Divided council overturns project labor agreement

By the narrowest of margins, the Cloquet City Council voted to overturn the city's Project Labor Agreement, as recommended by staff last month.

The 4-3 vote came after extensive public comment during Tuesday's meeting, which set a record for participation since the council started meeting virtually because of the pandemic. Including councilors and city staff, more than 50 people logged on or called into the meeting. Seventeen addressed the council directly Tuesday, and three had submitted letters to the city in the two weeks since the ordinance's first reading.

Voting in favor of eliminating the PLA were councilors Sheila Lamb, Kerry Kolodge, Lara Wilkinson and mayor Roger Maki, who cast the final vote. Voting "nay" were councilors Bun Carlson, Chris Swanson and Lyz Jaakola.

Generally, under the terms of a PLA, construction unions have bargaining rights to determine the wage rates and benefits of all employees working on a project. The terms of the agreement apply to all contractors and subcontractors working on the project, although they do not have to be union companies themselves. PLAs also typically require that employees hired for the project are referred through union hiring halls - in this case, the Duluth Building and Construction Trades Council.

Adopted in May 2017 by previous mayor Dave Hallback and city councilors, the Cloquet PLA required public as well as private projects with more than $175,000 in direct city funds to abide by the terms of the PLA. Cloquet was the first city in the Northland to require private contractors to abide by a PLA if they accessed city funds, including loans, grants, tax increment financing (TIF), abatement and bonds for private developers.

The impetus for the staff recommendation came from a lawsuit filed in January against the cities of Cloquet, Duluth and Two Harbors and the Western Lake Superior Sanitary Sewer District. But the PLA has always been somewhat controversial in Cloquet. As noted in the staff report, it was passed against the advice of the city's Economic Development Authority, which also unsuccessfully asked the council to delete the requirement that private companies comply with the PLA in January 2019.

City staff argued that the PLA has had a negative impact on Cloquet and its taxpayers, by limiting the number of contractors willing to bid on a project or do their own developments in the city, citing the salt shed, water tank repairs and the skatepark projects, among others. For example, the skatepark was approved in April 2018 at $420,300 ($110,000 over the city engineer's estimate) after only one company (Boldt) bid on it two different times. A Boldt representative spoke in favor of the PLA Tuesday.

Many union staff and members also urged the council to keep the PLA in place.

Craig Olson, president of the Duluth Building and Construction Trades Council, spoke first, noting that 1,002 union members live in Cloquet, 218 in Carlton and 318 in Saginaw, not including Teamsters members. "We all shop and do business in Cloquet," he said.

Olson pointed out that the 14th Street project was bid under PLA and had six bidders.

He pointed out that private developers don't have to abide by the PLA if they don't use public money: $175,000 or more of public funding will trigger the PLA requirement.

"But they don't want that. They want to come to the Cloquet taxpayers and they want to be in their pockets for handouts, for public subsidy, plain and simple," Olson said. "We've had enough of that," he continued. "We think ... they should have to follow some public rules that keep Cloquet and local people working."

"A vote against a PLA is a vote to exploit workers," said Derek Peterson.

Union leaders talked about the high standards of training offered by unions, and the high wages and benefits. Several people cautioned that without a PLA in place, local contractors would lose bids to out-of-state contractors that don't live or spend their money here. Cloquet ironworker Taylor Kolb said without a PLA, he wouldn't have the opportunity to bid on projects in town.

When Ward 2 councilor Sheila Lamb questioned that statement later, city administrator Tim Peterson said all union contractors would still be able to bid with or without a PLA. "Not having a PLA would not stop anyone," he said.

That was part of Adam Hanson's argument against the PLA. Hanson was one of two people who spoke against the PLA and a letter writer. Hanson works with an association of commercial and industrial contractors across Minnesota and pointed out that 75 percent of all construction workers are not in a union. "PLA supporters fail to mention that the term 'local workers' excludes local nonunion workers," he said, highlighting the requirement that workers be referred by the union hall.

Two local contractors - Dave Chmielewski and Adam Kiminski - also wrote letters to the city against the PLA. Former mayor Dave Hallback sent a letter in favor of the ordinance he shepherded through as mayor.

Kiminski said it is the union, not the worker, that wins with a PLA. The Kiminski Paving owner said the wage for a PLA job is $36 per hour to the employee as wage and $19 to the union for health and welfare/pension. He compared that to the same $36 for a prevailing-wage job, and $19 for benefits and pension that gets paid directly to the employee.

Although the council removed the part of the PLA that required workers to remain in or join a union, city administrator Tim Peterson verified that the PLA would still force contractors to pay into union benefit funds that their employees will never benefit from.

"This not only increases the cost of a project, but it does so with no actual benefit to any employee," Peterson said. "There is no thought given to the fact that a nonunion contractor may already be providing fringe benefit contributions, which means we would be forcing them to contribute twice."

Councilor Chris Swanson said he supported the idea of the PLA, echoing Dan Olson's recommendation to consider amendments to the PLA. "I'm also in favor of making tweaks if we need to," Swanson said. "I think that incremental approach, 'not throwing the baby out with the bathwater,' is the smart way to do business."

That choice was not on the agenda Tuesday, Tim Peterson explained; the proposals in the packet were to either overturn the PLA completely or keep it.

Following Tuesday's vote, the removal of the PLA from city code was effective immediately, Peterson said.