St. Louis Community Benefit Agreements
Next Stl has a very thorough and long article about Community Benefit Agreements. The purpose of this type of agreement is for communities to receive social benefits from development that takes place in their communities. These agreements would come into play for larger developments that are receiving city support. Here is the article:
Simply put, a Community Benefit Agreement is a legally binding contract, entered into by the developer(s) of a property, or group of properties, and community groups and individual stakeholders in the community surrounding the development. The developer agrees to provide a range of direct benefits to the community in exchange for community organizational support for the project.
The crux of a CBA is that it ensures some direct benefits to the community and assigns a time and monetary-based method for obtaining them, rather than relying on the promise of (and in some cases the complete absence of) indirect, or trickle-down, benefits. It takes the immediacy of benefits from potentially being generational to a time period that is generally much more immediate, making those benefits more measurable, and potentially more impactful.
If we as a city enable and empower a community to benefit immediately from the presence of a new development, rather than 10-15 years down the road, we get the best of both worlds. Those living in the neighborhood now are enabled to benefit now, and if those benefits accrue in the form of higher wages, better education, increased housing affordability, or more transportation options, those benefits can be felt now, built upon, and passed down to future generations.
Some national examples of well-negotiated and well-executed CBAs are: the Kingsbridge Armory CBA in New York City, the Bayview-Hunters Point CBA in San Francisco, the Hill District CBA in Pittsburgh, and the Gates Cherokee CBA in Denver. Comprehensive guidance is available from organizations such as Good Jobs First and the California Partnership for Working Families to help guide other communities, as well as offer caution as processes move forward.
An article from the Boston Federal Reserve points out that CBAs have increasingly become commonplace, but offers caution about making sure that CBAs are not misconstrued as being “for” the community if they are not “of” the community:
Unfortunately, much of this discussion about CBAs has shifted focus away from the key participants: the coalitions of community groups representing low-income workers and residents, often in communities of color. It is important for these communities to know how CBAs can help protect and serve their interests around development planning and to understand the elements that make a CBA successful. The Kingsbridge National Ice Center case example below demonstrates that CBAs can and do benefit communities when the coalitions involved represent diverse community viewpoints and when such coalitions can be held accountable by the broader community itself.
CBAs are meant to help bridge the gap between how a development helps the developer and how it helps the community. It hopefully answers the question “For whom is this being built?” in a way that a majority of stakeholders can find agreement in.
What We Have
In the wake of the increased focus on locally controlled tax incentives in St. Louis City over the last 2 years, a coalition called Equitable STL has recently convened. It is a broad coalition of organizations and individuals, focused on areas such as racial equity, community betterment, fair housing, and transportation. Borrowing from nationwide best practices on CBAs, they say the following are 3 essential principles that every CBA and its negotiation process must have:
▪ COMMUNITY representation leading the negotiating process.
▪ CBAs should be negotiated by a coalition that effectively represents the interests of the impacted community through an inclusive and transparent negotiation process.
▪ BENEFITS that are mutually beneficial for the developer, the city, and the community.
▪ CBAs must include specific terms that provide mutual benefits to address community needs and invest in equitable development.
▪ AGREEMENTS that are legally binding and directly enforceable by the community.
▪ This includes a clearly defined monitoring process and means of community-based recourse if the developer violates the contract.
Areas which could potentially be covered by CBAs could include but are by no means limited to: affordable housing access, public transportation, community spaces, local public school support, small business support, and displacement prevention measures.
On June 1 of this year, a coalition of groups, including, St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA), Forward Through Ferguson, and Team TIF, held a learning session at LaSalle School on N. Jefferson. It was moderated by Sylvester Brown, Jr., of The Sweet Potato Project, and featured Rashida Tlaib, from the Sugar Law Center for Economic and Social Justice in Detroit, Michigan, as well as a panel discussion with local women involved in efforts to bring CBAs to St. Louis. The presentation from that event can be found here.
In short, St. Louis has a large group of people wanting to bring this process to their neighborhoods, and many internal and external organizations ready and willing to help. St. Louis has many examples of what has worked and what hasn’t in other communities, nationwide. St. Louis has a growing inventory of what we do have, which brings us to…
What We Don’t
Examining the current state of play in St. Louis City for CBAs, one glaring issue becomes apparent: they are entirely voluntary. Participation in any CBA right now in St. Louis is dependent exclusively on the will of individual aldermen, and the political capital available to allow them to stick with the process. Results vary, but generally, if people are not forced to do something, they will choose not to, elected official, developer, or otherwise.
Additionally, St. Louis does not have an updated development plan. Our most recent comprehensive plan is from 1947, and sits mostly ignored on a shelf down at City Hall. Moreover, we don’t have a plan for how to employ and govern the numerous tax incentives and write-offs which have come into play in the time between our last citywide plan and now. What we have instead is a patchwork of neighborhood and ward plans, some on paper and some not, and no clear citywide mechanism to institute or enforce them. Resources are spread incredibly unevenly in this city, and that includes the existing ability of some neighborhoods to navigate the complex and uneven process that development in this city has become.
What St. Louis does and does not have in place for a successful CBA process is clear, next we will look at…
What We Should
Questions such as: what type, size, and value of development should be subject to a CBA negotiation, as well as who has authority to convene a negotiation, who is represented at the negotiating table, and how community feedback is gathered, etc. all need to be in scope in any ordinance setting up a CBA process for the City of St. Louis. These questions need to be answered to ensure that there are clear expectations, for both the community and the developer, concerning the process, no matter what ward in the city the development is proposed for.
Triggers are extremely important. Obviously, requiring every corner store or startup applying for a tax abatement to undergo a CBA negotiating process is not workable, nor is it advisable if we want to foster a business community in this city which incorporates organizations both large and small. Requiring a small start-up to engage in this process carries the potential to completely derail their business altogether before it even starts. The types of benefits sought by CBAs are generally best accomplished at scale, therefore the triggering thresholds for a project should correlate to that goal. Data-driven metrics allow for little wiggle-room in terms of being subject to a CBA negotiating process or not, and should be employed whenever and wherever possible
Process is key here, because with 28 different aldermen, and the resulting potential for 28 different processes for CBAs (including not having to enter into one as a term of the development), there lies the potential for chaos.
If a developer doesn’t like the terms offered by one alderman, they are currently free to pick up stakes and move their development across the street, negating any contractual direct benefits that could have done a measure of good in the surrounding community. This issue is not solved solely by instituting a statutory CBA process, but by instituting a CBA process as part of a broad set of tools the city could employ in a pursuit of more racially equitable development and economic outcomes.
More broad questions, such as where in the city one should be able to get a tax abatement, and at what rate and duration, are best accomplished as a city-wide policy change. Individual CBAs are not the best place to fight abuses of the tax incentive system as a whole, nor is doing so sustainable or healthy for a community. CBAs and incentive reform are issues on the same side of the economic development coin, and should be pursued simultaneously, as they both seek to answer the question referenced earlier, “for whom?”.
There is a stark difference between the financial stature of many of the large-scale developers seeking incentives, and the communities and neighborhoods in which they seek to build. Often, the language used when arguing for a tax incentive is that the project is “not viable” without the added boost. To the City’s credit, they have begun to ask the developers for their anticipated profit margins, both with and without the incentive. What is starting to be revealed is that the incentive is often not moving the needle from non-viability to viability, but rather from average profit margins, to upper-range or even above average profit margins for the market (these analyses are available for review upon request from SLDC, but are not publicly posted). Therefore, in addition to asking “for whom is this being built?”, perhaps the question of “who stands to profit, and at what cost?” should also be on the table.
There are currently two competing aldermanic proposals under consideration concerning CBAs. The first, Board Bill 11, was filed by Board of Aldermen President Lewis Reed. The second, Board Bill 61, was filed by 15th Ward Alderwoman Megan Green. They have both been assigned to the Housing, Urban Development, and Zoning Committee, chaired by 17th Ward Alderman Joe Roddy, where they have sat since May 5th and June 9th, respectively.
Both bills aim to make more clear the process by which a CBA is negotiated. The level of detail in the bills varies greatly, as well as the who, what, and how of the process by which they would be employed. In both instances, more community input is needed to fine-tune and perfect the bills. Both bills appear to have languished in committee until one of them gains a critical mass of political support to move forward.
Ideally, they could be combined and strengthened, rather than move forward in tandem as competing proposals. Community Benefits Agreements are about the community, and the community would benefit the most from a serious effort at collaboration to produce the best bill possible for the whole city.
President Reed has held a series of town halls throughout the city to explain what his bill does. His bill does include a trigger in terms of development value ($1 million), and has minority and women owned business requirements for the construction of developments which fall under the governance of the ordinance. His bill has been criticized for preserving too much of the status quo, and not doing enough to truly include a broad-based community voice in the negotiations, insteading leaving the process of negotiating up the individual aldermen. The bill contains language noting that the CBA is to inform the community of the benefits resulting from any potential development. Ideally, the residents should be involved in the crafting of those benefits, not just informed of them after the fact.
Alderwoman Green’s bill includes similar triggers to President Reed’s, although there are tiers built into hers based on poverty rates in the development area and development size. It also contains data-driven metrics and triggering mechanisms for the institution of CBA agreements, which leave less room for loopholes. It contains guidance on convening bodies who would then help facilitate the CBA negotiations. It has, however, been criticized for being overly complex to the point that it may deter business.
Alderwoman Green used the development proposed for 3172 Morgan Ford as a proof of concept that CBAs are something that can be done. The effort was successful in that it generated an agreement with the developer, resulting in a $60,000 (10% of the value of the tax abatement being sought) one-time payment, to be made to a local nonprofit to help finance down-payments for the production of 15-25 quality and permanently affordable housing units in the Tower Grove South neighborhood. Questions around process and representation in the negotiations were expressed during feedback sessions with the community, and both of those concerns could and should be addressed by a strong CBA ordinance.
We have recently seen Equitable STL working to educate people on what the core tenants of CBAs are and are not, using other cities which have instituted CBA agreements successfully as a guidepost. Equitable STL had a presence at every mayoral town hall in September, and has, thus far, presented an educational CBA presentation to over a dozen neighborhood associations and other community organizations.
Additionally, commenters (and commissioners/board members) at TIF Commission and LCRA Board meetings have increasingly brought up the idea of requiring CBA funds from some of the larger developments that have moved through those bodies for approval. Most recently, at the TIF Commission hearing for the second phase of the City Foundry project, Gerry Connolly, a member of Team TIF, suggested that the TIF Commission should consider that option. Specifically a CBA for City Foundry could direct funds from the CID and TDD revenue to support development in neighborhoods outside the central corridor with high rates of poverty.
As St. Louis moves towards further exploration and implementation of a citywide ordinance governing CBAs, its leaders would do well to remember that they are for the benefit of the people who elected them. A rising tide lifts all boats, and CBAs are a critical step in making sure that the tide is as far-reaching and immediately impactful as possible. The Ferguson Commission Report contains a call to Broadly Apply a Racial Equity Framework. As the region, and specifically our city, are once again being forced to examine the broad racial disparities which exist in nearly every facet of daily life here, our leaders have an opportunity to take bold action to address those realities and find ways to alleviate them. I firmly believe that a CBA ordinance holds the potential to help do so.
About Andrew Arkills
Andrew Arkills is a data analyst by day, and has served on the Tower Grove South Neighborhood Association Board, first as a member of the steering committee which founded the organization, as its first Treasurer and then as President. He is currently the immediate Past-President of that organization. He also volunteers his time and data/financial analysis skills with Team TIF. He served, in a limited role, as an advisor to the negotiating committee which recently produced a CBA agreement with the developers of the property at 3172 Morgan Ford, answering questions related to tax incentives for the group. He is a resident of the 10th Ward.