Council asked to make Cloquet business and union friendly

A note of urgency dominated the Cloquet City Council work session Feb. 7, when members of the city’s Economic Development Agency asked, for the third time in five years, that the council remove the requirement for private businesses to sign a project labor agreement.

While the private business requirement for a PLA is union-friendly, it’s not business-friendly, they said. According to EDA director Holly Hansen, that’s impacting the EDA’s core mission of attracting, retaining, assisting expansion and enabling redevelopment for business, housing and other projects in the city to grow the local economy.

Hansen pointed out that while the PLA requirement has worked for public projects — its original intended use — it has not been a boon to negotiations with private developers or business people.

“For a little bit of background, since 2017 when this was put into place, the city has initiated 20 to 25 public PLAs for city projects,” Hansen said. “There have been zero private PLA projects since 2017.”

What exactly is a PLA?

Project labor agreements are collective bargaining agreements between building trade unions and contractors that govern terms and conditions of employment for all craft workers — union and non-union — on a construction project. The labor agreement is between an owner and a regional building trades council, in Cloquet’s case, the Duluth Building and Construction Trades Council. While the Cloquet PLA no longer requires workers to belong to a union, it does require employers to pay the agreed-upon wage, and pay into the union’s trust fund during the project, money that remains in the trust fund at the end of the project.

Hansen explained that the city is normally in a minority position with any loans, meaning the business owners and banks or credit unions generally cover the bulk of the financing, and the city is simply providing “gap” financing, to help bring a project to fruition. The current Cloquet PLA requires public as well as private projects with more than $175,000 in direct city funds to abide by the terms of the PLA.

Requiring developers and others to sign a PLA can inhibit that process or even drive an owner somewhere with more business-friendly policies, Hansen said.

Cloquet Chamber director Kelly Zink told the council that business owners have told her they want to control their own projects.

“I feel like we’ve lost things potentially over the last few years because businesses weren’t comfortable not having that control,” she said. “So, being a small community next to a large community like Duluth, if we have an incentive program versus a requirement, that’s an incentive for someone to come in and bite.”

Which led to the second proposal from the EDA: using a carrot instead of a stick.

Instead of requiring private business to abide by the terms of a project labor agreement in order to access the many tools the EDA has to offer, the EDA wants the city to incentivize the business owner by allowing the EDA to add 15 percent to the gap financing amount if a private project utilizes a PLA.

Hansen mentioned the search for a developer for the Solem Hotel, a historic building in decline in the heart of downtown Cloquet. She cited other businesses for sale, including the Brenny-Dahl Block plant and Wear-a-Knit that may need renovations.

Although Hansen and her EDA board members only discussed the PLA request on Feb. 7, they asked that the council take action on their request in the near future.

“It’s imperative that we address this in a timely fashion,” Hansen told the council, referring to potential projects on her desk. “Because as [city attorney Bill Helwig] mentioned, we have many companies in Cloquet that are internationally based, others that are statewide. … How we treat them and their development teams when they come here, matters.”

Also on Feb. 7, city councilors:

• Approved the hire of Brittany Asanovich as a new police officer.

• Amended the city code to set the planning commission at five members instead of seven.

• Approved changes to the SKB Environmental Landfill permit to allow the industrial landfill to accept waste only from the paper mill in Duluth and Minnesota Power outside of regular hours, 24 hours a day, seven days a week.