Community benefits agreements

What is a CBA? Community Benefits Agreements are deals between developers and coalitions of community organizations, addressing a broad range of community needs. It is also a legally enforceable contract, signed by community groups and by a developer, setting forth a range of community benefits that the developer agrees to provide as part of a development project.

----How were previous dealings handled before CBA’s were implemented? While economic development projects are often heavily subsidized by taxpayer dollars, they produce decidedly mixed results for city dwellers. While many of these projects bring sorely needed jobs and tax revenues back to areas that have been disinvested, there is usually no guarantee that the “ripple effects” of the project will benefit current residents. Many developments cause inner-city gentrification, pushing out low-income residents as housing prices rise. Other projects create large numbers of dead-end low-wage retail and service sector jobs, leaving low income, families, mostly of color, mired in an endless cycle of poverty. Even after investing billions of dollars in economic development, metropolitan regions continue to experience spiraling poverty, sprawling, unplanned growth, a crisis of unaffordable housing and declining quality of life for low and middle, income communities.

Why is there a movement towards CBA’s? Local governments have begun to grapple with their responsibility to shape development and land use patterns. In order to solve some of these issues they have adopted CBA’s because they feel the main purpose of economic development is to bring measurable, permanent improvements to the lives of affected residents, particularly those in low-income neighborhoods. The new movement is pressuring the public sector to play a more strategic role in land use planning and urban growth, in order to leverage its multibillion dollar investment in the private sector towards creation of good jobs, affordable housing, and neighborhood services that improve the quality of life for all residents.

What is the best way to achieve a CBA? A community group’s ability to win a CBA is directly related to how much power it has organized.

----When should a CBA be negotiated? A CBA is negotiated by community groups and the developer before the development agreement is executed by the developer and the government. The development agreement negotiations may be going on while the CBA is also being negotiated, but the CBA needs to be finalized before hand.

Who should negotiate a CBA? CBA’s are negotiated by community group leaders and the developer, prior to governmental approval of the project. Sometimes a government agency will play an inactive role in CBA negotiations. All CBA’s Attorneys will have to become involved at some point, since CBA’s are an enforceable contract, with real legal consequences for both the developer and the community groups. Ideally, the neighborhood organizations will start the negotiations directly with the director, and attorneys for both sides are brought in to formalize the contract after an agreement has been reached. In such cases the role of the attorneys is to simply memorialize, in a legal enforceable manner, the substance of the agreement. If a developer negotiates through an attorney, community groups should negotiate through one as well.

----What are the beneficial components for developers? Any development project of significant size has to go through a complex governmental approval process. As a proposed project moves through this process, government officials and community groups may request that the project provide particular community benefits, or that the project be tailored to the needs of the community in a certain way. Developers use CBA’s to get government approval for their development agreements. While in exchange for providing community benefits, developers get community support in their projects. They need that support because they want their projects subsidized, and because virtually all development projects require a wide range of governmental permit approvals, such as building permits, rezoning and environmental impact statements. CBAs can greatly improve the approval process.

What community benefits can a CBA include? Benefits provided by a CBA can vary as widely as the needs of affected communities. Community groups should be creative in advocating for benefits tailored to their own needs. Benefits contained in a CBA may be provided by the developer or by other parties benefiting from the development subsidies, such as the stores that rent space in a subsidized retailed development. Some benefits can be built into the project itself, such as the inclusion of a child care center in the project, or the use of environmentally sensitive design elements such as white roofs which help avoid the “heat island” effect. Some benefits affect project operations, such as wage requirements or traffic management rules. Other benefits will be completely separate from the project, such as money devoted to a public art fund, or a support for existing job-training centers.

----How is a CBA enforced? This depends upon who signed it and what enforcement provisions it contains. As a CBA is a legally binding contract, it can be enforced only by a party that has signed it. CBA’s that are incorporated into the development agreement can be enforced by the government as well as by community groups.

How should CBAs be drafted? All CBAs should contain carefully-drafted provisions describing how commitments will be monitored and enforced. Commitments made by developers should apply to successor entities such as purchasers of property within the development, and to contractors and tenants of the developer for certain commitments. Each commitment made in a CBA, and the CBA itself, should have a defined term of years.

----Pros of a CBA: Inclusiveness: The CBA negotiation process provides a mechanism to ensure that community concerns are heard and addressed. While some cities do a good job of seeking community input and responding to it, many do not. Low-income neighborhoods, non-English speaking areas, and communities of color have historically been excluded from the development process. Laws concerning public notice and participation are poorly enforced, and official public hearings are held at times and places that are not neighborhood-friendly. Having a CBA negotiation process helps to address these problems, providing a forum for all parts of an affected community.

Enforceability: CBAs ensure that the developer’s promises regarding community benefits are legally enforced. Developers “pitching” a project often make promises that are never written into the development agreement, or are never enforced even if they are included. This is especially true of promises about jobs being created for local residents. CBAs commit developers in writing to promises they make regarding their projects, and make enforcements much easier.

Transparency: CBAs help the public, community groups, government officials, and the news media monitor a project’s outcome. Having all the benefits set forth in one place allows everyone to understand and assess the specific commitments made by a developer. They can then compare those benefits to benefits provided in similar projects in the past. They can also compare benefits offered by developers who are competing for the right to build on a particular piece of land. Transparency is an undeniable good-government value.

Coalition-Building: The process of negotiating a CBA encourages new alliances among new groups that may care about different issues or have different constituencies. This is critical because developers often use a “divide and conquer” strategy when dealing with community groups, making just enough accommodation to gain the support of one group, while ignoring the concerns of others. The developers can then claim that there is some community support for the project, and obtain necessary government approvals, even though most community issues have not been addressed. Similarly, a developer may agree to build its project with union construction and labor while ignoring the concerns of those unions whose members will fill the project’s permanent jobs, and then claim the project has “labor’s support.”

Efficiency: First, The government can approve the project over neighborhood objections, leaving residents unhappy and leading to a project that fails to address the community needs. Second, the government can reject the project completely leaving the developer unhappy and the community without whatever benefits the project might have provided. Third, the government can delay the project until the controversial issues have been resolved. That leaves the developer unhappy because is time is money, and it delays the community benefits just as it delays the whole project. It also puts the community groups and the developer in roughly the same place they would have been in had they started negotiating over community benefits at the outset. CBA negotiations avoid all three of these unsatisfactory scenarios by leading a cooperative relationship between normally adversarial parties, and getting good projects approved without delays.

Clarity of Outcomes: CBAs provide local governments with the information they need to show successful delivery of promised benefits, like creation of jobs. Very few state and local economic development entities can quantify their outcomes when questioned by legislatures or the public about the success of their programs or the public’s return on investment. CBAs can be a vehicle for governments to gather and maintain information that demonstrates that the jobs and other benefits actually materialize.

Cons of a CBA: Inadequate organizing could set poor precedents: If neighborhood organizations are poorly organized and therefore have little leverage over developers and governmental agencies in a particular situation, seeking a CBA will not help-and could result in a poor precedent being set for future projects

One person’s floor is another person’s ceiling: If developers are looking at the CBAs from past projects, they may not want to provide greater benefits than those provided by others. Community groups want to use past commitments as a “floor,” but developers will want to use them as a “ceiling.”

Reference

Community Benefit Agreement: Making Development Project Accountable by Julian Gros with Greg LeRoy and Madeline Jani-Aparicio