The Test Just Began for the Community Benefits Movement – Next City

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The Test Just Began for the Community Benefits Movement

How a groundbreaking new law plays out in Detroit will shape the future of a popular tool for equitable development.

Story by Erick TrickeyTwitter

Photography by Nick Hagen

Published on Feb 20, 2017

On downtown Detroit’s northern edge, construction cranes are adding to the skyline, filling in the skeleton of Little Caesars Arena, the future home of the Red Wings hockey team and the Pistons basketball team. A block away, across Woodward Avenue and its just-completed streetcar tracks, the near-abandoned Brush Park neighborhood may soon see hundreds of new homes.

To some Detroiters, the new arena represents the next step in downtown Detroit’s comeback, after its struggles with vacancy in the 1990s. To other Detroiters, though, the new arena represents a hope dashed, an opportunity missed, a corporate welfare giveaway that hasn’t produced enough in return. When the arena project launched three years ago, mostly funded by a massive tax abatement, activists in the nearby Cass Corridor neighborhood demanded job guarantees at the arena and a say in the design. The activists got less than they wanted: a more modest jobs agreement, a commitment to rehab a vacant historic hotel into housing, and an advisory council that lobbies the developer on issues such as design and green space. “Ultimately we have no say in it,” says Francis Grunow of the Corridors Alliance, who’s on the advisory council. “We’re just meeting and advocating.”

But this year, a new, untested law raises the chances that when the next big projects land in the city — a planned practice facility for the Pistons, the new housing in Brush Park — things will go differently.

In November, Detroit voters approved a groundbreaking ordinance that will require developers of the city’s biggest taxpayer-supported projects to sign a city-negotiated community benefits agreement (CBA) before a shovel goes into the ground. In exchange for public subsidies approved by local government, developers will have to sign a guarantee that may include job opportunities, environmental protections, or neighborhood improvements. These CBAs will be among the first in the U.S. to be negotiated through a mandatory, government-led process.

“It makes sure the peoples’ voices are heard during the development process,” says Detroit City Councilman Scott Benson, the new ordinance’s sponsor.

Detroit Pistons signs are shown hanging on the Little Caesars Arena. (AP Photo/Paul Sancya)

Benson introduced the winning measure as an alternative to a more radical proposal. That ballot initiative, pushed by activists, would’ve forced developers to negotiate directly with community representatives and bypassed the city government almost entirely. Instead, voters opted for a law that institutionalizes a process that until now 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.

“Folks are really interested in how we get beyond individual projects and do what Detroit’s doing,” says Sarah Johnson, co-director of Local Progress, a network of progressive municipal officials, “where it’s not just project by project, but there are actually either standards or processes mandated at the city level.”

For Detroit, the new law represents a milestone on several fronts. After decades of struggling to attract private businesses to fill in the city’s thousands of empty lots, the city has found itself with projects on the docket and an opportunity to ensure that whatever is built benefits not only investors, but all of the Detroiters who stuck with the city through the hard times.

CATALYTIC INTENT

Scott Benson was elected to the City Council in 2013, the same year the city filed for bankruptcy. An urban planner who came to Detroit from Los Angeles during his Coast Guard service, he got his planning master’s at Wayne State University and worked for various small cities in the region before turning his attention to his adopted hometown.

The district Benson represents, in northeast Detroit, struggles with abandonment and low property values, emptying residential streets and vacant storefronts. “Trying to get people to come in and rehab homes, that’s a challenge,” he says. “We have challenges with the number of stable, solid neighborhoods — we have them, but we just don’t have as many as other districts do.” Industrial development is the district’s main strength. “We are primarily the industrial hub of the city,” Benson says.

Until his election, Benson managed small business development for Midtown Detroit Inc., the nonprofit association that has helped spark reinvestment around the city’s cultural district, north of downtown.

“I’ve seen it from both sides,” says Benson. “So I understood what the community wanted, but I also understood as a city what we need to be successful. I support community benefits agreements, but they have to be reasonable.”

The law that Benson sponsored and voters approved will apply to private projects that cost at least $75 million and receive $1 million in either tax abatements or city-owned land.

“These are catalyst-type projects,” says Benson, “something that’s really going to be a game changer on your neighborhood, your quality of life.” He thinks it’ll apply to about three to four projects a year: stadiums and arenas, huge towers, whole new neighborhoods.

Here’s how the law will work: Once a developer proposes a project, the city will set 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 will choose most of the advisory council members, from a pool of residents nominated by their neighbors. In a nod to direct democracy, two members of the advisory council will be selected directly by the residents themselves, though the ordinance doesn’t define how. “You can do a vote; you can pull straws,” Benson says.

“I’ve seen it from both sides. So I understood what the community wanted, but I also understood as a city what we need to be successful. I support community benefits agreements, but they have to be reasonable.”

The law will require the developer to attend one meeting with the neighborhood advisory council to hear its concerns about the project. Then the developer will enter negotiations with Detroit’s planning director, who’ll report to City Council on whether and how the neighborhood concerns will be addressed. Whatever community benefits the city and developer negotiate, along with enforcement mechanisms and plans for compliance reports, will be included in a binding agreement along with the tax abatement or land transfer. The City Council can waive the law’s requirements by a majority vote if it finds that they’re “impractical or infeasible.”

Mayor Mike Duggan’s administration has said little about how it’ll implement the new law. Before the November election, Duggan described it as “probably … the fairest balance between assuring the community there will be benefits and also assuring businesses.” Though the law mentions the planning director 28 times, mayoral spokesperson Lauren Mondry declined to make Detroit Planning Director Maurice Cox available for an interview.

Benson says the residents can ask developers for just about anything: jobs, workforce development, improvements to a park or grocery store, or just landscaping and regulations of truck traffic. As an example, Benson offers an agreement the city reached last year with Flex-N-Gate, an auto-parts supplier that plans to build a $95 million factory in a long-vacant industrial park. Flex-N-Gate bought 30 acres there from the city’s economic development corporation, and a $3.5 million grant from the state-run Michigan Strategic Fund subsidized the deal. Benson says the city and Flex-N-Gate followed a negotiating process very similar to the new law’s. A month after the project was announced, city residents and officials met with company representatives to talk community benefits.

“We made sure residents were getting jobs and they had a say in design,” Benson says. The company, which says the project will create 400 to 750 jobs, agreed to hire a workforce of 51 percent Detroit residents and meet goals for local contracting. Because the neighbors didn’t want truck traffic on their street, the city acquired a federal road-improvement grant to improve a different truck route. Residents also asked the company to install landscaping as a buffer between the plant and the nearby neighborhood. The plant hasn’t been designed yet, but Benson says he’ll insist on that buffer.

Benson says a committee made up of the city’s human rights, law and development departments will be charged with monitoring and enforcing the agreement. So far, he says, Flex-N-Gate executives have “done everything they’ve said they were going to do.” (Flex-N-Gate did not respond to requests for comment for this story.)

Rebecca Karp, an urban planner who has written extensively about CBAs, says Detroit’s standardized approach offers more predictability than the ad-hoc CBA approaches of other cities. She also thinks it’s more comprehensive than benefits strategies seen in cities such as Boston and Cambridge, Massachusetts, where developers of large projects are required to pay into development funds for affordable housing or job training.

Now, she says, “It’s got to carry all the way to the end, with an implementation plan.”

The Detroit Pistons will probably test the new law first. The basketball team plans to move its offices and practice facility from suburban Auburn Hills to the city, to be near the new arena. The Pistons have agreed to follow the city’s new CBA process voluntarily, even though the project won’t be large enough to meet the law’s $75 million threshold.

“It’s an opportunity for the community to say to the Detroit Pistons, ‘This is what we want to see,’” says Benson. “Minimize your negative impact in our neighborhood — or what could be your negative impact — and we want to see you help the community.”

Another early test will likely come from Dan Gilbert, the CEO of Quicken Loans, who has bought many of the city’s once-vacant skyscrapers since moving his company headquarters downtown. Gilbert has proposed building 410 new homes in Brush Park, on now-vacant land between fading old mansions. His project, still in the early stages, is expected to cost $100 million, enough to trigger the new law.

“COMMUNITY ENGAGEMENT ON STEROIDS”

As Detroit ramps up its new rules, local activists are watching with skepticism. Rashida Tlaib, a former state representative, spent years pushing for community benefits agreements in Detroit. She currently works for the Sugar Law Center for Economic and Social Justice, which was part of the Rise Together Detroit coalition that got the CBA issue on the ballot, only to see its proposal lose to Benson’s council-backed plan. When asked about the CBA ordinance, she doesn’t mince words.

“We know it’s not going to result in any kind of accountability,” she says.

Rashida Tlaib helped get Proposal A on the ballot. 

The coalition’s proposal would have set stricter rules for developers than the new law. It would have applied to any development that cost $15 million — one-fifth the size of Proposal B’s limit — and received $300,000 in public subsidy. It would’ve shut the city government out of the community benefits process, instead requiring developers to negotiate with a host community representative group formed at a public organizing meeting. That group would’ve been able to sue to enforce the resulting community benefits agreement.

Detroit’s mayor, chamber of commerce and many unions opposed the proposal, arguing that it created too many barriers to development in the city. During the campaign, they heavily outspent its supporters. On Nov. 8, Detroit voters approved Proposal B with 53 percent of the vote, while rejecting Proposal A by a similar margin.

It was a bitter defeat for Tlaib and her allies, who have pushed for voluntary CBAs in Detroit for years, without success. Activists in her southwest neighborhood have tried and failed to negotiate a CBA with the state of Michigan over the Gordie Howe International Bridge, a planned border crossing to Canada. (The new law won’t apply to the bridge project, because it’s not retroactive.)

Yet Tlaib alternates between dismissing the new law as meaningless and saying it’s a step forward. “The fact that it did pass is a good thing for many of us, because it’s a thorn in their side,” she says. “It’s a very extravagant community engagement on steroids.” But Tlaib fears that the City Council and mayor will appoint yes men to the neighborhood advisory council, waive the law when developers complain, or fail to enforce the CBAs. She says her coalition plans to ask either City Council or the voters to amend the new law to give community groups standing to sue developers to enforce future agreements.

Benson says it’s highly unlikely that Detroit City Council would waive the law’s requirements for a developer. Proposal A, he says, would’ve required about 75 percent of all development projects in Detroit to go through a CBA process with no timeline for completion. That would’ve discouraged growth, he says, at a time when Detroit’s city government needs new revenue to meet its pension obligations. The city’s 2013 bankruptcy halted its employee pension payments until 2024, but after that, they’ll cost $200 million a year, one-fifth of the city’s current budget. “We have to grow our revenue,” he says. “One of the ways is through taxes.”

FROM GRASSROOTS TO GOVERNMENT

Urbanists around the country say Detroit is the first city to require a CBA for every large subsidized project. So activists and scholars interested in CBAs will be watching Detroit to see how the ordinance works.

Brett Theodos, a senior research associate at the Urban Institute, says CBAs and similar project-based hiring agreements often look good on paper, but that’s about it. “There’s rarely verification of any sort into whether these promises have been met,” Theodos says. “It takes real legwork.” That’s because statistics such as the percentage of jobs going to city residents don’t come from existing data sources. “Going to companies, doing audits, could be seen as adversarial. It’s not the level of work most cities have opted to pursue.”

“There’s something really positive about setting up an expectation that if a developer is going to receive a public subsidy or land at a concessionary price, [they] distribute the benefits of growth widely. That idea is increasingly accepted and enshrined in agreements.”

Theodos calls Detroit’s new law, with its mandatory compliance reports and government oversight, “a notable step” forward for CBAs. But he says he will be watching closely to see if it proves effective.

He says he’ll keep an eye on how engaged neighborhood residents are in the process, whether the process slows or scares off business investment, whether the negotiated benefits truly help people, and whether there’s an effective monitoring and accountability regime.

Laura Wolf-Powers, a visiting scholar at the City University of New York’s Center for Urban Research, will also be paying attention. She says she’s never heard of a CBA ordinance like Detroit’s, but sees it as part of a growing trend. She compares it to ordinances in other cities that call for negotiation of local hiring requirements or living-wage standards on city-subsidized developments.

“There’s something really positive about setting up an expectation that if a developer is going to receive a public subsidy or land at a concessionary price, [they] distribute the benefits of growth widely,” Wolf-Powers says. “That idea is increasingly accepted and enshrined in agreements, both formal and informal.”

But Wolf-Powers, who’s written about CBAs in cities from Los Angeles to Denver, also points out a way Detroit is different.

“What was innovative about CBAs at the beginning had to do with their emergence from social movements,” Wolf-Powers says. In many cities, she notes, social-justice groups, like the Sugar Law Center in Detroit, launched the drive for a specific CBA and negotiated the agreements themselves. But in the cities where government has driven the negotiations, the process has led to unexpected outcomes.

In Denver, for instance, activist demands for a CBA led the city government to create a community task force to negotiate directly with the developer. It bypassed the activist coalition, which considered the task force illegitimate because it was formed by the government, Wolf-Powers says. Still, the city’s agreement with the developer addressed many of the activists’ demands, including local hiring, prevailing wages and inclusionary housing. In Detroit, the city has gone a step farther than in Denver. Community groups tried to pass a law mandating a CBA process they could control, which led the city government to step in and create a process it controls.

Anytime a social movement organization gets a win, it faces a problematic moment, Wolf-Powers says: “They have to figure out how to get a government bureaucracy in the spirit of what they fought for.” In Detroit, Wolf-Powers says, she’ll be watching the city officials who will run the CBA process — “what kind of instructions they have from the mayor’s office, and how permeable or impervious they’re going to be with groups that were advocating for the more aggressive ordinance.”

Social movements “have to make trouble to get concessions from people in power,” Wolf-Powers says. “It’ll be interesting to see whether this quells the trouble that might surround future development projects, or whether they continue to make trouble because they continue to feel left out.”

Erick Trickey is a freelance journalist in Boston. He's written for SmithsonianPolitico Magazine, Boston magazine and Cleveland Magazine.

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Nick Hagen is a freelance editorial and documentary photographer in Detroit, MI. See his work atnickhagenphotography.com