Union Puts the Squeeze on Tax Breaks
"Very seldom could you pull off an accord in a project if every time you had to wait for some kind of public referendum. The timing justdoesn't work."
A petition drive under way right now in Dallas calls for a citywide election on tax subsidies from City Hall to developers. I'm amazed I'm not for it.
Show me a New York-based labor union backing a referendum on subsidies to developers, I should be looking at Christmas. I'm a lefty, pro-union guy with a strong bias against taxpayer giveaways. I ought to love this stuff.
Instead I'm getting a really bad odor.
A good public conversation about City Hall's habit of giving away our tax money is one thing—all to the good. That's not what I smell here.
Instead, I remember my best friend in junior high school in Michigan whose dad owned a big tire store on Woodward Avenue in downtown Detroit. The Teamsters were trying to organize the employees, and his dad was fighting it.
One day a guy in a bad suit with a bent nose came in, looked around the showroom with his hands in his pockets and a cigar in his mouth, and said, "Youse got a lot of windows in this joint. They could get broke youse ain't here one night."
That's what this smells like to me. You be the judge.
Unite Here, a national union representing service industry workers, is funding a petition drive to force a referendum in Dallas on all taxpayer subsidies to developers of more than a million dollars. In other words, if they get enough signatures, and if we have an election, and if their thing passes, then forever afterward any time the city council wants to give away more than a million dollars to a developer, we residents will have to vote on it.
Unite Here has been talking to the Dallas City Council about its desire to represent employees in a planned, city-owned convention headquarters hotel. It is also a pioneer in what are called "corporate campaigns" and the use of nontraditional pressure tactics.
Unite Here is being sued in federal court in New York by Cintas, the largest uniform supplier in the country. Cintas, a NASDAQ-traded firm headquartered in Cincinnati with $3.9 billion in annual sales, has accused the union of racketeering and extortion.
For a group that wants to be involved in the local political process, Unite Here has an odd way of conducting itself. I spent a week calling and e-mailing union officials here and in New York. Some guy in their New York press office kept telling me he was looking for someone who could answer my questions—I hadn't asked any yet—but he never got back to me. Their lawyer in Dallas did talk to me and promised to find someone who would call me back, but nobody ever did. A lady in the local union office answered the phone, told me the president of the local wasn't around, then switched me to the president's voice mail message, which sounded a whole heck of a lot like the lady who just answered the phone.
C'mon. What are these people, carnies?
Unite Here was formed in 2004 when two unions merged—the Union of Needletrades, Industrial and Textile Employees and the Hotel Employees and Restaurant Employees International Union. The union says it has 450,000 active members and represents 400,000 retirees.
There are serious, legitimate ways to go about reforming the process by which city tax subsidies are granted. This is not one of them. This is a way to kill all subsidies.
I think subsidies are a problem. We're talking about deals like the one in 2005 where the city council gave Hunt Oil (Ray Hunt) $6.3 million as an "incentive" for building a new 15-story $120 million headquarters building on the Woodall Rodgers Expressway at Akard on the north end of downtown.
Problem? Yeah, problem. Hunt was already committed to building the thing when the council gave him $6.3 million in tax dollars. So why did he need an incentive?
That's a fair question. It seems right and appropriate that we taxpayers get a chance to hear the full story on deals like that. But there's a big catch here. If the city had to call an election every time it wanted to give a developer a serious incentive, the city wouldn't be able to give incentives at all. Why? Because no developer would stick around for the election.
Let me put it this way. Think of the city as a young gentleman and the developer as a young lady, and the two of them are sitting in a bar. The young lady indicates she might be willing to come visit the young gentleman's apartment. He says, "Great. But I have to clear it with my parents first."
Very nice thought, I suppose. But the visit is not going to be, shall we say, consummated. Ever.
I discussed this idea last week with Larry Beasley, an urban development expert from Canada who had just been here the week before to address the Dallas City Council on inner-city development. Beasley has worked development deals from both ends of the room, as a city planning director in Vancouver and as a private developer.
I called him because he and other urban development experts who came here to speak to city council all had expressed various forms of skepticism about tax subsidies for developers. I even wondered if he would be supportive of the Unite Here initiative.
But far from that, he said he believes tax subsidies are one of several tools any competitive city must have in its arsenal in order to attract development. And he said the Unite Here initiative would effectively kill the use of significant subsidies.
"To be honest," he said, "and this is from my experience as a civic negotiator, very seldom could you pull off an accord in a project if every time you had to wait for some kind of public referendum. The timing just doesn't work."
Going back to my metaphor of the couple in the bar, most developers would develop a sudden headache and ask you to call them a cab.
"Time is of the essence," he said. "Let's say you had to wait six months for the next referendum. Numbers change. It's very expensive to hold an interest in land even on a short-term basis. Usually you have to pay hard cash for that."
He gave me several ideas—really interesting ones, I thought—for things the public could demand and maybe should demand in terms of information about subsidies, including asking to see a detailed pro forma.
In the Ray Hunt headquarters deal—this is my example, not his—the taxpayers should have been able to see a public report showing exactly what that deal was worth to the city in potential tax revenue, what was going on with comparable property nearby, what it was going to cost the city in infrastructure, and what was the likelihood, in the absence of a subsidy, that the property would be developed at the same level by somebody else.
Now there's a reform you could sink your teeth into.
Not this one. This one is not about helping you and me get a better handle on what City Hall does with our money. It's about bringing City Hall to its knees in a labor negotiation.
I spoke with Greg Utter, an attorney with Keating, Muething & Klekamp in Cincinnati, one of the firms representing Cintas in its suit against Unite Here. Utter told me Unite Here uses campaigns of public pressure to force companies to give up their right to demand a supervised union election.
"Typically the union knows that the employees don't want the union," he said, "and the union can't win an election if management asks for a normal union election through the National Labor Relations Board election process."
Instead, Utter said, Unite Here tries to force companies to agree to a "card-check" process and a "neutrality agreement" by which the company agrees not to oppose the union's organization effort. That means, instead of an election, the union can organize the company's employees simply by getting more than 50 percent of them to check "Yes" on a card. And the company has signed away its right to argue against any of what the union promises or alleges to workers.
The Cintas suit accuses Unite Here of conducting a campaign of terror and false allegations aimed at Cintas customers, stockholders and the general public. "So Cintas has gone through this for about five years now," Utter said, "and has decided enough is enough. We have filed a complaint in federal court in New York alleging that the union's daily barrage constitutes a campaign of extortion."
I contacted several lawyers who represent Unite Here in the lawsuit and heard back from none of them. But I did read their answer to the Cintas allegations against Unite Here, in the form of a motion to have the case dismissed, which is now under review by the judge. They cite both labor law and criminal law to argue that whatever Unite Here does, none of it rises to the level of extortion and all of it is fair play in labor law.
That's above my pay grade. It's what courts are for. What I notice in the Unite Here answer to the Cintas lawsuit is this: Unite Here does not even try to refute the charge that it uses collateral pressure techniques to bend management to its will. It just says the attack Web sites and the propaganda campaigns aimed at consumers and the efforts to undermine stock value are all fair play.
Maybe they're right. But you know what else is fair play? When these people started gathering petitions for an election, they stepped out of the courts and into the political arena. Our political arena.
Their lawyer in Dallas told me they may delay turning in their petitions. You know why I think they would delay? Because once they turn in the petitions, the process is set in motion and out of their hands. Then the petitions have lost their extortive value. Before they're turned in, the city could still cave to the union's demands, agree to card-check neutrality at the convention hotel, and the petitions could get lost in the river.
We know they could make trouble. We know we got a lotta windows in this joint. But I bet Dallas would rather see every damn window in the city smashed on the floor than give a single inch to this kind of crap.
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