Union Distaste of Ritz, Whole Foods Might Sink Project

Civic San Diego UNVEILING THE UNSEEN

Union Distaste of Ritz and Whole Foods May Scuttle 7th and Market Project

San Diego could be getting a preview of what a controversial bill to add a check to Civic San Diego’s power would have meant for downtown development.

The project at 7th and Market in East Village, has something to please almost everyone – but that “almost” is what’s causing it problems.

The City Council will vote Tuesday on whether to give Civic San Diego – a city-owned nonprofit that regulates downtown development – the go-ahead to negotiate a deal with Cisterra Development for the project.

The sticking point for Council Democrats, though, is the union unfriendliness of two high-profile business intended to be part of the project, Whole Foods Market and the Ritz Carlton Hotel.

In a lot of ways, the whole thing is a preview of what a recent state bill, introduced by Assemblywoman Lorena Gonzalez this year but vetoed by Gov. Jerry Brown, would have meant for downtown development. The bill would have given the Council final say on projects that Civic San Diego is currently empowered to approve on its own.

This isn’t the first time the Council has been asked to greenlight final negotiations between Civic San Diego and Cisterra on this project. The issue came before the Council last month, and Democratic Councilman Todd Gloria tried to direct Civic San Diego’s negotiators to include a set of conditions requiring all future businesses on the property to stay out of any local union attempts to organize employees.

He didn’t have the votes. The city attorney’s office has since deteremined the city cannot make such an agreement a condition of approving the project. The city can request that Civic San Diego negotiators raise the idea to Cisterra, who could voluntarily agree to it, but it can’t be a requirement.

Cisterra Chairman Steve Black said he’d already presented the idea to Ritz and Whole Foods, and both said they’d pull out if required to sign such a deal. And, he said, the whole project falls apart if Ritz and Whole Foods aren’t a part of it.

“The Ritz Carlton Hotel and Whole Foods are essential elements to the project, because the brand recognition they bring help support the economics of the other project uses,” he said.

But here’s where things get tricky: While it was hard for many Council progressives to stomach high-end companies refusing union-focused provisions, there’s a lot of stuff in the project to please more than luxury travelers or organic quinoa buyers.

The Project

Civic San Diego has authority to approve developments that conform to downtown’s zoning plan.  But the City Council has oversight over this particular project because it is on city-owned property.

The Council isn’t actually voting to approve the project just yet. For now, it’s giving Civic San Diego the go-ahead to negotiate the terms for a project that’s already been selected over two other proposals. After negotiations are finished, the Council will be asked to give final approval.

Cisterra has proposed a 39-story building with Ritz Carlton Hotel for what would be the city’s first five-star hotel. Also included would be Whole Foods, 58 apartments for sale and 115 for rent and 32 reserved for low-income residents. It includes public parking, a public restroom and a small public park.

The developer would also agree to remodel and manage the Clermont Hotel, a historic building on the property home to 57 single-room occupancy apartments – small, bare-bones units for those at risk of becoming homeless.

Plus, all the money the city gets from Cisterra purchasing the property will go into the fund the city uses to build affordable housing projects.

The project already has a project labor agreement – a contract with local construction unions stating wage and conditions terms, and stipulating that hiring will be done through union halls.

Thus, it is an attractive project to not only downtown insiders and tourism boosters but affordable housing advocates and other labor unions.

Tom Lemmon, business manager at the San Diego Building & Construction Trades Council, AFL-CIO, has urged Council members to approve the project. Surrounding neighborhood groups did the same.

But then there’s the problem with Whole Foods and Ritz being non-union shops.

Sacramento Similarities

Earlier this year, Gonzalez passed a bill narrowly focused on an issue relevant only to San Diego: giving the City Council final say on Civic San Diego decisions. Brown vetoed it, but Gonzalez has promised to reintroduce it next session.

Civic San Diego’s board has authority to approve downtown projects that broadly comply with downtown development regulations previously approved by the Council. Gonzalez’s bill would have given City Council final say.

Gonzalez wanted to make sure elected officials, not appointed board members, have control over major development decisions. She also wanted the more union-friendly City Council to have leverage to impose union-friendly conditions on those projects, she told me in May.

“My bill is absolutely about protecting workers, and yes, I believe that all workers are better off if they’re in a union,” she said at the time.

In practice, that could have meant giving the Council authority to make labor-friendly agreements, like the one proposed for 7th and Market, a requirement before projects are approved.

A Gonzalez spokesperson said she wasn’t familiar enough with the project to comment on whether it’s a comparable situation.

Reese Jarrett, president of Civic San Diego, said the bill would have hypothetically allowed the Council to make demands like this, but wouldn’t speculate on whether that would have happened regularly.

Mickey Kasparian, president of both the local grocery workers union and the San Diego and Imperial Counties Labor Council, said during public comment that he supported the project, except for the inclusion of Whole Foods, which he said mistreats and underpays its employees.

“This is the employer that’s coming into this project, and it’s what’s wrong with everything that we’re trying to put forth here: It’s an issue that we have with Civic San Diego. If they’re going to be able to approve these projects … they should be providing good jobs.”

There is one major way the 7th and Market project is different than most downtown projects that would have been affected by Gonzalez’s bill.

Gloria and Council President Sherri Lightner indicated that because it was on public land, the Council had more responsibility to make sure it delivers public benefits.

“I think we have a responsibility to see that the project built here creates good jobs, not just during the construction phase, but also during the businesses that operate later on the site,” said Lightner.

“This project makes a massive investment in affordable housing. It does,” Gloria said. “It exceeds the city’s standard. It creates 32 affordable housing units and preserves Clermont Hotel. What we want to do is not add to the consumers of those affordable units.”

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