Detroit's Community Benefits Ordinance
This November, Detroit approved a ballot measure backed by local union and business groups that require developers of major projects to engage residents to negotiate jobs, affordable housing or other benefits, according to unofficial election results. Such a law, known as a Community Benefits Ordinance, is rare for major cities. Prior to the CBO, community groups in Detroit have been left on their own to exert public pressure or leverage political alliances to get a seat at the bargaining table before developments are approved.
The ballot measure included two plans: Proposal A and Proposal B. Both proposals required developers with major investments or who seek certain tax subsidies to provide community benefits, such as job opportunities or affordable housing.But the proposals differed on enforcement, levels of investment and city involvement.
Voters rejected — Proposal A, a grassroots plan that would have further increased the benefits to residents. The prevailing version, Proposal B, which was earlier approved by Detroit’s City Council, won out in the vote. The dueling proposals laid out a different city law to give Detroit residents a role in negotiating new housing or commercial development projects.The proposals laid out a path for local community groups to discuss jobs, affordable housing or other concerns when developers pitch new projects that include city tax breaks.
The new ordinance makes Detroit the first city in the nation with such a sweeping requirement. The prevailing proposal, Proposal B offers a much higher project development threshold of $75 million compared to the $15 million offered by Proposal A with the rationale that a $15 million development project is not big enough to expect any developer to put up with in addition to all other existing hurdles.Proposal B also allows participation from city elected officials in the negotiation process between neighborhood groups and developers, whereas Proposal A shutout participation from city officials – elected or otherwise – altogether.
Although a Community Benefits Ordinance is a newer concept, cities have negotiated contracts on behalf of communities for new development often referred to as a Community Benefits Agreement ("CBA"). CBA’s are contracts signed by community groups and a real estate developer that requires the developer to provide specific amenities and/or mitigations to the local community or neighborhood. In exchange, the community groups agree to publicly support the project, or at least not oppose it.
Often, negotiating a CBA relies heavily upon the formation of a multi-issue, broad based community coalition including community, environmental, faith-based and labor organizations.The community benefits movement began in Los Angeles, with implementation at mixed-use projects at Hollywood and Highland, and Staples Center / LA Live. It has since spread rapidly to other cities, including Atlanta, Denver, Milwaukee, Minneapolis, New Haven, New York City, Philadelphia, Pittsburgh, San Diego, San Francisco, San Jose, Seattle, Syracuse, Washington, D.C., and Wilmington.
In 2008, the One Hill Coalition, representing the Hill District neighborhood in Pittsburgh, brokered the city’s first CBA with the developers and operators of the Pittsburgh Penguins. In exchange for supporting a new arena for the hockey team, the agreement provided $8.3 million in neighborhood improvements and set benchmarks for local hiring, livable wages and protections for workers to organize. The agreement also called for the development of a grocery store and youth center. Although, it has been viewed as a success by in many, several community members felt like the agreement, crafted with very little input from area residents, was paving the way for yet another urban planning disaster.
Although cities have negotiated several successful CBAs, a Community Benefits Ordinance would create a framework for developers to follow. By approving the Ordinance, residents of a city will have a seat at the table when large scale development using public resources takes place in their city.
Many consider these types of agreements beneficial for community development, however opposers to CBAs and CBOs argue that requiring developers to incorporate certain community benefits deters development, gives too much control of real estate projects, and adds unnecessary delays in an already time-intensive business.
To learn more about Detroit's CBO Proposal A and Proposal B click here.