Community Benefits Agreement News Weekly Roundup

July 11, 2014 -- Partnership for Working Families

Real talk about collective-benefits agreements, extortion, greed and the latest Sacramento Kings-arena lawsuit, Sacramento News Review

City Council wants developers to deliver jobs they promise for Detroiters, Detroit Free Press

Will the Bayview benefit from Lennar's massive Shipyard project? San Francisco Business Times


Real talk about collective-benefits agreements, extortion, greed and the latest Sacramento Kings-arena lawsuit

Sacramento News Review

By Cosmo Garvin 

July 3

Last week, housing advocates and environmental groups filed a new lawsuit over the Kings arena, alleging that the planning for the project doesn’t sufficiently address the arena’s many impacts on traffic, housing and the quality of life in surrounding neighborhoods.

It’s the second lawsuit brought against the arena under the California Environmental Quality Act. The plaintiffs, the Sacramento Coalition for Shared Prosperity, hope the lawsuit will help leverage some concessions from the Kings—in the form of a community-benefits agreement that would help fund affordable housing in the central city, homeless services, transit passes for workers and a small-business loan fund for local businesses, among other requests.

Predictably, the suit was met with outrage from arena boosters. Sacramento Bee columnist/Sacramento Basketball Holdings LLC stenographer Marcos Breton called the proposed CBA and lawsuit, “extortion” and “greed.”

Everybody got that? Going to court to try and win a few more public benefits in exchange for an enormous public subsidy is called extortion. When the NBA threatens to move a team unless it gets $300 million-plus in taxpayer money to build a new arena, it’s called a “public-private partnership.”

Anyway, CBAs are actually pretty common in California cities with fewer self-esteem issues, communities like Los Angeles and San Diego that have secured CBAs in exchange for far less generous public subsidies.

And everything the Coalition is asking for is something that would support the city’s stated goals for downtown revitalization, help bring more residents to live downtown, support local businesses and promote economic development. “I would like nothing more than to see the arena catalyze a renaissance downtown,” says Dr. Alex Kelter of the Environmental Council of Sacramento, one of the groups involved in the Coalition.

As an environmentalist and a public-health doctor, Kelter believes that the city needs to curb sprawl and add thousands of housing units downtown, at all income levels. “Housing is the keystone for protecting open space and habitat, promoting transit, and agriculture.”

The Kings project includes some housing, about 550 units that will rent for whatever the market will bear. But beyond that, there’s no guarantee for housing and other ancillary development around the arena. The Kings make a big deal about the $800,000 they have “pledged” to the city’s affordable-housing trust fund. But, actually, they have to pay that by law. It’s literally the least they can do, and a drop in the bucket compared to the need.

All in all, the things the city says it really cares about—housing, transit-oriented development, local business—are secondary to the basketball arena. CEQA certainly doesn’t prevent the city from putting together a weak project that fails to get much benefit for the buck. Downtown is proof of that.

But it does require the city to fully analyze the environmental impacts of the project, like traffic and air quality, impacts to neighborhoods, and displacement of poor people, and then to do something about it. The lawsuits, one by the Coalition and one by another group of Sacramento citizens represented by land-use attorney Kelly Smith, say the city has fallen short of its obligations under CEQA.

The additional investment in housing and public transit and local business are what Kelter’s group proposes to offset some of the impacts of the project. “Maximizing transit, improving air quality—these are the goals of CEQA. And providing housing downtown meets those goals,” Kelter explains.

In the past, the possibility of delays and additional costs of a CEQA lawsuit might have been enough to get a developer to sit down and negotiate. But the arena is protected by Darrell Steinberg’s Senate Bill 743, which was specifically written to fast-track the Kings arena and prohibits a judge from issuing any injunctions to stop the project while considering a CEQA challenge. “It really takes away the court’s authority and raises a separation-of-powers issue,” says attorney Don Mooney, who is representing the Coalition.

Both lawsuits also challenge the constitutionality of S.B. 743. The Smith suit is due for a hearing on July 25, just as demolition of Downtown Plaza is set to begin. The judge is Timothy Frawley, the same judge who threw out petition signatures from tens of thousands of Sacramento residents who wanted a vote on the arena plan. So arena boosters have got to like their chances there.

And even if the groups get a win in court, nothing will happen to magically make the project a good deal for the city. But it could be a slightly better deal. Sacramento needs to get at least a little bit greedy before it’s too late, and ask for some more reasonable benefits in return for all that money. That might bring a little balance to a project that has been much more about renewing the Kings’ bottom line than about renewing downtown.


City Council wants developers to deliver jobs they promise for Detroiters

Detroit Free Press

July 10, 2014   

By Joe Guillen 

The Detroit City Council is expected to discuss a proposed ordinance today that would hold developers more accountable for the promises they make when seeking tax breaks or other city subsidies.

Marathon Petroleum’s recently disclosed shortcomings in hiring Detroiters after it received a $175-million tax break in 2007, and the $1 sale earlier this year of a large swath of city-owned land for the new Red Wings arena illustrate a need for more accountability, supporters of the ordinance say.

“It’s time to move beyond the words and get to some true commitment,” said John Philo, legal director for the Sugar Law Center, a Detroit-based advocacy organization involved in putting together the proposal. “We’ve been doing that for 30 years and it’s landed us with the city we have now.”

The proposed ordinance, crafted with the help of City Council President Brenda Jones’ office, would require certain developers to enter into a contract — known as a community benefits agreement — when seeking city subsidies worth at least $300,000 or the transfer of city property at a discounted rate.

Community benefits agreements can require the developer to hire local residents. The agreements also can address concerns about a project’s environmental impacts and potential to displace residents.  If a developer violates the agreement, the city could enforce the ordinance and cancel the assistance, Philo said.

The Detroit Economic Growth Corp. came out strongly against the ordinance. The economic growth group promotes business growth in Detroit and supports job creation for Detroiters, but the proposal would further burden developers who deal with high costs for insurance premiums, property taxes and site remediation when working in the city, said George Jackson, the organization’s president and CEO.

“The imposition of the ordinance would add an additional layer of complexity, cost and time that will obliterate already-thin profit margins for potential investors and lenders in the city, and have an immediate negative impact on the city’s ability to attract future investment,” Jackson wrote in a June 18 letter to Councilman Scott Benson.

Rather than establish an ordinance that would affect so many developers in Detroit, Jackson suggested the council push for job creation benchmarks and other community benefits when evaluating each developer’s request for a subsidy.

Mayor Mike Duggan seems to prefer the alternative Jackson suggested.

When asked on Friday whether establishing an ordinance is the right way to hold developers accountable, Duggan said, “I’d like to see it addressed on a case-by-case basis. That’s a conversation I’m having with council right now.”

The ordinance would give the city a way to guarantee Detroiters get jobs from companies that are getting a tax break.When Marathon Petroleum asked for and received its $175-million tax break to expand its refinery in southwest Detroit, the company pledged to try to hire Detroit residents. Out of nearly 200 new jobs, 15 were awarded to Detroiters.

The council criticized the company’s hiring practices but has not found a way to reverse the trend and set consequences for Marathon’s track record. The company said it struggled to find qualified residents to work at the refinery.

Too late to weigh in

But it is sometimes difficult for the council to address the community’s needs by the time a project comes up for the council’s approval, Councilwoman Raquel Castaneda-Lopez said. The proposed ordinance would help bring in community members during a project’s planning stages rather than at the tail end when it is mostly lined up, she said.

The $450-million Red Wings arena development is one example. By the time the council was asked to approve the land transfer for $1, several other aspects of the development already were approved by other agencies. The developer, Olympia Development of Michigan, rejected the council’s requests for a job guarantee for Detroiters at the new arena and for a binding community benefits agreement. Olympia, however, did agree to communicate with a new Neighborhood Advisory Council to hear the community’s concerns.

“Historically, what happens in large-scale development, or development in general, is that the community isn’t engaged, if at all, until the end. It’s often seen as an afterthought or an extra burden to have to talk to the community,” Castaneda-Lopez said. “In a lot of these developments, negotiations begin years before they actually get to the council table. This ordinance is needed to address that, so that the community will be involved from the start.”

Last week, Jones sent a pair of memos to city departments seeking records about Marathon’s tax abatement and the company’s training program at Henry Ford Community College. Jones was unavailable for comment.

The council’s planning and economic development committee is expected to discuss the proposed ordinance today and set up a public hearing on the proposal in September, when the council returns from its August recess.

The Rev. Joan Ross, director of the North End Woodward Community Coalition, said requiring more community benefits agreements would help bridge the divide between the city’s neighborhoods and the downtown-Midtown corridor where many new developments are sprouting up.

“None of us are against development,” Ross said. “Somebody has to draw the line in the sand and say, ‘We’re going to give you want you want, but you have to consider our communities, too.’ ”


Will the Bayview benefit from Lennar's massive Shipyard project?

San Francisco Business Times

Blanca Torres

July 8

Now that the first new homes at Lennar Corp.’s San Francisco Shipyard are on the market, the developer’s community benefits for the Bayview neighborhood are also underway. To date, the developer has set aside $8.925 million of the more than $80 million it is expected to shell out during the course of the Shipyard’s build out, which will take at least 15 years.

Lennar recently started selling the first 88 units in a development slated to bring 12,000 new homes to a corner of San Francisco that has long struggled with poverty and crime. Plans call for more than 3.5 million square feet of commercial space, a new regional shopping center, 300 acres of open space and thousands of new residents. The entire project will likely take $8 billion to build out.

The Shipyard brings increased investment and opportunity, but has also sparked fears about gentrification and existing residents being left behind. That's where the community benefits agreement was supposed to come into the picture. So far, the money has mostly gone to job training for Bayview residents and housing programs to help existing residents stay in the neighborhood.

The agreement requires Lennar to pay for a variety of programs and services such as a scholarship fund, health and wellness programs, educational programs, job training, infrastructure, artist studios, public parks, open space and affordable housing. In total, Lennar is on the hook for $82.84 million of which close to $30 million goes toward rebuilding the Alice Griffith Public Housing development that is slated to move forward in 2015.

Grant money has gone to nonprofits such as the Young Community Developers, Japanese Community Council, San Francisco Housing Development Corp. and Girls 2000. Community organizations and churches also received grants. Zachary McRae, who works for the San Francisco Foundation and is the program coordinator for a committee that oversees the Bayview/Hunters Point Core Community Benefits Agreement, said the idea is "to put the existing community in the position to take advantage of all these opportunities from the development of the Shipyard and Candlestick Park."

One of those opportunities is for artists. Lennar recently secured approvals to build an 89,000-square-foot facility for artists studios to replace existing studio spaces on the Shipyard. That's progress, but it has taken years to get there. Settling on the agreement and arriving at the point where Lennar could start building and selling market rate homes took more than decade and faced major hurdles, said Tiffany Bohee, executive director of the San Francisco Office of Community Investment and Infrastructure. Now, the community benefits will start to roll in as the market rate homes begin selling, she said. One part of the benefits package includes a Legacy Fund that will receive 0.5 percent from the sale of each market rate home.

“The goal of having this transformational project really is to lift up the entire southeast of San Francisco,” Bohee said. After the shipyard operations ended, the Bayview took an economic hit as many residents relied on the shipyard for work. The area then became known for high crime and has not seen in decades the level of investment the Shipyard could bring.

Many existing residents are concerned about being left out and have yet to see any results from the Shipyard’s community benefits, said Marie Harrison, a community organizer with Green Action, an organization that advocates for social and environmental justice who focuses on the Bayview.

McRae said the community benefits committee is looking at ways to make sure the benefits reach existing residents, especially those who don't have a job or are exposed to crime and violence.

“It’s hard for some residents to get mobilized to take advantage of the programs. Or they don’t know about them or don’t have time to take advantage of the programs,” McRae said. “It’s tough trying to reach every corner and crevice of such a hyper-stressed community.”

The committee and many existing residents have witnessed the trend of longtime Bayview residents leaving the neighborhood. Some people are concerned that the rising home prices and the new homes at the Shipyard will attract outsiders, which will just further exacerbate the trend. “The Bayview a very diverse neighborhood and we want to keep it diverse,” McRae said. “Some of the work that we do is trying to curb the out migration.”