Understanding community benefits agreements: equitable development, social justice and other considerations for developers, municipalities and community organizations.

• Author: Salkin, Patricia E.

1. INTRODUCTION II. WHAT ARE COMMUNITY BENEFITS AGREEMENTS III. ACCOUNTING FOR THE GROWING INTEREST IN COMMUNITY BENEFIT AGREEMENTS IV. EXAMPLES OF CBAS A. California 1. Hollywood and Highland Center (Los Angeles, 1998) 2. Staples Center (Los Angeles, 2001) 3. LAX Expansion (Los Angeles, 2004) 4. Ballpark Village (San Diego, 2005) 5. Other California CBAs B. New York City 1. Atlantic Yards 2. Columbia University Expansion C. Other Notable CBAs V. PRACTICAL PROBLEMS WITH CBAS A. Community Organizing B. Bargaining Power and Bargaining Tactics C. Money D. Enforcement and Monitoring VI. LEGAL ISSUES RELATED TO CBAS A. Consideration B. Standing to Enforce C. Issues Related to the Planning Process VII. CHECKLIST OF ISSUES TO REVIEW IN CONSIDERING THE USE OF CBAS VIII. CONCLUSION I.

   INTRODUCTION

   The opportunity to develop a Community Benefits Agreement (CBA) typically arises when a developer announces plans to construct a major project, such as a stadium or a theater complex. Local residents and business owners may often welcome these projects, but they may also have legitimate fears, such as: Will the project displace local residents and local businesses, either physically or through gentrification? Will it cause traffic problems and generate noise, pollution, or other nuisances? Will the economic development benefits espoused by the developer actually create jobs that pay a living wage and offer decent benefits for residents in the neighborhood or in a larger geographic community? Will the developer seek and/or welcome public participation in the project design and review of environmental and community impacts? In short, will the developer and the resulting built project be good neighbors?

   The CBA movement was born in the late 1990s as a mechanism for community groups to organize and work collaboratively to communicate and negotiate directly with developers. CBAs allow community groups to address a multitude of community impacts and opportunities that the host municipality may not have legal authority and/or the political will to discuss otherwise. Usually framed as private agreements (with or without municipal involvement), CBAs may require a developer to mitigate potential impacts of the development. But often they go even farther, asking the developer to work with the community to improve housing, employment options, and recreational and cultural facilities. As a result, CBAs can empower communities to become active participants in the planning process. Because of their potential to improve communities' quality of life, CBAs are becoming increasingly popular.

   While CBAs are ardently supported by many stakeholders as a tool for obtaining amenities that might otherwise be unavailable, it should not be assumed that they are always ideal vehicles to promote social justice issues. Practical problems--from organizing coalitions of community groups to negotiating with legally and politically sophisticated developers--sometimes combine to make the process of negotiating a successful CBA an unwieldy exercise. Moreover, CBAs have yet to stand the test of judicial review. When they do reach the courts, they will undoubtedly raise numerous issues of contract validity and interpretation. Additionally, where municipalities may be a party to the CBA and/or may give administrative or legislative validity to a privately negotiated agreement, delegation and enforcement issues are likely to arise.

   This article offers an analysis of legal and policy issues surrounding the development, implementation and enforcement of CBAs. Part II offers a general explanation of CBAs--what they are, what types of benefits they commonly include, and how they are negotiated and finalized. Part III briefly discusses the reasons behind the popularity of CBAs, and explains how they have been tied to smart growth and other social justice issues. Part IV reviews select CBAs from various cities, offering examples of successful models as well as discussing more controversial efforts. These case studies not only assist in understanding the dynamics of the CBA negotiating process, but also they illustrate some of the practical difficulties associated with the CBA model. These problems are discussed in greater depth in Part V. Part VI presents the legal issues surrounding CBAs, including questions of enforceability and validity. Finally, Part VII offers a checklist of items to be considered by developers, communities and municipalities before and during negotiations.

   II.

   WHAT ARE COMMUNITY BENEFITS AGREEMENTS?

   A CBA is a contract negotiated between a prospective developer and community representatives. In essence, a CBA specifies the public benefits and amenities that a particular developer will provide to the impacted community in exchange for the community's support of its proposed project. Community support goes far to ensure that the development approval process will occur expeditiously, and it may be especially useful to developers seeking government subsidies, zoning variances or permits. (2) Negotiations for a CBA usually take place between the project developer and a coalition of community groups, which may include labor, environmental, civic, and religious organizations.

   Many CBA provisions are inspired by social justice concerns and desires of the coalition, including such things as: living-wage requirements, "first source" (i.e. local) hiring and job training programs, minority hiring minimums, guarantees that developments will include low-income and affordable housing, environmental remediation requirements, and funding for community services and programs. (3) Because CBAs are negotiated on a case-by-case basis, the benefits can be tailored to meet specific community needs. (4)

   The flexibility of the CBA model is also apparent in the processes by which these agreements may be negotiated. Negotiations may be initiated by a developer or by a community coalition, and in some cases they may be encouraged by local officials. (5) Often, broad-based community input, gained through public meetings, workshops and surveys, plays an important role in determining and prioritizing community goals. Community outreach may be initiated and facilitated by the emerging coalition, or the developer may attempt to coordinate a forum to ensure that an appropriate dialogue takes place.

   After a CBA has been completed, it may, in some cases, be incorporated into a development agreement made between the developer and the municipality as part of the planning process. (6) Although this ensures a certain measure of transparency and also permits the government, as well as coalition members, to enforce the agreement, most states do not authorize local governments to enter into development agreements, so many CBAs will be enforceable only by the contracting community groups. (7) This reality raises a number of yet tested legal issues, including who will have standing to challenge and enforce privately negotiated CBAs, and whether these voluntary agreements, regardless of their terms, will be enforceable in a court of law. (8) CBAs are considered by their supporters to be powerful tools for assuring that community impacts will not be overlooked when large developments are planned for the neighborhood.

   Developers may also support the negotiating process as an effective method for obtaining community support, making the project approval process faster and smoother. Local governments may also look favorably upon CBAs since they can expect that when successful negotiations have occurred between the community and the applicant, it is less likely that the municipality will have to expend its resources defending land use and environmental permitting decisions. In addition, privately negotiated CBAs tend to remove and/or lessen the political pressures that might otherwise come to bear on elected and appointed representatives involved in the decision-making process.

3. ACCOUNTING FOR THE GROWING INTEREST IN COMMUNITY BENEFIT AGREEMENTS

   CBAs have been negotiated in relation to dozens of development projects in cities across the country. (9) The growing interest in this practice is due in part to factors such as increased urban redevelopment and reinvestment in the face of shrinking federal aid provided to cities; the evolution of the smart growth movement; an awareness of the connectivity between land use and environmental justice; and increased public concern regarding developer accountability.

   The types of development projects that most often give rise to CBAs--large-scale urban projects--are becoming more common. According to a recent study, eight out of the ten largest cities in the U.S. experienced population increases during the 1990s for the first time in decades and the growth rate is expected to accelerate over the next twenty years. (10) Space limitations and geographic boundaries have created expansion barriers and have resulted in the need and/or opportunity for redevelopment of already-populated areas. This creates a ripe environment for CBAs, which function best when the community base is large and where the developer needs community support in order to obtain subsidies, approvals, or regulatory variances (as is often the case in dense urban neighborhoods). As urban areas become more popular locations for large developments, residents are becoming increasingly empowered to demand that such developments "give back" to the community with benefits that improve urban quality of life. (11) And, as has been suggested, "no one can credibly argue that a major development should not benefit the community...." (12)

   The "accountable development" movement has also contributed to the spread of CBAs. According to this view, communities provide substantial tax incentives and subsidies to developers to support new job creation, while developers pin community hopes upon attenuated "ripple effects" without giving communities any control over the job opportunities created. (13)...