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Detroit Community Benefits Ordinance Update

By Kathy Ralston, CDAD Fall 2015 Intern

“Agreements reached through good faith negotiation with the legal weight of an ordinance will provide assurances that promises made are promises kept.”

Grass roots community leaders are calling for an up or down vote from City Council on the proposed Detroit Community Benefits Ordinance (CBO). Speaking for the Northwest Neighborhood Community Benefits Consortium, Bill Hickey urged Council to vote on the ordinance at the September 29 regular session.  https://www.youtube.com/watch?v=1ZomxupHNiY.

On June 30 this year, the Michigan State Legislature voted House Bill 4052 into law. The resulting legislation, Public Act 105 of 2015 targets the ability of local governments to pass laws “regarding the regulation of terms and conditions of employment within local government boundaries for employees of nonpublic employers.”

PA 105 does nothing to stop local municipalities from passing CBOs. It does, however, seek to limit what goes into those CBOs with respect to the employee/employer relationship. Following the passage of the bill, the city’s Legislative Policy Division (LPD) forwarded a memo to Council outlining recommended changes to the current draft CBO. While it is not in the public’s interest for council to pass a local ordinance that would be vulnerable to court challenges, just how much editing of the current draft is necessary to remain compliant with state law is subject to interpretation. LPD has made its recommendations and the community awaits action.

Some have questioned the value of a Community Benefits Ordinance when it is certainly possible for developers to reach agreements without an ordinance. But, without an ordinance to set specific permanent legal parameters, developers can choose to not engage the community whatsoever. Another very important note is that the CBO does not absolutely require that an agreement be signed. Written into the law are exceptions in cases where an agreement cannot be reached due to impasse. Under the ordinance, developments of a certain size (those worth $15 million or more) that ask for a certain amount of public subsidies such as tax abatements and public to private land transfers, require developers to engage the community. Those agreements can contain any number of community benefits. Common examples of community benefits agreed to by developers across the country have been environmental mitigation and agreements to hire a certain percentage of local workers. However, agreements can contain any number of benefits that fit the needs of the particular community. Across the U.S. there are many examples such as transportation opportunities for local residents, community centers, social services and even new grocery stores.

The CBO also contains provisions that would serve to legally hold developers accountable for honoring benefits agreed to. The importance of legal accountability for promises made has become obvious in light of incentive packages granted to developers in Detroit over the years. A prime example is the Marathon Oil Refinery expansion project in southwest Detroit. Marathon received a $175-million property tax break for the project in 2007 and pledged to recruit Detroiters for new jobs at the refinery. Since then, Marathon has hired few city residents.
http://www.freep.com/article/20140314/NEWS01/303140013/Tax-break-for-Marathon-refinery-expansion-fails-to-bring-jobs-for-Detroit-residents-city-officials-say.

In Detroit, there has been both opposition and support for a CBO from business and economic leaders. Rodrick Miller, president and CEO of the Detroit Economic Growth Corporation (DEGC), has stated that a CBO could create additional barriers and discourage new investment. http://michiganradio.org/post/debate-heats-over-community-benefits-ordinance-detroit#stream/0

The Michigan Black Chamber of Commerce (MBCC) publicly supports the adoption of the Detroit CBO while the Southeast Michigan Chamber Alliance remains opposed. President and CEO of the MBCC Kenneth Harris says that he and his organization support the ordinance because it would help build relationships between developers and local small businesses. http://www.crainsdetroit.com/article/20141109/BLOG200/311099999/community-benefits-agreements-would-boost-neighborhoods-small

Many laws exist to create a predictable process such as private property rights laws, building and zoning ordinances and laws that regulate banking and investment. It is widely recognized by economic development professional world-wide that all markets and bargaining processes need sufficient structure to function.

Local residents bring to the table a deep understanding of the unique needs and economies of their communities. Agreements reached in cities across the nation and the world demonstrate that community inclusion in development decisions does not hinder economic growth at all but actually promotes more equitable people-centered growth and development.

The community believes the proposed Detroit CBO has been on the table long enough. It’s time for Council to vote and let Detroit residents know if their elected representatives support a predictable process that ensures an equal voice for the community in development decisions. Community benefits agreements reached through good faith negotiation with the legal weight of an ordinance will provide assurances that promises made are promises kept.

Read the current proposed Detroit Community Benefits Ordinance here 3Revs.FinalDRAFTLaw.LPD_CBAO_-_10-30-14 (1)

 

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