Council does away with private PLA

While the parking lot outside Cloquet City Hall filled with union members rallying in support of project labor agreements Tuesday, councilors inside the building steeled themselves for a contentious discussion on the subject.

Ultimately the Cloquet City Council voted 5-2 - with Lyz Jaakola and Sheila Lamb the two "no" votes - to remove the PLA mandate for private businesses from city code.

At issue was a request by the city's Economic Development Authority that the council remove the private mandate in the city's project labor agreement, which required developers to work with the Duluth Building and Construction Trades Council on wages, hiring and benefits if they utilized more than $175,000 in gap financing from the city.

Instead, the EDA wanted to incentivize businesses to sign a PLA, by offering them 15 percent more assistance if they qualified.

EDA members worried the private PLA mandate has had a chilling effect on business and housing developments in the city, either encouraging businesses to find less restrictive locations or less ambitious projects. The EDA offered six years of evidence to back up its request and a number - zero - because no private businesses have signed a PLA in Cloquet since the policy was implemented in 2017.

That doesn't mean the city and EDA haven't used financing tools such as low-interest loans or tax increment financing to help private businesses since 2017; it just means that all the businesses they worked with deliberately stayed below the trigger of $175,000 in city contributions, explained community development director Holly Hansen.

Plus there were businesses that chose not to pursue projects, because they were leery of signing a PLA, which business owners have said makes a project more complicated or takes away control. Hansen said she couldn't answer questions about jobs or apartments missed or other impacts those businesses might have had, because they never came to fruition.

In response to questions submitted by Jaakola and Lamb, Hansen did share details of pre-2017 city gap financing deals. The extensive list included a $250,000 loan to Community Memorial Hospital in 2002-2003, a tax increment financing note of $445,000 for construction of Oakwood Apartments in 2005-2006 and $500,000 in assistance to Daqota Systems in 2010 to build at the Cloquet Business Park. The list included many more loans, grants and TIF deals - including a number of large transactions in which the city simply acted as a conduit for bonding dollars, for entities such as the hospital, Potlatch and Evergreen Knoll among others.

The issue of removing the private PLA mandate became more pressing earlier this year when Hansen was talking with businesses exploring city assistance, along with a possible business relocation from Duluth. "I'd love to see more jobs come to Cloquet," Hansen said.

Cloquet Sappi mill manager Tom Radovich talked about the lack of affordable housing and rental properties in the Cloquet area, its impact on his employees (many end up finding homes in Duluth) and the possible impact of the private PLA on housing projects since 2017. Eliminating the private mandate doesn't guarantee funding utilization, he said, "it certainly cannot get any worse."

After listening to presentations and comments by city staff, Chamber members and leaders at the Duluth Building and Construction Trades Council, councilors took their turn.

Ward 1 councilor Bun Carlson noted that two contractors and a half-dozen union workers all told him that Cloquet was trying to get rid of its PLA. That's simply untrue, he said, pointing out that public PLAs will remain and were not part of the discussion, and pressing union leadership about what exactly they were telling their members about the Cloquet proposal.

"You have in five years, zero workers from a private PLA," Carlson said. "If we do get some jobs, they are probably going to hire union workers. I have a hard time thinking how you think that's bad when we have supported the PLA. ... We all support labor up here. We're not the bad guys."

Dan Olson, vice president of Duluth Building Trades, assured Carlson that they were not telling union members that Cloquet wanted to completely eliminate the PLA requirement from city code. Olson said they were trying to "protect the language" in the PLA that is advantageous to the city and its residents, which promises highly trained workers and no work stoppages.

"We want to see Cloquet grow and we think that having the [private PLA] language in there is to protect your investments," Olson said.

Ward 4 councilor Kerry Kolodge pressed Olson on that.

"How many phone calls have you made to the city administrator expressing concern that we had zero projects?" Kolodge asked more than once.

Olson eventually answered, "zero," and said, "I do not reach out to people that are absolutely against what I'm doing," naming Hansen and city administrator Tim Peterson.

When Olson questioned whether Hansen and the city had done any outreach to businesses over the past six years, Peterson ended the conversation and invited other councilors to ask questions.

Cloquet's newest city councilor had done her homework. Ward 3 councilor Iris Keller said she had watched numerous recordings of previous council meetings when PLAs were discussed, for background.

"In the last two years this issue has come up before the city council, to my count, 16 times, and the PLA is today pretty much the same as it was when it was written in 2017," Keller said, expressing worries that with no changes, the PLA will continue to come up again and again. "So I'm wondering, where are we able to compromise?"

Andrew Campeau, president of the Duluth Building and Construction Trades Council, said he didn't know what compromise would look like.

"Our fear is [you] take away the private language in the PLA, this happens all over again," he said, presumably referring to the public PLA mandate. "It's happened in the past and we've seen it elsewhere."

The formal council meeting followed the work session, and the vote to amend the PLA was the final item under council business. It passed 5-2, with no further discussion by the council.

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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.

Until Tuesday’s vote, private projects in Cloquet were required to sign a PLA if they utilized more than $175,000 in city loans or other forms of gap financing. The council removed the private PLA mandate by a 5-2 vote.