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Chula Vista Kicking Off New Campaign for Major Bay Front Project

Chula Vista isn’t throwing in the towel just yet.

Last week, the city’s elected officials and Chamber of Commerce launched a campaign to solicit public pressure on labor leaders to return to the negotiating table with Gaylord Entertainment and strike a deal that would allow the Tennessee-based developer to proceed with its hotel and convention center project on the Chula Vista bay front.

“I’m an eternal optimist and I just see what they wrote in the last sentence of their letter,” said City Councilman Jerry Rindone. “The unions must call (Gaylord) to continue the dialogue. If that occurs, then I think we can get something done.”

Rindone was referring to a letter from Gaylord Entertainment Senior Vice President Bennett Westbrook to the city of Chula Vista and the San Diego Unified Port District that Gaylord was no longer pursuing the project because of “unwavering, unreasonable demands” from union officials and environmental groups.

Westbrook’s final sentence in the letter reads, “We would welcome the opportunity to work with the city and port under different circumstances in the future.”

Rindone repeated his main reason for continuing to hope the project could still be salvaged. “I will say this again: Never have so many lost so much.”

Announced a year ago when representatives of Gaylord, the port and Chula Vista signed a letter of intent to begin negotiations, the project involved up to a 2,000-room hotel and convention center containing 400,000 square feet of meeting space, restaurants and retail space. City leaders saw the project as the catalyst for redeveloping the bay front, and a chance to lure other developers to the area.

But what was viewed as a promising economic development opportunity disintegrated in late June and early this month when local union leaders stood firm in their position to ensure that the majority of the estimated 6,500 construction jobs go to union workers.

In its letter, Gaylord stated that limiting the bidding on the construction contracts to only union contractors would increase the project’s cost by $50 million to $75 million. The total cost for the project has been estimated at $700 million to $1 billion. Chula Vista and the port agreed to provide a combined subsidy of $308 million.

The crux of the disagreement between Gaylord and the unions revolves around the bidding process for what is expected to be 50 to 75 different contracts, according to Jim Ryan, executive vice president of the San Diego chapter of the Associated General Contractors, a trade group representing 1,400 union and nonunion contractors.

Ryan, who sat in on the negotiating sessions at the request of Gaylord, said while initial negotiations got off to a rocky start, in the final stages, the parties were very close to striking an agreement.

Union leaders compromised on a few issues, as did Gaylord, but when it came to opening the bidding process to nonunion companies, the labor leaders refused to budge, Ryan said.

In a news conference July 3, Tom Lemmon, negotiator from the San Diego County Building and Construction Trades Council, said local labor groups would not allow Gaylord to bring in outside contractors, and circumvent hiring local workers. “We will not compromise on our core position that Gaylord has to hire local workers,” he said.

Ryan said the characterization was a “red herring.”

The San Diego area simply doesn’t have enough union contractors to do all of the work on a project the size of what Gaylord was undertaking, he said.

Also, by limiting Gaylord to accepting bids from only union contractors, it would drive up costs so much that the company would have a hard time recouping its investment, Ryan said.


Willing To Make Concessions

In a report posted on AGC’s Web site, Ryan said that Gaylord was willing to pay union scale wages to nonunion craftspeople, provide all benefits to nonunion workers that matched those of union employees, and to abide by the same rules covering working hours, safety provisions and other agreements required by union contractors.

Gaylord was even willing to have all nonunion contractors audited by an independent accounting firm to ensure compliance with the agreement, Ryan said.

In the end, Ryan charged that what was really driving the union leadership to their hard-line stance was the money the labor organizations would get through prearranged contracts that upstream parts of their workers’ paychecks to the union coffers.

Another sticking point that caused Gaylord to withdraw from the project came from the Environmental Health Coalition, a San Diego-based environmental advocacy group, which was demanding mitigation payments of $21 million from Pacifica Cos., the selected residential developer, the city of Chula Vista and Gaylord. The payments would go toward restoring wetlands areas in and around the bay to replace the area that would be eliminated because of the hotel project.

The prospect of Gaylord moving forward without a negotiated project labor agreement (which is not required of a developer), wasn’t feasible because the developer understood labor and environmental groups would file lawsuits against the project on environmental issues. That would drive up the project’s costs and delay its completion, Ryan said.

“This deal is all about money,” Ryan said. “Gaylord wouldn’t be talking to them if it wasn’t for the environmental stuff.”


Moving Forward

Despite Gaylord’s apparent final decision, the city of Chula Vista and the Port District are moving ahead with plans to complete an environmental impact report as if the developer were still involved, said Ralph Hicks, the port’s director of land use.

At some point, after the entitlement process is complete (getting all the necessary regulatory agencies’ approval, including the California Coastal Commission’s), the port and Chula Vista will seek another developer to replace Gaylord, Hicks said.

Though Gaylord’s exit is clearly disappointing, the port and the city are still intent on completing an overall master plan for the development of the entire Chula Vista bay front, an area of 560 acres. The Gaylord project covered 32 acres and was the linchpin for the rest of the city’s bay front plan, but by no means the only part of the overall plan, Hicks said.

JMI Realty, the local development company that oversaw construction of Petco Park and was an original bidder on the Chula Vista project, was seen as a possible replacement to Gaylord. A call to CEO John Kratzer was not returned.

Another local developer, Jason Wood, senior vice president of Cisterra Partners LLC, said he wasn’t familiar with details of the project, but given what he knew, he would take a look at it.

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