‘Associated Builders and Contractors’ Calls Out City of Duluth for Losing Costco Development

DULUTH, Minn. – Costco no longer plans to build a long-awaited store in Duluth.

The company was planning to build near the intersection of Haines Road and West Arrowhead Road.

The real estate agent working on the project said Costco had issues with the city’s Project Labor Agreement (PLA) as well as with rising costs associated with the project.

The city’s PLA was unanimously passed by the city council in 2018. It mandates that any project getting taxpayer money or assistance must use all union labor.

Now, in a letter to Mayor Emily Larson and city councilors, the Associated Builders and Contractors of Minnesota and North Dakota is asking the city to get rid of the PLA, saying it discriminates against workers who choose to not join a union, and that it can drive up costs for developers.

“You get fewer contractors bidding on these projects which, when there are fewer bidders, there’s less competition, and costs can increase,” said Adam Hanson, Director of Government Affairs for the Associated Builders and Contractors.

City councilor Arik Forsman disagrees. He tells us the PLA is important for Duluth taxpayers to get the best bang for their buck on all developments getting government funding.

“If a company isn’t asking the city for either tax abatement or tax increment financing, they’re under no obligation to use a project labor agreement,” explained Forsman.

He says many factors go into a development like Costco choosing to build in Duluth, and that the existence of a PLA was likely not the determining factor in Costco deciding against the project.

“You’ve got to look at is the site shovel ready? Are there issues like wetlands that need to be mitigated on it, and what’s the environmental permitting process? This particular site, from what I’ve heard, has challenges. And that’s probably the reason it has never been developed to this point,” said Forsman.

Other city officials agree. City of Duluth Chief Administrative Officer Noah Schuchman released the following statement:

“On a large development, there are multiple factors that go into whether or not the project is viable. Community benefit and project labor agreements are required by ordinance for a certain level of financial assistance from the City of Duluth and passed the city council unanimously, reflecting the City of Duluth and the community’s values. There are more than a dozen projects that are currently successfully working in accordance with this policy. The City of Duluth worked in good faith with Costco and remains hopeful of a successful development in the city of Duluth.”

Duluth Mayor Emily Larson did not respond to our requests for comment on this story.

Meanwhile, city councilor Derek Medved believes the PLA is important to protect local unions but thinks the council should look at ways it can be improved.

“Let’s look at it. Let’s really understand the intent here. Can we improve it? Can we really make a change to this PLA to encourage Costco to come back maybe and change future projects,” said Medved.

Medved, Forsman, and other city leaders haven’t given up on bringing Costco to Duluth. They’re focused on making the city’s officer to the retail company the best it can be to attract the development.

“Costco, we love you,” said Medved. “Come back, we want to have a discussion, and we’re more than willing to open up any discussion and make it work.”

There has been talking of Costco choosing to make Hermantown it’s next home instead.

The Hermantown Area Chamber of Commerce tells us they’re not aware of any talks between that city and Costco, but add that Hermantown is open for business.