If you live in Detroit, you’ll see two measures on your ballot that look almost identical — Proposals A and B. They’re called “community benefits ordinances.”
The laws would require businesses looking for tax incentives to build in Detroit to meet with representatives from the neighborhoods around the proposed projects to hear their concerns and decide on which community benefits they’ll provide, before getting approval.
Some say if either of the ordinances is passed, it will chase developers away and ultimately bring job growth to a halt. Others think a citywide ordinance is necessary to give the community a voice in the multi-million dollar development projects affecting their neighborhoods.
The proposals – A and B – are two versions of the same thing, competing for your vote. We’ll take a look at where they came from, how they’re different and what they could mean for the city of Detroit.
What is a Community Benefits Agreement?
A Community Benefits Agreement (or CBA) is a contract signed by a developer and a community group(s) that requires the developer to provide mitigations or amenities – like job creation, educational programs or environmental protections – in exchange for building in the neighborhood.
Proposal A: The People’s Community Benefits Ordinance
Some Detroiters say they’re tired of watching new development suck resources from their neighborhoods and give little in return.
Why the people’s proposal came about
“We’re tired,” says former state legislator Rashida Tlaib. “We’re tired of watching our school system deteriorate and literally building our own bus covers because our city can’t afford it. Yet we can afford to subsidize a big hockey stadium. It’s just wrong.”
Tlaib is a member of Rise Together Detroit, a coalition of community organizations that’s behind the creation of Proposal A.
She’s talking about the new Red Wings arena. It’s a private development of billionaire Mike Illitch, to which the city contributed $260 million dollars of taxpayer money.
“If we have to pay for it we should have say,” says Tlaib. “This proposal is something that came about because of broken promises by developers.”
Tlaib says the developers have had a history of not complying with agreements – like hiring requirements – and the city has had a history of not enforcing them.
As part of the agreement, 51% of the jobs created were required to go to Detroiters. But recently, Olympia Development was found to have not met its end of the deal.
The city has fined them over $500,000, saying it’s creating job training programs with the money. But, Tlaib thinks this is a nominal penalty.
“The fact of the matter is those fines, they are so little, they don’t deter [developers] from continuing to violate,” she says. “no one has the courage to claw back those large tax breaks.”
The proposed ordinance would require developers of city-subsidized projects of $15 million or more to negotiate a Community Benefits Agreement (CBA) with communities impacted. Because the community group signs the CBA, it would be able to sue the developer in the event the agreement is not met.
Proposal B: The City of Detroit’s Community Benefits Ordinance
City Council feared Proposal A would scare away developers. They created a “compromise.”
Why the city’s proposal came about
When Proposal A came to City Council to be put on the ballot, members like Scott Benson were concerned it would slow down much-needed development.
“No where on the planet earth does anybody do CBA’s at that threshold,” says Benson. “They’re typically done at the nine-digit or higher level.”
Benson says the $15-million-dollar threshold in Proposal A would require many more projects to enter into this community benefits process – a process, he says, that is complicated and time consuming.
“We’d be doing one every 25 to 20 days. It’s not a reasonable expectation,” says Benson. “And what you’re really going to end up doing is just pushing development away from the city of Detroit.”
So Benson along with Council President Jones’ office and the city’s Planning and Development and Jobs, Economy and Training departments, drafted what he calls a “compromise.” Proposal B.
The city’s proposal increases the threshold to projects costing $75-million-dollars or more – which means only one to two projects a year would be required to go through the community benefits process, says Benson.
He says City Council tested Proposal B in negotiations with auto supplier Flex N Gate for the creation of its $100-million-dollar facility — and was successful.
“The community identified that truck traffic was a major issue,” he says. “And so the city, being at the table, was able to go out and apply for a federal grant which came back with $4.1 million dollars that will go to expand Georgia … And that’s going to encourage the truck traffic, instead of going through the neighborhood, to take the proper route.”
Benson says if Proposal A was in place, the city wouldn’t have been able to help secure the grant because the proposal states city representatives will not be part of negotiations between the developer and community representatives.
In Proposal B, a “Neighborhood Advisory Council” would be brought into the negotiation process, but developers would not be required to sign a contract with them.
Business leaders are worried
Detroit business leaders, like Sandy Baruah of the Detroit Regional Chamber, think that if either proposal passes it could pose a threat to the progress of development in the city. And ultimately could wind up costing Detroit the one thing it can’t afford to lose – jobs.
“All across the nation, you’re seeing the streamlining of processes to allow businesses to flourish and develop so jobs can be created so tax revenue can be captured,” says Baruah. “These two proposals take Detroit going in a very contrary direction making it much more difficult for people to come in.”
“Proposal A puts the steering wheel of development in the hands of unelected, unaccountable, very amorphous community groups that would have no parameters as far as what they could negotiate for, for how long they could negotiate … I know very few business that would allow that to happen. It introduces far too much uncertainty into the process.”
Community benefits agreements are a 15-year-old practice
Armando Carbonell, a Senior Fellow at the Lincoln Institute for Land Policy, says while other cities are trying out individual agreements, he hasn’t seen anything like what Detroit’s considering.
He says voluntary agreements between developers and neighborhood groups have been around since the 2001 Staples Center deal in Los Angeles.
“The reason these have been done outside of any city ordinance is that they can be beneficial to the developer and the community, because they’re taken on voluntarily to smooth the development process,” he says.
“I don’t think, per se, a city ordinance is going to discourage development,” says Carbonell. “I think it obviously depends on how such a program is implemented.”