TABLE OF CONTENTS
LIST OF FIGURES
LIST OF TABLES
Community benefits agreement (CBA) is a voluntary but legally binding contract between a developer and community representatives committing the developer to fulfill specific obligations for the benefit of the community in connection with a development project. In exchange, the community provides their support (or at minimum, their acquiescence) for the proposed projects. Although many development projects often create new jobs and economic growth, they do not automatically result in sustained, local economic benefits. CBA is a technique that State and local governments and communities are increasingly looking to in order to help build sustained benefits to host communities.
Developer commitments in CBA are typically monetary in nature but can include many non-monetary benefits as well (e.g., investment in a community center, an affordable housing fund, agreements to pay workers a living wage, legal assistance). The promise of community support in return can be especially useful for developers seeking timely project approvals or government subsidies. In addition to helping to avoid long delays for developers, CBAs help minimize the possibility that their projects may be denied altogether. Similar to DAs, the existence of CBAs can make it easier for developers to secure project financing. In CBA, developers also benefit by establishing relationships with community members and elected officials that can help avoid costly legal disputes and public protests.
CBA is a product of negotiations between the developer and community members who have banded together to safeguard their community's interests. The CBA negotiation and implementation process opens leadership opportunities for community members and ensures that essential resources are leveraged to meet the short- and long-term needs of local residents. CBAs can help in managing and sustaining the accountability mechanisms and public engagement needed to ensure that an investment's benefits are shared across the community, including its most vulnerable populations.
In particular, in addressing potential gentrification and displacement impacts of development projects, CBAs can help reduce their negative impacts and increase transparency and accountability in public spending (Gross et. al. 2005). While CBAs have so far been used to secure a range of commitments around local workforce development, hiring, and community investment from private developers, they are sometimes leveraged to create even broader and more lasting change away from speculation-driven development (see Sidebar 3.1).
Often, developers' pledges in CBAs are in exchange for tax abatements, subsidies, regulatory changes or exemptions granted by the local government for their projects. Although the only CBA signatories are developers and community coalitions in most cases, local governments can also play an important role in the CBA negotiation and implementation process (see Sidebar 3.2).14
The very first CBA in U.S. history was executed in California in 1999, linked to the Hollywood and Highland Center project (home to the Academy Awards ceremonies), which dealt for the first time with labor organizing commitments and other community benefits (e.g., affordable housing, first source hiring, job training, living wages). The "Staples" CBA, the best known and widely regarded as an exemplary CBA, soon followed in 2001, involving the L.A. Live Sports and Entertainment Complex (see Section 3.3.1 for more detailed description).
With the success of the Staples CBA, the broader "community benefits" movement began in California, where community coalitions in Los Angeles, San Diego, San Jose, and the Bay Area used CBAs and other techniques to realize the social justice potential of economic development and land use planning. Soon thereafter, community organizations in Atlanta, Boston, Chicago, Denver, Indianapolis, Miami, Milwaukee, Minneapolis/St. Paul, Pittsburgh, New Orleans, New York City, Seattle, and Washington, D.C., have pursued a similar community benefits approach to major economic development projects, often successfully. The Partnership for Working Families estimated that 104,000 construction jobs and 113,000 permanent jobs were associated with CBAs between 2000 and 2006. In the same period, from Seattle to Miami, more than 50 large-scale projects had enforceable CBAs linked to them. Today, it is becoming rare for developers to strike major deals with city governments without first negotiating some sort of CBA.
Developers:
Communities:
State and Local Governments:
(Source: OMB&ED 2017)
A list of basic elements included in CBA is provided in Appendix B. As CBAs are becoming more common, many public and non-profit resources are now available to help communities maneuver the complex legal landscape linked to CBAs. Past CBA experience indicates that there are three critical issues to be addressed when developing a CBA: (1) the legal entity that is representing the community coalition, (2) the specific benefits the community receives, and (3) enforcement and monitoring mechanisms for CBA commitments.
Community Benefits
When community benefits are delineated in CBA, the community and the developer would establish clear and measurable commitments, not just aspirational standards. CBAs would describe expectations of project deliverables and specify reporting requirements, including how the reports will be publicly available. CBAs would also clearly describe roles and responsibilities to facilitate compliance and specify how noncompliance will be addressed. The following is a representative list of community benefits that have been included in past CBAs:
Legal Signatory to Community Coalition
The local community signatory to CBAs are typically coalitions of community groups that incorporate a broad array of local stakeholders, often including local residents (across income spectrum and ethnicity), representatives from labor, environmental, and religious organizations, and affordable housing advocates. Through a well-structured CBA process, those most likely to be affected by a project–but who might be excluded from conventional governing procedures–have greater opportunities to contribute to the decision-making regarding the development of local community assets. Community-based organizations involved in CBA negotiations are usually formed by concerned citizens and may be built upon traditional community organizing structures, such as block clubs or church-based groups. These groups sometimes coalesce with other nonprofit advocacy groups linked to specific issues, such as living wage or affordable housing.
Collective action is inherently difficult. The members of a community benefits coalition will likely work together for years to ensure strong implementation of the commitments they negotiate. Although organization can be informal, there are benefits associated with more formal coalescing (e.g., a group could draft and agree to an operating agreement or establish an advisory council, or oversight committee, to manage and distribute CBA resources and monitor the progress of delivery of benefits agreed upon.
In addition, for certain provisions, such as local hiring commitments, communities benefit from basic program setup to successfully deliver the benefits. For example, local or targeted hiring provisions in CBAs may involve support from multiple entities, including a central job center capable of conducting intake, screenings of prospective applicants, and making referrals to employers.
Because a CBA community coalition is negotiating as a single entity, it is natural to think that the coalition itself will enter into the CBA with the developer. However, most coalitions that enter into CBAs are not incorporated legally as stand-alone nonprofits. Rather, they are simply groups of organizations and individuals working together. Few coalitions have structured systems for determining who official members are and who can speak or act on their behalf. This uncertainty could cause significant problems if an unincorporated coalition were the legal signatory to a CBA.
If the coalition were to sign the CBA, every coalition member could be forced to comply with the coalition's commitments under the CBA. While associations that are not legally incorporated can enter into contracts, when compared to a legally incorporated entity, the individual members making up the association can more easily be held responsible for the association's commitments. For this reason, a better approach has been to have each coalition member (organizations, not individuals) sign the CBA on its own behalf to make it clear that each must live up to the CBA's legal commitments based on its own internal approval process (see Sidebar 3.3).
With each coalition member as a signatory, CBA implementation could become complex and cumbersome, involving as many as several dozen different parties. As such, clear definitions and technical language would be important. For example, the definitions and responsibilities of "Coalition" and "Organization" could be clearly spelled out using the following language:
This language makes clear that each signing organization has the power to enforce the CBA, and the responsibility to comply with it. It also makes clear that only the signing organizations can be held to the CBA commitments. Finally, it clarifies that a signing organization cannot be held responsible for actions of its members, staffers, or board, except when those parties are authorized to act for the organization.
(Source: Gross et. al. 2005)
Enforcement and Monitoring
Community groups should consider how each CBA benefit would be monitored and enforced. Financial commitments and other one-time benefits are probably the easiest aspects of a CBA to monitor. Much more challenging are ongoing tenant commitments, such as living wage and local hiring requirements. According to Gross, the most effective approaches include affirmative reporting requirements as well as the ability to investigate complaints in case of noncompliance. Also, required reports should be no less frequent than once a year, publicly available, and due by a particular date each year (Gross et. al. 2005).
One possible compromise is to empower local government officials to verify reports and/or investigate complaints. This is possible if the CBA is folded into a DA, where the developer's commitments are made to the local government subject to governmental monitoring. In general, requirements of a CBA would become part of a DA if the local jurisdiction is providing government subsidy to the developer. Inclusion of a CBA in the DA often facilitates its enforcement because the prospect of government enforcement for the DA provides an incentive for compliance. In addition, the local government may be able to fold enforcement of some community benefits into existing administrative systems (e.g., living wage noncompliance).
In some cases, community groups would prefer the ability to monitor performance themselves, rather than having to rely on the local government. There is no one-size-fits-all approach to monitoring community benefits. A verifiable monitoring system and other challenging issues can often be addressed explicitly through a creative and collaborative problem-solving approach during the CBA negotiation process.
Community groups entering into CBAs typically can seek to enforce CBAs against the developer in court. While most contracts have provisions for monetary recovery, community groups are generally more concerned about ensuring that promised benefits are provided. CBAs often recognize the right to ask for a court order if the developers do not honor their commitments. For example, the only alternative to direct enforcement against the tenants and contractors is to make the developer responsible for the behavior of tenants and contractors. CBAs sometimes specify that the developer is subject to court orders to fulfill its commitments and cannot escape by paying money damages. All these enforcement issues benefit from close attention from an attorney trusted by community groups.
Correction and dispute-resolution provisions in CBAs allow each party a chance to correct problems and the ability to come together and work out solutions to avoid litigation. Court action or arbitration would be an important but last-resort enforcement option. Open communication and good-faith efforts to work out problems–backed by the ability to take legal action if necessary–would solve most CBA compliance issues.
CBAs can at times conflict with existing local political and policy priorities for community revitalization. While this can create some challenges between grassroots community leaders and local elected officials, the conflict can also reveal opportunities that would be overlooked otherwise. Additionally, CBAs can prove ineffective if they were created through secretive negotiations with little community participation, contain vague commitments with no timeframes, or allow for little community control or public accountability.
Compared to other techniques, the CBA concept is still in its infancy in the United States and is a relative newcomer to the VC tool box. In States that authorize DAs, as mentioned, CBAs have often been incorporated into DAs to help increase both their transparency and enforceability. Although the use of CBAs has generally been more common than DAs in terms of the number of States that use them,15 CBA performance outcomes have been much more mixed in comparison (Salkin and Lavine 2008, Abello 2015).
For one, the legal environment surrounding CBAs is still being tested and there are concerns about their enforceability in the courts. When not combined with DAs, CBAs are considered enforceable only by contracting community groups. As mentioned, there has also been concern about the legitimacy of community representatives for purposes of negotiating on behalf of the public (Gross et. al. 2005). More broadly, because CBAs are also considered an economic development technique, questions have been raised regarding the effectiveness of CBAs in the context of the larger redistributive effects, such as social equity and poverty reduction (Wolf-Powers 2012).16
In a recent survey of 225 CBA participants, respondents ranked "increases in public participation on development outcomes" as the number one way that CBAs improve the development process (DeBarbieri 2017). The bottom line for CBAs thus may lie in their (generally) unintended effect of coalescing marginalized communities to influence policies and resources beyond those tied directly to development projects (Abello 2015). Nonetheless, without CBAs, there appears to be limited alternative solutions that can ensure accountable development with shared economic benefits.
An effective CBA is grounded in four core principles (PWF 2016):
Table 3 summarizes basic features that contribute to CBAs being either effective or ineffective along the four principles.
Criteria |
Effective CBA Features |
Ineffective CBA Features |
|---|---|---|
Representativeness |
|
|
|
Transparency, Inclusivity |
|
|
Community Benefits |
|
|
Accountability |
|
|
(Source: PWF 2016)
There are numerous examples of CBA, most of which are linked to major real estate development projects. Relatively speaking, CBAs associated with dedicated transportation projects are less common, especially those related to highways. The following presents two CBAs that were linked to transit-oriented developments (TODs) in Denver (Gates Cherokee CBA) and Atlanta (Atlanta BeltLine CBA) (PWF 2020, TPLC 2011). Also presented in this section is the CBA for Los Angeles International Airport (LAX CBA), one of the largest and most comprehensive CBAs to date (PWF 2020).
As mentioned earlier, CBAs are typically between developers and community coalitions. Unless a CBA is folded directly into a DA, the role of a local government in CBA is one of a facilitator. More recently, local governments are choosing to become a direct signatory to CBA, in some cases making CBAs no longer voluntary but mandatory for any substantive development projects (see Sidebar 3.4). While a local agency's participation can enhance the enforceability of the developer's commitment for the community benefits, it can also potentially diminish the negotiating position of the coalition if the agency's interests are strongly aligned with the development project and the developer.
Background
In February 2006, FRESC [17] and the coalition members of the Campaign for Responsible Development
(CRD) secured a set of Community Benefit Achievements at the site of the former
Gates Rubber Factory. These achievements were the result of more than 3 years
of research, advocacy, organizing, leadership from the city and elected
officials, and a process of dialogue with the private developer. The
redevelopment project, undertaken by developer Cherokee Investment Partners,
was a 50+ acre,
$1 billion brownfield located on a light rail transit line and at the
intersection of I-25 and Broadway in central Denver. Cherokee sought $126
million in public subsidies and taxing authority to support the cleanup and
redevelopment of the site into a mixed-use, transit-oriented development that
would include retail, offices, housing, and open space. The CRD took the
position that any project receiving that magnitude of public support would meet
principles of responsible development and provide community benefits.
Community benefits included:
As a result of this CBA, Denver's Office of Economic Development (OED) employed, for the first time, an explicit "public benefits framework" to outline the public financing package for this project.
CBA Participation
CBA Implementation Issues
Negotiations took many months, and the agreement was set to be signed on June 11, 2003. But negotiations over certain community benefits resulted in serious conflict among the parties. The project took a 3-year hiatus, with many thinking the disgruntled party representatives would abandon the project all together. In 2006 negotiations resumed and the CBA was signed months later. The development and community benefits were produced on schedule.
Background
In 2005, Georgia STAND-UP succeeded in attaching community benefits language to a City ordinance authorizing almost $2 billion in public funding over a 20-year period for transit-oriented development. The Atlanta BeltLine project involved the development of a 22-mile light rail transit loop encircling the city. The $2.8 billion project is expected to take 25 years and includes transit-oriented design, including multi-use trails, as well as 1,200 acres of green space, affordable housing, brownfield remediation, historic preservation, and public art. The 2005 city resolution that created the BeltLine Tax Allocation District (TAD)18 included several community benefits principles that apply not to an individual project, but to every project within the BeltLine redevelopment area. These included:
Summary of community benefits:
CBA Participation
CBA Implementation Issues
Both the local government and developer ran into legal problems when beginning the project because provisions of the CBA unintentionally required both parties to step outside their jurisdiction (TPLC 2011):
Background
In December 2004, a broad coalition of community-based organizations and labor unions in Los Angeles entered into the largest CBA at the time, addressing the LAX's $11 billion modernization plan. The CBA was a legally binding contract between the LAX Coalition for Economic, Environmental, and Educational Justice and the Los Angeles World Airports (LAWA), the governmental entity that operates LAX. The bulk of the benefits were set forth in the LAX CBA. In addition, the airport's commitments to two area school districts were set forth in side agreements that were negotiated as part of the Coalition's CBA campaign. The CBA has been hailed as a model for future airport development nationally.
The wide range of benefits included:
The CBA also detailed monitoring and enforcement provisions, enabling Coalition members to ensure implementation of these benefits and hold accountable the responsible parties.
In November 2016, Detroit voters approved a groundbreaking ordinance that requires developers to sign a city-negotiated CBA before a project can break the ground. The law applies to private projects that cost at least $75 million and receive $1 million in either tax abatements or city-owned land. In exchange for public subsidies approved by local government, developers must sign a guarantee that may include job opportunities, environmental protections, or neighborhood improvements. These CBAs are among the first in the United States to be negotiated through a mandatory, government-led process.
Detroit voters opted for a law that institutionalizes a process that has been largely improvised, putting Detroit at the leading edge of the "community benefits" movement, a two-decades-old effort to make developers more accountable to the neighborhoods in which they build. Instead of dealing on a project-by-project basis, CBA standards and/or processes have been mandated at the city level.
Specifically, once a developer proposes a project, the city sets up a nine-member neighborhood advisory council, made up of residents of the census tracts near the project site. City officials and City Council members can choose most of the advisory council members from a pool of residents nominated by their neighbors. Two members of the advisory council are selected directly by the residents themselves.
The law requires the developer to attend one meeting with the neighborhood advisory council to hear its concerns about the project. The developer then enters into negotiations with Detroit's planning director, who reports to the City Council on whether and how the neighborhood concerns are to be addressed. Whatever community benefits the city and developer negotiate, along with enforcement mechanisms and plans for compliance reports, are to be included in a binding agreement along with the tax abatement or land transfer.
(Source: Trickery 2017)
14 In recent years, some local governments and other public agencies have chosen to become direct signatories to CBAs. See Sidebar 3.4 in Section 3.3 for Detroit CBA case example.
15 According to some studies, States that have used CBAs have included, in addition to California, Colorado, Connecticut, the District of Columbia, Delaware, Georgia, Louisiana, Minnesota, New Jersey, New York, Pennsylvania, and Wisconsin (Salkin and Lavine 2008, TPLC 2011).
16 Wolf-Powers (2012) suggests that CBAs' effectiveness would be viewed from local governments' overall land value capture policy goals and treat CBAs' ability to mitigate negative impacts (through just compensation) as distinct from their use as an instrument to pursue redistributive goals. Wolf-Powers also suggests the importance of identifying legitimate claimants to the value created when the public sector takes actions that increase the worth of private property.
17 Acronyms for community coalitions included in the case examples are given at the beginning of this Primer.
18 In Georgia, tax increment financing (TIF) districts are referred to as Tax Allocation Districts (TAD).
19 Woodham v. City of Atlanta et al. (Two Cases). Nos. S07A1309, S07A1566. Decided: February 11, 2008.
20 FHWA, Case Studies: Atlanta Beltline Tax Allocation District, https://www.fhwa.dot.gov/ipd/value_capture/case_studies/atlanta_beltline_tax_allocation_district.aspx.
21 Sherman v. Atlanta Independent School System, S13A0333, decided June 3, 2013.
22 Surface Transportation Board Decision, STB Finance Docket No. 35215, National Railroad Passenger Corporation - Application Under 49 U.S.C. 24311(C) To Condemn Certain Rail Carrier Property In Atlanta, Fulton County, Ga - Norfolk Southern Railway Company, Decided: April 10, 2009.
