Reform #7: Negotiate Community Benefits Agreements with Developers
Improving the quality of life in cities is often touted as one of the goals of economic development, but development projects often produce few tangible benefits for local residents. Many cities have embraced a development strategy that involves investing large public subsidies in big-ticket items such as new stadiums, entertainment districts, and convention centers in downtown areas. While these projects may increase entertainment and tourism spending in one part of town, the benefits don't always reach out into neighborhoods. Such developments often create low-wage jobs while pushing up housing prices, forcing long-time residents from the area.
The community benefits movement is founded on the premise that economic development should create tangible improvements for local residents, particularly those in low-income neighborhoods. Community benefits agreements (CBAs) are legally enforceable contracts, signed by community groups and by a developer, which spell out a set of community benefits that the developer has committed to provide as part of a development project.
Pioneered by a coalition of labor, community, and faith-based organizations in Los Angeles, CBAs give community groups a voice in shaping projects, enable them to press for project benefits that match local needs, and give them the legal authority to enforce developers' promises. CBAs differ from the other reforms we recommend because rather than being legislative -- that is, passed by a legislature at the state or local level and applied to all projects subsidized under a particular program or in a jurisdiction --CBAs are legal agreements between two private parties (the developer and community coalition) negotiated individually for a specific project.
How CBAs are negotiated
Typically, CBAs are negotiated between the project developer and a coalition representing a broad range of community members. The community coalition includes residents from the area impacted by the development; community organizations such as affordable housing, environmental, and immigrants' rights groups; and members of faith-based organizations.
Labor unions representing janitors, hotel workers, clerical workers, and in some cases the building trades have also played central roles in nearly every successful CBA campaign. Because CBAs are contracts, community coalitions also need an attorney, and often will work with other advisors who can offer additional types of assistance.
CBAs are negotiated before a development goes to the city for approval. This allows community members to have input early in the planning process, and it also provides the coalition with the leverage to keep developers at the table. Before breaking ground, a development project typically has to cross several hurdles such as applying for subsidies, zoning changes, and building permits. Most of these approvals have a public input process, which organized communities can use to block a project or push for amendments. But with a signed CBA, the developer goes to the city for approval with the full support of the coalition in those public hearings.
After a CBA is signed by the developer and community coalition, it is typically integrated into the development agreement signed by the developer and the city or county government. This makes the agreement enforceable both by local officials and by community groups.
The benefits created through a CBA can vary as widely as the needs of communities. Components are determined by the size and type of development, the needs and creativity of the community, and the relative bargaining power of the developer and the coalition members.
Employment opportunities are often a major focus of CBAs. Agreements typically include first-source hiring provisions that give local residents the first chance to qualify for new jobs. CBAs may also set aside funds to create or enhance training and job-readiness programs to prepare local residents for the new jobs in advance of the project's completion. CBAs also focus on job quality, so they include requirements that many of the jobs pay above a certain wage and provide health benefits; these job quality standards may be tied to a local living wage ordinance.
If a project will demolish housing or otherwise create housing needs, a CBA may include a provision whereby the developer creates affordable housing, either within the project or through financial support for a local affordable housing corporation.
CBAs may also set aside space or funding for services the community desires, such as a day care center or a healthcare clinic. It may include a provision that increases the likelihood that local merchants -- instead of national retail chains -- occupy rented retail space. Developers may agree to provide public space and environmental benefits, such as money for the purchase or improvements of parks, traffic management, restrictions on truck idling, and even roofing designs to reduce "heat island" effects.
CBAs can include benefits provided both by a project's developer and by its future tenants. Some of the benefits may be integrated directly into the development itself, like public space, while others may be funded by the developer but executed outside the development, such as seed funding for the development of affordable housing.
Coalitions in several cities, including Los Angeles, Milwaukee, and Denver, have waged successful CBA campaigns. These efforts, involving widely disparate projects such as the redevelopment of a large brownfield and the reuse of land freed up by the demolition of two massive freeway ramps, demonstrate the flexibility of the community benefits framework.
The CBA negotiated around the expansion of Los Angeles' Staples Center sports arena in 2001 is widely viewed as the exemplary CBA model. The initial phase of the development, which included the arena itself, had been pushed through with little community input, and the results frustrated both local residents and project employees. More than 250 residents, most of them low-income Latino immigrants, were displaced from their homes for the construction of the parking lot. The residents who remained were beset with a traffic and parking nightmare, nighttime noise, and drunk drivers. The developer tried to renege on a promise to transfer long-time arena employees to the new facility at their current wage rates, and the unions had to stage a campaign to pressure the developer to keep its word.
The next phase of the development was slated to add a 45-story hotel; a 7,000 seat theater for musicals, concerts, and award shows; restaurants, nightclubs, and retailing around a plaza; a 250,000 square-foot expansion of the Convention Center; two apartment buildings with a total of 800 units; and a second, smaller hotel.
When the developers began planning the second phase, the community was ready. A diverse coalition of over 30 organizations, many of which had been active in the living wage campaign a few years earlier, came together to craft a list of the benefits they wanted the project to create. Strategic Action for a Just Economy (SAJE) coordinated the work of bringing groups on board and organized over 300 local tenants. These tenants formed the grassroots base that played a key role in winning the agreement and shaped the benefits to meet their needs. Los Angeles Alliance for a New Economy (LAANE) was instrumental in building union support.
In May of 2001, after nine months of negotiations, the developers and the coalition signed a landmark contract. The developers agreed to:
- implement a first source hiring policy targeting residents displaced by the development and low-income individuals living near the development and elsewhere in the city
- allocate $100,000 in seed money for community groups to develop specialized job training and notification programs
- include public open space in the development
- provide $1 million for the creation and improvement of parks within one mile of the development, to be spent with community input
- create a residential street parking permit system, to be financed by the developers for the first five years
- construct between 100 and 160 affordable housing units, equal to 20 percent of the total project, that are affordable for families earning below 50, 60, and 80 percent of the area's median income
- make $650,000 in interest-free loans available to local nonprofit housing developers
- notify the coalition 45 days before signing lease agreements, giving the community time to investigate and react to potential tenants
- set a goal that 70 percent of the 5,500 permanent jobs generated by the project pay a living wage or be covered by a collective bargaining agreement
The agreement remains legally binding even if the property passes to new owners. The developers also signed separate card check/neutrality agreements with five unions and agreed to abide by the city's worker retention ordinance.
Because CBAs cut across such a broad range of issues – including living wages and workforce development, community and economic development, affordable housing, smart growth and livability, and environmental protection – they are an excellent focus for organizing strong, diverse coalitions among groups that may not typically work together.
Successful CBA campaigns require more than a long list of coalition members, however. An effective CBA campaign must have an organized power base of community members who can make developers and public officials take note. Once a CBA is signed, the coalition must stay involved in the development process to hold developers accountable for implementation. Often coalition members themselves may have key roles to play in implementing local hiring or job training programs agreed to in the CBA. All of this requires an organizing approach to the campaign and long-term commitments from coalition groups.
While CBA campaigns will necessarily involve balancing a coalition's wish list with the benefits the developer is willing or able to provide, it is important that every CBA set a strong precedent by providing an enforceable set of community benefits commensurate to the project and reflective of community wishes. The risk of weak precedents is that developers may come to see CBAs as a rubber stamp of community approval that will make their projects look good in the public eye, without producing any real benefits for community residents. It is difficult for community groups to amend or strengthen the agreement at a later date, since by signing the CBA community coalitions must concede one of their most powerful weapons -- the ability to oppose a developer's proposal when it goes before the city council. Once this power is gone and the deal is approved, community coalitions have much less clout.
Information for this section was drawn from the following two documents:
Julian Gross with Greg LeRoy and Madeline Janis-Aparicio, Community Benefits Agreements: Making Development Projects Accountable, May 2005, online at http://www.goodjobsfirst.org/sites/default/files/docs/pdf/cba2005final.pdf
Greg LeRoy and Anna Purinton, "Community Benefits Agreements: Ensuring that Urban Redevelopment Benefits Everyone," Neighborhood Funders Group issue brief, August 2005.
The Partnership for Working Families (www.communitybenefits.org) serves as a resource for CBA campaigns nationwide.