Fund Freeze Casts Cloud of Doubt on Opening of Hotel

COMPTON — In less than a month, the Compton Lazben Hotel is due to open its doors to a crowd of proud local dignitaries and boosters for the city’s centennial ball.

The celebration has been billed as the city’s social event of the season: a chance to marvel at a $30-million crown jewel of the city’s redevelopment efforts alongside the Artesia Freeway.

But even as dozens of workers scurried to finish the 10-story hotel tower and pink-walled convention center last week, an order from state labor officials--freezing city construction funds because of suspected wage-law violations--has thrown the project and the scheduled party under a last-minute cloud of doubt.

Wants Funds Released

A spokesman for the hotel’s prime contractor said work cannot continue unless state officials allow the city to release remaining funds for the project.

“If this job shuts down right now before Thanksgiving and Christmas, it’s not very nice” for the construction force or hotel workers now being hired, said Benjamin Deutsch, president of Tucon Development Co.

In one of its largest enforcement actions ever, the state Department of Labor Relations directed the city of Compton to withhold $3.3 million in payments to Tucon for allegedly failing to pay prevailing wages to carpenters and other workers on the project.

The state’s figure includes both the back wages that Tucon allegedly owes workers and more than $300,000 in penalties, said Roger Miller, the state agency’s regional manager.

Compton officials said they will comply with the order, but added that the contractor has already received all but $2.5 million of the project funds.

Miller said the contractor will nevertheless be liable for the entire amount of the state’s claim.

Official’s Ruling

State Labor Relations Director Ronald T. Rinaldi recently decided that the hotel project--financed with city redevelopment bonds and direct city loans as well as private funds--qualifies as a public works project that must pay prevailing wages.

Tucon and Compton officials contend that the work does not qualify as a public project that would be subject to the prevailing wage law. The city has scheduled a meeting with state officials to discuss the matter next week.

“My sense is they (state officials) want to sit down and talk it out,” City Manager James Goins said.

But Simon Reyes, assistant chief of the state agency, said that any appeal of the freeze order will have to be decided in court.

Miller said agency investigators, acting on a tip from a local labor union, inspected Tucon’s payment record and found that some carpenters were being paid as little as $7.30 an hour when the prevailing wage and fringe benefits run about $25 an hour. Also, he said that the contractor was using lower-paid apprentices without the necessary approval of the state Division of Apprenticeship Standards.

Tucon executive Deutsch said, however, that the lower wage was set by the city and designed to pay less skilled workers who received a training program offered through Compton Community College. Other workers were paid substantially more, he said. Union-scale wages were paid to plumbers, heating and cooling specialists and other tradesmen.

While arguing that the project is exempt from prevailing wage requirements, Deutsch also said the amount of the state’s claim against the contractor is excessive.

“The amount of dollars they claim is exaggerated and basically we don’t know where they got the figure from,” he said.

Deutsch termed the investigation and freeze on disbursement of funds “an attack by the state and by the unions.” Those most damaged by the state action, he said, will be the construction force and the 250 employees in the process of being hired to run the hotel and convention center, about 80% of whom are residents of Compton, which has had one of the highest unemployment rates in the county.

“Why they would go so viciously after the city, I can’t explain,” he said.