It took $5.3 million in public money to make the Residence Inn and Schenley Gardens in North Oakland a reality. Nearly 12 years after that public investment was approved, housekeeping staff at the inn start at $7.50 an hour -- below what would be considered a "prevailing wage" under legislation that may come up for a vote today in Pittsburgh City Council.

To advocates of the legislation, the hotel's pay rate is an example of government creating low-wage jobs. To the hotel's owners, such starting salaries are a matter of economic reality.

"We're not dealing with business travelers who have expense accounts," said Jill Curry, general manager of the Residence Inn on Bigelow Boulevard. Her clients are "paying us from their savings while they're waiting here for a transplant" or other medical treatment. That affects what she can pay in wages.

"The work is the same work," whether it's done Downtown or in Oakland, countered Sam Williamson, Western District director of the Pennsylvania Joint Board of Workers United, of the Service Employees International Union, which represents hotel workers. "Cleaning hotel rooms is cleaning hotel rooms."

It pays $11 an hour, with benefits, at many hotels, he said. But a worker getting $7.50 an hour is "eligible for public assistance, food stamps, subsidized housing," he said, all paid by the taxpayer.

Had the legislation that council is considering been in place in 1997, it would have required that all employees at the 176-room Residence Inn receive pay, benefits and paid leave equivalent to the average enjoyed by workers at other sizable hotels citywide. The legislation contains the same requirement for building service workers, cafeteria workers, and grocery store employees in future developments of 100,000 square feet or more built with $100,000 or more in help from the city.

Prominent local developers who tap public financing said last week that they're sympathetic to workers, but they expressed concern that an open-ended requirement for their tenants to pay a certain wage would deter them from committing to city projects.

"There's probably a lot of promise in this kind of approach if you're not foreclosing on the possibility of doing the deals we need to move forward as a region," said Mark Minnerly, director of real estate development for Mosites Construction Co., which has redeveloped parts of East Liberty. "In the interest of having a higher wage environment ... you don't create the jobs."

He said he'd rather see a tax credit for businesses that create good-paying jobs.

The prevailing wage bill is the first in a series of proposals that would place new rules on city-backed development purported to ensure it is friendly to workers, communities, the environment and low-income residents. A coalition of environmental, religious, community and labor groups is backing the package.

"City money, tax money, not only shouldn't be used to create poverty-level jobs," said Gabe Morgan, Western Pennsylvania director of Service Employees International Union Local 32BJ. "It certainly shouldn't be used to undercut the base of good-paying service sector jobs."

The problem, they say, is that when the city backs a hotel, grocery store or office building, and the owner or tenant then pays bottom-of-the-barrel wages, it has a ripple effect. That business's competitors point to the development, note the city subsidy, and say they have to depress wages to compete.

"The nonunion competition's workers are living in poverty wages without affordable health insurance," said Lance Huber, assistant to the president of United Food and Commercial Workers Local 23. As the city tries to lure grocers to the inner city, his members want protection against operators that might undercut unionized stores.

The Residence Inn and adjacent Schenley Gardens assisted-living facility got $5.3 million in aid for construction of the garage that underlies both buildings. The Urban Redevelopment Authority borrowed the money, and it was paid back using most of the new property taxes generated that would have otherwise gone to the city, school district and Allegheny County.

"We subsidized a structured parking pad that two developments are sitting on top of," said Robert Rubinstein, the URA's director of economic development. It was the only way to build into a hillside in an area where parking is limited, he said. "Our investments are making projects happen that wouldn't otherwise happen."

Unite Here tried in 2007 to organize Residence Inn workers. It was stymied after Ms. Curry sent a letter to workers arguing against unionization.

Ms. Curry said last week that the starting rate of $7.50 an hour only applies to inexperienced workers, and employees get a raise and benefits after 90 days.

The Residence Inn's wage structure wouldn't be affected by the legislation, since the city can't place obligations on beneficiaries of subsidies from years past. Similar hotels that get public money in the future would be subject to its requirements.

"If there's a hotel like that one getting a $3 million or $4 million [tax-increment financing benefit], they have to pay the same rate, at least, as their competition," said Mr. Williamson. That means more wage tax payments for the city, he said -- and less of a drain on government safety-net programs.

Maurice Cohen is a 27-year-old building cleaner at the Del Monte building on the North Shore, constructed on land sold by a public agency and served by a publicly financed garage. He said he earns $8.50 an hour and is able to support his three daughters thanks to public housing and state-provided children's health insurance.

"Other [cleaners] in other buildings are getting, like, $14," an hour, he said. Learning that "kind of hurt a little bit. It was a little slap in the face."

Prevailing wage legislation would be a kick in the gut to those laboring to rebuild Pittsburgh, some developers said.

"It would cripple our ability to do what we've said we're going to do with our little piece of Downtown," said Brian Walker, chief financial officer of Millcraft Industries, which is involved with several properties in the Market Square area and Fifth-Forbes corridor, Downtown. "We will stop doing development in Downtown Pittsburgh."

Mr. Walker described a scenario in which he would offer a company a lease in a planned new building, and then disclose that it includes an open-ended requirement that the tenant pays certain employees a wage set by the city controller and reset annually.

"They will not sign lease deals in the city of Pittsburgh" if they include wage requirements, he said. "If you can't get tenants, you can't get deals."

At best, a wage requirement would prompt a tenant to demand lower rents, he said. To offset that, developers would have to seek bigger subsidies.

With seven co-sponsors, the legislation appears to have enough support on the nine-member council to pass. It was unclear last week whether it might be delayed for a public hearing -- something developers said would give them time to evaluate its effects.

Mayor Luke Ravenstahl said Friday that he had not decided whether he would sign a prevailing wage measure, veto it, or allow it to go into law without his signature.

"If it's the sense of the community, and if it's the sense of City Council that this is the right thing to do, I don't anticipate being a strong advocate against it," said Mr. Ravenstahl. "If the majority of folks think this is a good thing, then so be it."

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