Rockford aldermen vote Monday, July 10, 2023, on whether to approve a redevelopment deal with J. Jeffers & Co. for Barber-Colman. Building No. 5, at Rock and Loomis streets, would be the first to be renovated. (Photo by Kevin Haas/Rock River Current)

By Kevin Haas
Rock River Current
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ROCKFORD — City Council members on Monday voted to require developers behind the massive Barber-Colman restoration to cement a deal with organized labor as a condition of a financial package meant to spur the $420 million redevelopment.

The vote came with warnings from City Hall that such a requirement could kill the development, and a final vote on the project has now been put on hold indefinitely.

Aldermen voted 7-6 to require a project labor agreement as part of the city’s redevelopment deal with J. Jeffers & Co., a Milwaukee-based company that specializes in historic redevelopment projects. City Council members Aprel Prunty, Bill Rose, Jeff Bailey, Gabrielle Torina, Gina Meeks and Tim Durkee voted against the requirement. Alderwoman Janessa Wilkins was absent after a family emergency.

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The vote happened after a nearly 1 hour and 40 minute debate that was contentious at times as aldermen sparred over requiring a labor agreement in a redevelopment deal for the first time.

Alderman Jonathan Logemann brought forward the proposal for requiring a project labor agreement that was “acceptable to the Northwestern Illinois Building Trades Union.” It was given a second by Alderman Mark Bonne.

After the vote in favor off the labor deal, Mayor Tom McNamara decided to hold out a vote on the overall deal from the agenda. It’s unclear when a final vote will go forward.

“It’s held out until or if we can bring back,” McNamara said. “We’ll do everything we can, but aldermen knew what they did tonight.

“We were given new rules tonight, a new precedent was set and we’ll work with what we got.”

Proponents of requiring the labor deal say it ensures skilled workers will handle construction, making the construction site safer. They say it also keeps work local and curtails potential work stoppages and keeps the project on budget.

“I want this project to be local and regional workers, working on a project that transforms Rockford,” Logemann said on the council floor.

He said he doesn’t believe the developer is going to walk away from the deal because of the labor requirement.

“I’ve heard the developer will walk if we don’t approve this, as is, right now,” Logemann said. “I used a quote earlier, I stand by it, that this is a hostage situation.”

Those against the measure, however, say it threatens to kill the project outright by adding unknown time and costs to the development. They also argue it will prevent the developer from meeting its commitment to hiring a significant number of minority-owned and women-owned contractors. They also said mandating a labor agreement would strip developers of negotiating power with the unions because the project could not move forward without union permission.

“The developer is not anti-union. The developer is not anti-PLA,” City Administrator Todd Cagnoni said. “But if it’s mandated, it does become a one-sided discussion.”

Developers have said the private institutions financing the project have already agreed to term sheets that don’t take a labor agreement into account. They fear those term sheets could be pulled with a deal in place.

“We are in uncertain times. Will the Fed raise the interest rates two more points,” Durkee said. “A couple more points and to tell you the truth with margins on some construction projects, it could kill stuff. … This developer has to navigate some very shaky waters, and this developer is the one that’s taking the risk.”

Union supporters display signs that read “Rockford deserves a PLA” while supporters of the overall project hold signs that say “vote yes for Colman” on Monday, July 10, 2023, at Rockford City Hall City Council Chambers. (Photo by Kevin Haas/Rock River Current)

Ald. Chad Tuneberg said the project labor agreement should have been hashed out before the redevelopment deal was presented to council. Others contend that those deals can take years and have previously, such as in the redevelopment of the Embassy Suites Rockford Riverfront Hotel, happened without being required as part of the city’s negotiations.

“We are all rooting for this project to happen, we would like to see it happen and we would like it to be successful,” Tuneberg said. “What stands there now is absolutely unacceptable. It’s unacceptable as one of our gateways into the city.”

Rose, a Democrat who represents the 9th Ward, said Republicans voting in favor of the project labor agreement weren’t doing so because they are union supporters. Instead, he said they’re just trying to kill the project.

“You guys know it. You know that the potential to lose this project is huge,” Rose said. “You don’t want it. So vote for the PLA.”

Alderman Kevin Frost, a Republican who represents the 4th Ward, said in an interview after the meeting that’s not the case. He feels the project labor agreement is needed for the development.

“I would like to see the folks get back to the table and work it out so we don’t have this issue,” Frost said. “I hope J. Jeffers doesn’t walk away. I hope this can be reconsidered and we can do what’s best for the whole city.”

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Torina, who represents the 5th Ward where the factory sits, said aldermen would never allow a blighted factory to sit this long with nothing done in other parts of the city.

“If we really want to attract people here, the most prominent structure you see upon exiting U.S. 20 cannot be a mangy campus of buildings that represents division, pain and local leadership that don’t make good decisions,” Torina said.

Torina said aldermen need to move the project forward so the city’s progress isn’t stifled.

“Do not allow this abandoned structure that has perpetually haunted our city continue to serve as a reminder and a mockery of what we as a council will not do,” she said.

The deal between the city and the developer has been in the works for more than two years after J. Jeffers expressed interest in the 26-acre site that has been vacant for more than two decades. The company would buy the site for $500,000 as part of its agreement with the city.

The city, meanwhile, would provide a $6 million cash advance and two no-interest loans totaling $10.25 million. The city would also reimburse $3.5 million in infrastructure costs, $1.5 million of which comes from city water funds with the rest coming from federal American Rescue Plan dollars.

Demolition is estimated at $16 million to $19 million to tear down the blighted structure along South Main Street if the redevelopment doesn’t go forward.

Colman Yards is the name of the future mixed-use development planned for the Barber-Colman complex in south Rockford. (Illustration via J. Jeffers Co.)

The deal also lays out other state and federal financial sources for J. Jeffers to tap, including $26.5 million in equity from state historic tax credits, $20.7 million from federal historic tax credits, a $4 million state grant and a $6.5 million loan from the U.S. Environmental Protection Agency’s revolving loan fund.

The deal with the city focuses on the initial $170 million first phase of construction, when nine long vacant historic buildings along South Main and Loomis streets will be transformed into 334 apartments and 105,000 square feet of commercial space. A new 336-space parking deck will also be built.

Construction would begin on Phase 1A late this summer if approved and be complete in late 2024. Phase 1B is scheduled to begin in January 2025.

The total project will create 964 living units and roughly 130,000 square feet of commercial space over about a decade. Rent for the units is expected to range from around $1,000 for a studio to upwards of $2,000 for a townhome.

Supporters of the project labor agreement said it doesn’t mean the project must have 100% union labor. However, those non-union companies that sign on to the contract would have to abide by the agreement.

Bonne contended that labor leaders say they can meet the requirements for diverse workers. City Hall has previously said at least 70% of the project would go to union labor with the other amount potentially going to minority- and women-owned contractors.

He said aldermen had to decide who they believe — the developer or labor leaders — on whether the diversity goals could be met.

“If you choose to believe the out-of-state developer that minority hiring goals cannot be met from our local workforce, you support sending those wages out of Rockford and very likely out of state,” Bonne said. “That greatly diminishes the potential impact of this project.”

Alderwoman Karen Hoffman, a Democrat who represents the 8th Ward, said she believes strongly in the Barber-Colman project. She said she voted in favor of the labor agreement because she heard the reason for not having it was the need for “cheap labor.” However, the developer has already agreed to pay prevailing wages, the state-mandated pay on public projects that are typically union rates. That rate would be paid to workers whether or not they’re in a union.

Torina said in what functioned as a closing argument before council that if the project doesn’t move forward it will have a ripple effect that discourages future investment in the city.

“The immensity of this project being terminated for all the wrong reasons will have profound consequences,” Torina said. “Requiring a project labor agreement at this juncture, inadvertently ties the city’s hands in a way that is not only detrimental to this project, but also disrupts opportunities and the likelihood that other developers will come forward with future proposals.”

How they voted on the PLA

Here’s how aldermen voted on the requirement of a Project Labor Agreement to be included in the redevelopment deal for Barber-Colman.

For PLA: Jonathan Logemann, Chad Tuneberg, Karen Hoffman, Mark Bonne, Kevin Frost, Frank Beach, Isidro Barrios

Against PLA: Aprel Prunty, Bill Rose, Jeff Bailey, Gabrielle Torina, Tim Durkee, Gina Meeks

Absent: Janessa Wilkins

Breaking down the deal

Here’s a look at the city’s financial obligations in the overall redevelopment deal. 

New TIF District: The city will create a new tax-increment finance district that will expire in 2046, and it will reimburse 100% of the money generated by the TIF by the initial phase of construction.

$6M advance: The city will provide a $6 million advance from the TIF fund. This will be debt in that fund until the TIF generates enough money to repay it.

$7.25M loan: The city will provide a $7,250,000 no-interest loan to be repaid over 17 years starting Feb. 1, 2030.

$3.5M in infrastructure: The city will reimburse $3,500,000 in public infrastructure costs with $1.5 million coming from its water fund and the other $2 million coming from federal American Rescue Plan dollars.

$6.5M revolving loan: The city will provide the developer with $6,500,000 from the U.S. Environmental Protection Agency’s revolving loan fund. It is a no-interest loan that must be repaid in 15 years.

$2M settlement funding: The city will provide $2,000,000 from an environmental settlement a previous occupant of Barber-Colman.

$4M state grant: The city has secured a $4,000,000 Illinois Department of Commerce and Economic Opportunity grant through state Rep. Maurice West that will be provided to the developer.

$500K permit credit: The city will provide a $500,000 credit toward building permits in the first phase of construction. The estimated cost the developer will pay in those permits is $1.5 million, resulting in $1 million net building permit revenue for the city.

$3M loan: The city will provide another $3 million loan at the start of Phase 1B. That no-interest loan will also be repaid Feb. 1, 2030, to Feb. 1, 2047.

90% reimburse: The city will reimburse 90% of the revenue generated in the TIF district during the second phase of construction. The remaining 10% will go back into the TIF fund for other eligible expenses.

This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on Twitter at @KevinMHaas or Instagram @thekevinhaas and Threads @thekevinhaas