Old Duluth City Hall project hits snag on prevailing wage rule

But a proposal to provide $350,000 to help renovate a downtown landmark, the old City Hall at Second Avenue East and Superior Street, inspired lengthy discussion when local labor representatives objected to the way developers proposed to tackle work on the building.

Plans call for the building to house a restaurant, meeting space and a fitness studio. The BID grant also would be used to leverage an additional $350,000 in historic tax credits.

This money would then be used to help renovate the 30,000-square-foot building that was formerly home to Carlson Books.

Craig Olson, president of the Duluth Building and Construction Trades Council, criticized the idea of public money going to any developer who would not sign a project labor agreement, pledging to pay prevailing wages to all trade workers involved. He said that, to date, the developer, Old City Hall LLC, and its general contractor, Kuepers Construction of Baxter, had declined to do so.

Such an agreement would not obligate non-union contractors to use union workers but to pay any involved trades union-scale wages, he said.

Rod Raymond, one of the principal partners of the development team, said that all of the DEDA money proposed for the project would be used to hire union tradespeople, but contracts had already been signed committing him to use other non-union contractors. He said part of the problem is that the project was already under way when he learned of prevailing wage issues.

Dan Olson, business manager for Laborers Local 1091 in Duluth, said the project couldn’t be divided into pieces and should be considered as a whole. He also said Raymond and his business partner, Tim Nelson, have been in business long enough that they should be familiar with the city’s requirement that public funds be used only for projects that pay prevailing wages.

Raymond said he’s willing to talk in hopes of reaching a compromise. If the BID grant is denied, Raymond said he probably will have to walk away from the blighted Carlson Book building as well.

“If this doesn’t happen, the citizens of Duluth, the trades and everyone loses,” he said.

Assistant City Attorney Bob Asleson said that after reviewing city code he found no clear requirement that developers receiving DEDA money be required to pay prevailing wages to construction workers.

The city, however, does have such a requirement, and all the BID grants authorized by DEDA on Wednesday will require approval from the Duluth City Council before any money can flow.

The council is expected to take up the four grants on May 9, and Councilor Jeff Anderson, who also serves on DEDA, said he would support sending the grant forward with the understanding that Old City Hall LLC and the trades will continue talks in the meantime.

“I hope the developer and the trades can meet before then and come to agreement,” he said.

Councilor Todd Fedora, who also serves on DEDA, advised Nelson to make peace with local labor representatives.

“If you and Rod can’t get on the same page as the trades, your project is not going to get done,” he told Nelson.

City Councilor Tony Cuneo expressed discomfort with the idea of using public money for a project that didn’t pay prevailing wages but supported it nevertheless.

“The reality is that this isn’t a done deal until the council approves it anyway,” he said. “This is a project I want to see happen, so I don’t want to vote ‘no.’”

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