadership is not even contractually allowed to attend Anaheim city council meetings wherein hotel subsidies are being discussed.”

          I wasn’t aware (assuming it is true), but your allies in UNITE-HERE apparently are keeping you up to date on what they can and cannot do.

          It doesn’t really matter because they can use their symbiote organization OCCORD to mobilize people to say the same things. You are aware UNITE-HERE cuts a $5,000 check every month to their satellite group next door?

  3. I saw the headline but haven’t yet read the articles. Aside from the requirement for what I think would be termed Project Labor Agreements, are there any other material differences between the program as designed in Santa Ana versus the one designed in Anaheim?

    I can think of two likely differences between the cities’ situations: first, Anaheim is more well off than Santa Ana, and second, that more of what would normally be Anaheim’s future income has already been designated to be rebated to the subsidized interests.

    Play this one straight, Matt: it’s a serious question.

    • Well, since Clarence Darrow has commanded me to “play it straight”…

      I will first note that you are making judgments and offering conclusions immediately after admitting you aren’t in possession of the facts.

      Be that as it may…

      Santa Ana’s hotel incentive policy is different in important ways: it offers a smaller subsidy and increases costs for participating hotel developers. The rebate is 50% equivalent of TOT-revenue generated, over a 15-year period, compared to a 70-30 split over 20 years in Anaheim. Anaheim’s policy is a clean economic assistance agreement; Santa Ana makes a unionized work force, prevailing wage and other cost-spiking policies mandatory for program participants.

      Pretty big differences. Upshot – Santa Ana’s is less likely to succeed.

    • Yeah, why read the article, when your mind is already made up.

      You are the textbook definition of a BLOWHARD.

    • Greg, the black helicopters are circling. Yessina is supporting both Hillary and Lou. What a traitor.

  4. http://www.latimes.com/local/lanow/la-me-ln-grand-avenue-project-20160603-snap-story.html

    This is just a ralling method to mobilize inept tax consumers and blinded liberal thinking tax payers to the polls.

    They will fight the big bad wolf in front of the press media and get wined and dined behind the scenes.

    D-OH!

  5. So, this site and its proprietor don’t believe in market forces, but rather in robust government economic intervention – socialism, in fact.

    Here’s what I believe: if the hotel market wanted a “four diamond” hotel, then the market would build one.
    If the government has to finance one then it’s not wanted, and bound to be a failure.

    Is there a politically conservative blog in this town I can check out?

    • “So, this site and its proprietor don’t believe in market forces, but rather in robust government economic intervention – socialism, in fact.”

      That isn’t true, but if creating straw man arguments to knock down is your thing, go right ahead.

      • There’s no argument, “straw man” or otherwise. I made an observation. You are promoting the ridiculous tax kickbacks to the developers of hotels who otherwise wouldn’t build them.

        You would prefer to dodge a real argument by ignoring it.

        So here’s a chance for you to put your belief system on display. If the market wanted a four diamond hotel somebody would have built one without Anaheim City Council intervention. Do you agree or disagree?

        • Actually, you did. You accused this blog of supporting socialism, an accusation which is patently false and only serves to undermine your credibility.

          • Here’s my comment that seems to e lost in your moderation pile:

            There’s no argument, “straw man” or otherwise. I made an observation. You are promoting the ridiculous tax kickbacks to the developers of hotels who otherwise wouldn’t build them.

            You would prefer to dodge a real argument by ignoring it.

            So here’s a chance for you to put your belief system on display. If the market wanted a four diamond hotel somebody would have built one without Anaheim City Council intervention. Do you agree or disagree?

            So you are wrong. I am not arguing that you support socialist economic policy, I am saying it as a fact. Obviously an indisputable one since you refuse to explain how economic interference in the economy has suddenly become a conservative principle. Crony capitalism = socialist economic policy.

        • Let me ask you this: if the market wanted Anaheim to become Brew City, then craft breweries would be popping up in Anaheim without Mayor Tait’s recruitment and crafting of special rules and incentives for them. Do you agree or disagree?

          • I don’t know anything about Mayor Tait’s “special rules” but if they actually exist then they are an unnecessary intrusion – although my suspicion is that they are most likely a removal of regulations that were specifically put on breweries in the first place. Why don’t you do a post on it and please explain how the Mayor did what he did.

            NOW YOU ANSWER MY QUESTION.

            • That’s not what they are. The Brew City Initiative involves specific city action that gives craft breweries special regulatory streamlining not available to other business in an effort to attract a specific type of business to Anaheim.

              Or how about Anaheim Public Utilities’ financial incentives given to companies that locate or re-locate in Anaheim – incentives not provided to existing Anaheim businesses? Would you eliminate those?

              I bring these up because all the self-described free marketers who hate the Hotel Incentive program have nothing to say whatever about other city policies that provide financial or other incentives to specific types of businesses in order to attract them to the city. It’s enough to make one wonder if they are driven by a commitment to principle, or commitment to certain politician(s)?

  6. You espouse socialist economic policy you are a socialist. You’re the one who offered the premise, I just supplied the inevitable conclusion.

    Anaheim is all about big business looting the General Fund under socialist “incentive” giveaways that are disguised by silly language and self-serving rhetoric. And that seems to be okay so long as your clients are getting to swim downstream in the gravy.

    Now I have some research to do.

    • You espouse socialist economic policy you are a socialist.”

      Both are false, Mr. Higa. Just because you believe something doesn’t make it true. You can repeat your accusation a million times over, and it will still be untrue.

      And I have no clients here, Mr. Higa. And while you are conducting your “research,” may I suggest you research the meaning of socialism. If you are going to toss words and terms around, you ought to know what they mean.

    • Hi Warren, the difference is they create long lasting businesses and jobs with it and you swim downstream in agua prieta like the laughing hyenas freeloading off Shadowland in Lion King!

      • No, they create unnecessary operations that nobody wanted except the financial beneficiaries – mostly in the short run.

        If anybody had wanted a “four diamond” hotel in Anaheim then surely some hotel operator would have built one without a socialist tax kickback, er, I mean “incentive” a long, long time ago.

        The incentive boasted about by Cunningham will only serve the operator to lower rates to fill an otherwise empty hotel until he is competing with the existing non-subsidized establishments. Meanwhile the General Fund gets stiffed.

        Hooray! Crony Capitalism hard at work!

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