CLEVELAND, Ohio – Public-financing commitments for the nuCLEus project are stalled due to a disagreement over how much the project’s construction workers should be paid, according to multiple sources.

The final pieces of the ambitious project’s financing appeared to be coming together late last month when the city announced it was considering granting a $12 million forgivable loan to the project. The project’s capital stack is a mixture of private debt, equity, and more than $40 million in prospective contributions from the state, Cuyahoga County and the city, according to city documents.

The city, however, has now hit pause on legislation related to the $12 million loan. It was taken off the agenda of a recent committee meeting, and two city council members confirmed discussions are on hold for now. The developer, Stark Enterprises, declined to comment on the delay.

At issue is Stark’s request for an exemption from paying prevailing wages to workers on the project. Prevailing-wage laws require that construction workers on certain public projects receive wages and benefits in line with the region’s standards. While not required by law for private projects, some public entities require prevailing wage as a matter of policy if they are participating financially.

Among those entities is the quasi-public Cleveland-Cuyahoga County Port Authority. Representatives of the nuCLEus project went to the port earlier this month with a proposal for a financing partnership. Stark requested the port exempt it from paying sales tax on construction materials, an incentive the port offers to certain projects. Stark also asked for an exemption from the port’s prevailing-wage policy; the port’s board denied the request, voting that the agency would not consider any prevailing-wage exemptions on projects it finances.

“We require 100% prevailing wage for all projects we construct, with no exemption,” said Jade Davis, vice president of external affairs for the port, noting a policy approved in October. “That’s where the port board is at right now. Unless that changes, that’s going to be the structure.”

A prevailing wage, according to Affiliated Construction Trades Ohio for 2018-2019, ranges between the base of $25-$26 per hour for a laborer to about $44 per base hour for an elevator mechanic. (See all 2018-2019 prevailing wages listed by the construction trade organization for Cuyahoga County.)

It is unclear if Stark will continue to pursue a financing partnership with the port. The developer withdrew a request that was slated to be on the agenda at the port’s board meeting last week. “As of now, we are awaiting word of if [the] nuCLEus project will be utilizing port financing,” Davis said.

The wage issue also is proving to be a sticking point with the city. Cleveland City Council President Kevin Kelley said a prevailing-wage exemption on the project would likely be a non-starter for council.

“We were all kind of queued up and ready to go,” he said, referring to the loan legislation, which was jointly announced April 29 by Kelley, Ward 3 Councilman Kerry McCormack and Mayor Frank Jackson.

But, council then got wind of Stark’s request of the port authority. “That caused a problem for us, because it’s not going to be a small lift to get it done in the first place, but I certainly can’t get it done with the labor dispute in the middle,” Kelley said.

Although there is no city requirement that would apply in this case, Kelley said the size of the project makes prevailing wage a priority. “I think we very much want to be partners in development. We want a project of this size,” he said. “We just want to make sure everybody is paid fairly and everybody does well by this.”

McCormack, whose ward includes downtown, said a prevailing-wage exemption would be problematic for him, too.

“It would be an issue for me. There’s a reason that prevailing wage is important when it comes to ensuring that we get a high-quality product out of our labor,” he said. “I’m just hoping that this all gets worked out and we can move forward.”

The city previously committed to granting $360,000 in Vacant Property Initiative loans, as well as non-school tax increment financing estimated to be worth $19 million. The county and the state are considering contributing $6 million each, according to city documents on the project. In all, the project is slated to cost more than $350 million. It will add two 24-story towers on what is now a surface parking lot in downtown’s Gateway District.

The press office for the Jackson administration did not respond by press time to a request to interview the city’s economic development director, but a summary from a recent meeting of the Cleveland Citywide Development Corp.'s board of trustees indicates the administration cares about the issue, too. While it has not been finalized and would require a vote, prevailing wage is listed as a requirement for city financing assistance in a presentation on the nuCLEus project by city economic development staff (scroll to the bottom of the page to read the document).

Key to finding a resolution are ongoing discussions between the developer and the Cleveland Building & Construction Trades Council, an alliance of craft unions. David Wondolowski, the council’s executive secretary, confirmed that he is in talks with project representatives. “They’re telling me that the project doesn’t pencil,” he said. “You’ve either got enough money to build it or you don’t.”

Wondolowski (who also serves on the port authority’s board of directors) said the trades council is in favor of economic development and will do what it can “to work with our contractors and bring competitive quotes and work with Stark to build the project.”

Ultimately, though, the only viable resolution from his standpoint is Stark agreeing to pay prevailing wage–and he is confident the public financing partners the project needs to bring on board feel the same way.

“We’re hopeful that the project will go [forward],” he said. “We are committed to building the project for [Stark] with local contractors. But, with the amount of public investment in the project ... we believe [Stark] should pay the prevailing wage.”

He added: “I have a great deal of respect for Stark Enterprises. I think they’ve done a lot of great projects here in the area. I really respect the people who work there, and I respect [President and CEO] Bob Stark personally, but at the end of the day, if you want the assistance from the public to build your building, you have to pay it forward in terms of good wages.”

Stark has said it would like to begin construction this summer. The project will feature about 80,000 square feet of retail space, a six-floor parking garage, about 250 residential units and 400,000 square feet of office space, with Benesch law firm signed on as the office component’s anchor tenant.