Community Benefits Agreement News Weekly Roundup

October 28, 2014 -- Partnership for Working Families


Detroiters seek benefits as development booms in city
The Detroit News
By Christine Ferretti and Darren A. Nichols
October 22, 2014

Jason Gapa, 29, enjoys living in Detroit's Cass Corridor downtown and the sporting events and nightlife that come with it. But he wants assurances that his neighborhood will be protected from excessive traffic and crowds.

Gapa is within blocks of the future home of a $650 million development that will encompass a new Red Wings hockey arena and entertainment district. He's also a member of a 12-member advisory group that's keeping tabs on developer Olympia Development of Michigan to ensure it's mindful of neighbors.

In the meantime, Detroit has legislation in the works to take future agreements over community benefits a step further.

The proposed "Urban Development Agreements" would require developers on certain large-scale projects to partner with neighborhood groups to negotiate job opportunities and other health and welfare guarantees for the people who live nearby. Currently, two versions of the proposed ordinance exist and are being reconciled. Council members hope to vote on the measure before year's end.

"A community benefits ordinance is a proactive way in which the city can really ensure that large development projects move forward with the help of the local host community," Gapa said. "(An ordinance) would help eliminate the need for drawn-out processes in which community benefits are defined and agreed upon."

Officials say the ordinance would be the first of its kind in the nation and comes as development is on the rise in Detroit and the city begins to revamp itself. Benefits agreements, often negotiated by developers and either the city or neighboring community groups, address a wide range of issues including job opportunities, traffic, environmental concerns and other spinoff development.

But the prospect of an ordinance to ensure such guarantees hasn't come without controversy.

Opponents of the local law say it would drive up costs and discourage investment in the city. Those crafting and advocating for it say it aims to engage parties before a project is developed to hammer out concerns and avoid headaches and delays.

The ordinance, as drafted, would apply to development projects with a public and/or private investment of more than $15 million during construction, or the investment of more than $3 million to begin or expand operations or renovate. The projects must involve either the transfer of city-owned land or subsidies. A violation could result in the loss of public subsidies or tax abatement. Officials stress, however, that the ordinance would not be one size fits all and would have exemptions.

Council member Raquel Castaneda-Lopez, whose office has participated in a work group on the issue, says council members are committed to seeing the ordinance through. It would serve as a framework for projects that could set a precedent for the rest of the nation, she said. "It shows Detroit is at the forefront of progressive policy. No other city has a community benefits agreement ordinance," she said. "The intention is to benefit everybody."

Ordinance draws concern

But not everyone has been as hopeful. The head of the Detroit Economic Growth Corp. sent a letter to the council this month, urging members to reject the proposal on claims it would tie the hands of developers. DEGC CEO Rodrick Miller stressed the city will be self-sufficient as it emerges from bankruptcy only if it builds a strong tax base of profitable businesses to generate jobs and investment.

He warned that a "blanket" ordinance is a "huge barrier" that would thwart development and "undermine our economic progress well before our recovery has hit critical mass." "The quickest way to undo all we have done to create a positive environment for new investment and to abruptly stop the economic momentum we have built over the last five years is to pass a Community Benefits Ordinance — in any form, or by any name," the letter said.

Mayor Mike Duggan's office has said the mayor shares Miller's concerns.

Castaneda-Lopez countered that the law would resolve concerns and not having an ordinance in place is "short-sighted."

But some council members aren't sure about the ordinance, either. District 7 Councilman Gabe Leland says he has multiple concerns over the proposal, including its legality. He also believes the city should first evaluate opportunities it may have to strengthen rules already on the books. "We all agree that community benefits are important, but I don't necessarily know if we need to force an ordinance on these companies," he said. "We might be doing ourselves some good by analyzing and accounting for what we have currently. Why recreate the wheel?"

Agreements spreading

Community benefit agreements have been used as part of development deals in about 80 cities nationally, including the Staples Center project in Los Angeles, an early pioneer of the model, says John Goldstein, civic engagement director for the Newark, N.J.-based Partnership for Working Families.

Goldstein said there was a shift when cities and residents recognized they are stakeholders and should be a part of crafting deals. "It's way more widespread now than ever before," Goldstein said.

Goldstein pointed to a development agreement put in place for Hill District in Pittsburgh near the new hockey arena. The result is $32 million in new investment, the first grocery store in 40 years that employs 125 new workers, $4 million worth of new jobs and a $13 million YMCA, he said. "That's the difference in having one and not having one," Goldstein added.

In Detroit, such agreements came into play for the Red Wings project and New International Trade Crossing. With the arena deal, the council voted 6-3 in favor of a land transfer that paved the way for the 650,000-square-foot arena to be built on Woodward. An accompanying, 45-block entertainment district will span from Grand Circus Park to Charlotte between Woodward and Grand River. The approval hinged on several negotiated conditions. Among them was the creation of the Neighborhood Advisory Committee. Gapa said the committee began meeting in May with Olympia to discuss its plans for traffic, parking and historic preservation in the neighborhood.

Community benefits also came into play when the council unanimously rejected a land transfer request last month tied to the New International Trade Crossing. The proposal called for the transfer of 301 city-owned parcels in the footprint of the future site of the new Detroit River bridge to the State Land Bank in exchange for $1.4 million. But members argued the deal lacked protections and reinvestment plans for the southwest Detroit community in the project's path. The state Emergency Loan Board later authorized the land transfer.

Political analyst Steve Hood agrees it's good for a developer to be a good corporate citizen, but taking it too far could stifle development. "If a developer has to jump through too many hoops, they are going to go someplace where they don't have to," he said.


Kingsbridge Armory ice center nets $30M infusion
Crain’s New York Business
By Joe Anuta
August 12, 2014

The developers of the Kingsbridge National Ice Center, a project designed to bring nine skating rinks to the former Bronx armory, announced Tuesday that a group of investors led by the Kresge Foundation have injected a round of equity into the project.

Sources familiar with the matter pegged the amount at $30 million. The investment is the project’s first major piece of good news since its founder became embroiled in a legal battle earlier this spring with three men who were previously involved in the project.

The Michigan-based Kresge Foundation bills the proposed 750,000-square-foot ice center as a project that aligns with its philanthropic and investment goals. In a departure from its typical role as grant maker, the foundation expects to get a return on its money in the Bronx.  "This investment reflects the natural evolution of our capital tool box," says Rip Rapson, president and CEO of the Kresge Foundation. "We award grants, make program-related investments, and now are adding market-rate investments to support our mission."

Meanwhile, National Hockey League Hall-of-Famer Mark Messier, who serves as chief executive of the Kingsbridge project, touted the investment as a "validation of our mission to help revitalize the Kingsbridge neighborhood and the Bronx."

The good news on the financial front is a welcome sign that the project is advancing after a group of three men filed a lawsuit against Kevin Parker, the founder of the group that won the right to develop the armory. The group's plans were approved by the City Council in December. Jonathan Richter, Marcus Wignell and Jeff Spiritos alleged that Mr. Parker cut them out of a partnership stake in the group even though they put in substantial work helping to usher the project through the public review process. They want to be named controlling equity partners of the center. Mr. Parker subsequently filed a suit against the trio in June, accusing them of trying to extort money from the ice center.

The fresh funds could come in handy, as the cost of the project appears to have swollen. Initial reports put a $275 million price tag on the development, but Tuesday's announcement pegged that number at $350 million.