Cloquet set to end labor agreements for city projects, citing higher costs and ‘negative impact’
The Cloquet City Council has set the stage to stop using so-called project labor agreements that in effect guaranteed union participation in city construction projects. The city council has moved in the direction of repealing the use of PLAs in response to a recently filed lawsuit challenging the constitutionality of such agreements.
The News Tribune notes the action comes only three years after the city instituted the requirement to use PLAs in the northeastern Minnesota community.
Since 2017, the city has been implementing PLAs in all city construction projects, requiring contractors to abide by certain terms, such as timelines, working conditions and budgets.
The proposed ordinance to eliminate PLAs comes as a result of pending litigation against the city involving the enforcement of the agreements, which previously prohibited non-union contractors from working on city projects.
The council has since removed the union security portion of the city’s PLA, but city staff believe that further action is necessary to avoid future legal issues.
A city analysis states a current lawsuit and potential for future lawsuits over labor agreements “directly impact the City’s taxpayers as the costs for defense and potential damages are passed on to them through property tax levies.”
But the unusually frank staff review of the consequences of project labor agreements on recently completed projects goes much further, concluding PLAs have an overall “negative impact.”
“…we have seen negative impacts to timely projects and cost control. In these examples, we found that many necessary contractors are entirely unwilling to sign a project labor agreement, causing the pool of potential contractors to shrink all the way to, in some situations, one willing contractor. When a project is limited to one willing contractor, costs are likely to increase due to the lack of competition. Efficiency has also been impacted. In many cases we spend additional staff time trying to unnecessarily break up the bidding of projects, or simply trying to find potential contractors.”
Moreover, the city’s experience indicates some private developers prefer to avoid projects that require labor agreements altogether.
“There are numerous developers who have done, and are willing to continue to do, developments within the City of Cloquet but show an unwillingness to move forward on projects due to the requirement of project labor agreement. In a time when communities are constantly competing for development, begging for additional housing stock, constantly looking for redevelopment in downtown vacant stores, we should not stand in the way and add additional blockades. Again, with every lost opportunity of private development, we must recognize the negative property tax implications for residents of Cloquet.”
Union representatives at the April 20 city council meeting made the case against repealing the controversial ordinance.
“When you guys are voting against PLAs, that is a direct attack against your local responsible skilled labor,” Daniel Gilbert, union business agent for International Union of Operating Engineers Local 49, said.
Gilbert argued that PLAs are essential for local governments, emphasizing that they ensure projects are completed on time and within budget.
Duluth Building and Construction Trades Council President Craig Olson echoed Gilbert’s ideas, emphasizing that the main legal issue with Cloquet’s agreements was that they contained a union security portion, which has since been removed.
He called the plaintiff’s point in the current lawsuit against the city “moot,” and explained that even if lawsuits continue, city insurance should stop them from affecting taxpayers.
Yet city staff rejected the notion that ending project labor agreements is anti-union, affirming the community’s continuing reliance on and support for union workers.
“The city of Cloquet is lucky to have many union operations in town that have been a part of, and fantastic partners to, city projects. We know this will continue. This conversation is based on efficiency of projects and doing right by the citizens in Cloquet. This is not a union versus non-union issue.”