06-042-O                                                          REPLACEMENT

ORDINANCE NO. __________




The city of Duluth does ordain:

     Section 1. That Duluth City Code, 1959, as amended, be amended by adding a new Section 2-28 to read as follows:

     Sec. 2-28. Labor agreements in hotel/restaurant development projects.

     (a)  The city council finds that when the city involves itself as an owner, lessor, guarantor, pledger, investor, or contributor to a development project that involves construction or operation of a hotel or restaurant business the city has an ongoing proprietary interest in the development and therefore has a direct interest in its financial performance. In such situations, the city must make precedent management decisions to protect the project. One of those decisions is whether and how to protect against conflict between management and organized labor. This section sets forth the city’s policy in that regard. Because the tourism industry is vital to the city’s economic state, and because some labor organizing campaigns can disrupt or delay development and construction and obstruct normal business operation, it is for the protection of the industry and the city’s proprietary interests that this section is enacted. The purpose of this section is to protect the city’s proprietary interests in certain narrowly prescribed circumstances where the city commits its economic resources and its proprietary interests are put at risk by the potential for some types of labor-management conflict;

     (b)  This section is subject to any applicable federal or state regulation. If any part of this section is affected by state, federal, or judicial action, the remainder of it shall continue in full force and effect;

     (c)  Definitions.

           (1)  Hotel/restaurant development project means a business development which includes, or is planned to include, construction or operation of a hotel or restaurant, and in which project the city has an ongoing proprietary interest, as set out herein;

           (2)  City protection agreement means a written agreement between an employer and a labor organization that provides, at a minimum, the following:

                 (A)  Employee preference regarding whether to be represented by a labor organization for collective bargaining, and if so, by which labor organization shall be determined based on signed authorization cards in a card check procedure conducted by a neutral third party in lieu of a formal election;

                 (B)  The employer and the labor organization shall at all times refrain from the use of intimidation, reprisal or threats of reprisal, or other conduct designed to intimidate or coerce employees to influence the decision by employees whether to join or be represented by any labor organization;

                 (C)  Signatory labor organizations shall forbear from taking economic action, such as striking or picketing, against the signatory employer at the worksite of an organizing drive covered by this section, so long as the employer complies with the terms of the agreement. The employer and labor organization may incorporate additional consistent provisions to protect the city’s/agency’s proprietary interest if they so agree;

           (3)  Proprietary interest means an interest in a hotel/restaurant development project where the city administration determines, on a case-by-case basis, that one or more of the following conditions are met:

                 (A)  That the city, as property owner, receives ongoing revenue such as rent payments under a lease of real property owned by the city for the development of a project, excluding government fees or tax or assessment revenues, or the like, except for tax revenues exempted herein;

                 (B)  That the city receives ongoing revenue from a project to repay loans provided by the city to assist the development of said project, including incremental tax revenues generated by the project and used, directly or indirectly, to repay the loan by the city where the proceeds are used for development of that project;

                 (C)  That the city receives ongoing revenue from a project to pay debt service on bonds provided by the city to assist the development of said project, including incremental tax revenues generated by the project and used, directly or indirectly, to pay debt service on bonds by the city where the proceeds are used for development of the project;

                 (D)  That the city has significant assets at risk because it has agreed to underwrite or guarantee the development of a project, or loans related thereto;

                 (E)  That the city has a significant ongoing economic and nonregulatory interest at risk in the financial service of a project which is likely to be adversely affected by labor/management conflict resulting from a union organizing campaign, except that no interest shall be considered “economic and nonregulatory” if it arises from the exercise of regulatory or police powers such as taxation (except as set forth above), zoning, or the issuance of permits or licenses;

           (4)  Employer means any person, corporation, company, association, limited or general partnership, joint venture, contractor, subcontractor, or other entity who employs individuals at the site of a development project, and whose ongoing economic performance and potential for labor/management conflict can affect the city’s proprietary interest, including, but not limited to commercial, retail, hospitality, or services enterprises in a development project;

           (5)  Contract means a lease, management agreement, service agreement, development agreement, loan, bond, guarantee, or similar agreement to which the city is a party and in which the city has a proprietary interest;

           (6)  City means the city of Duluth, Minnesota;

     (d)  Regulation.

           (1)  Duty of city. On any hotel/restaurant development project in which the city participates or has a financial interest, the city administration shall determine, whether employers on the project are required to enter into a proprietary interest protection agreement (hereinafter “agreement”). All such determinations shall be made on a case-by-case basis pursuant to the standards articulated in the definition in this section, subject to the exemptions set forth below. Such determination shall be made in all cases as a necessary precondition of the city’s participation in a development project;

           (2)  When agreements required. A proprietary interest protection agreement shall be required where the city determines that the city has a proprietary interest at risk in a hotel/restaurant development project pursuant to the definition set forth in this section;

           (3)  Contracts. Where the city determines that a proprietary interest protection agreement is required on a development project, any city contract must include a provision requiring any employer on said project to enter into said agreement as essential consideration for the city entering into the contract;

           (4)  Requests for proposal. Any request for proposal or invitation to bid or similar document regarding a city development project must include in such document a reference to the policy and requirements of this ordinance. Failure to include reference to this ordinance in a request for proposal or similar document shall not exempt any employer otherwise subject to the requirements of this ordinance;

           (5)  Scope. The requirements of this section apply only to the procedures for determining employee preference regarding whether to be represented by a labor organization for purposes of collective bargaining and/or by which labor organization to be represented. Nothing in this ordinance requires an employer to recognize a particular labor organization. Nor does any provision of this ordinance require that an employer enter into a collective bargaining agreement establishing the substantive terms and conditions of employment;

     (e)  Exemptions. The requirements of this section shall not apply to:

           (1)  Employers employing fewer than the equivalent of eight (8) full-time or part-time employees at the site of the development project;

           (2)  Any employer signatory to a valid and binding collective bargaining agreement covering the terms and conditions of employment for its employees at that development project, or which has entered into an agreement with a labor organization regarding such employees which agreement provides for a procedure for determining collective bargaining units;

           (3)  Any development project where the city administration determines that the risk to the city’s financial or other nonregulatory interest resulting from labor/management conflict is so minimal or speculative as not to warrant concern for the city’s investment or other nonregulatory interest;

           (4)  Any development project that receives less than $50,000 of assistance from the city;

           (5)  Any residential development project;

           (6)  Any multi-tenanted development project that is built on a speculative basis;

           (7)  Any development project that receives only conduit bond financing from the city;

           (8)  Any development project in which the city, by contract approved by the council, became a participant before November 15, 2006.

     Section 2. That this ordinance shall take effect 30 days after its passage and publication.

STATEMENT OF PURPOSE:  This ordinance requires a certain method of having workers determine whether they wish to form a union and/or be represented by a particular union. That method is by individuals submitting signed notices that report a preference. These are then counted. The ordinance applies to hotel/restaurant projects, and there are various limits and exemptions. Currently, such matters are decided by an election or hearing conducted by state or federal government.