Archive for the ‘Community Benefits Agreements’ Category

$2.6 Billion Spent on Cleaning Up DC Rivers Must Address Local Job Creation

June 7, 2013

SinkorSwim_WebBoxOver the next decade, DC Water will use a regressive Impervious Area Charge (IAC) to fund $2.6 billion in needed water infrastructure investments. Middle- and low-income residents and neighborhoods will carry the highest burden of the DC Water fee increase that will pay for these improvements.

Despite the fact that the funding burden of these projects falls heavily on the most vulnerable residents, DC Water has not implemented a local hiring agreement, even though putting residents to work on the project may be the best way to reduce the harm of a regressive fee. These are among the findings of Sink or Swim? Who will pay and who will benefit from DC Water’s $2.6 billion Clean Rivers Project?, a study published this week by Good Jobs First.

More coverage of the report can be found over at the Washington Post and the Washington City Paper’s Housing Complex Blog.

Cities rarely spend so much — $2.6 billion — on infrastructure projects. A strong Community Benefits Agreement could make this public infrastructure investment provide a jobs stimulus benefit to District residents without spending an additional dollar. A proposed Community Benefits Agreement (CBA), like the District’s amended First Source Law, would establish a minimum percentage of work hours that must be performed by District residents, increasing to 50% over the next decade.

The report was commissioned by the Washington Interfaith Network (WIN) and The Laborers’ International Union of North America (LIUNA).

Among the major findings:

  • The impact of the IAC – measured as a share of 2013 property taxes – will be four- to five times greater for homeowners in poor neighborhoods than for those in affluent neighborhoods.
  • Small businesses, especially those east of the river, will feel a heavy burden from IAC fees. Office buildings on K Street will feel little impact.
  • There is no indication that District residents will benefit in proportion to their burden. Contractors on major DC Water projects currently employ more North Carolinians than residents from Wards 7 & 8 combined. Over half the contractor workforce lives outside Washington, D.C. and its immediate surroundings.
  • Continued failure to hire local residents will result in a massive transfer of wealth out of the District. We estimate that over the next thirty years, D.C. ratepayers will be billed $4.2 billion in IACs, including $1.1 billion from Wards 7 and 8 alone.

District residents will pay for these infrastructure investments through a regressive fee for the next thirty years. Low- and middle-income residents will be hit the hardest. These are neighborhoods that have historically been excluded from opportunities in construction careers; to not leverage $2.6 billion in public spending for District construction careers would represent a tremendous missed opportunity.

ED Officials Agree with Us!

February 18, 2013

A stunning survey issued today by the International Economic Development Council (IEDC) proves that state and local economic development officials overwhelmingly agree with most accountability activists.

That is, hundreds of people who deal with site location consultants, tax-dodging lawyers, and footloose companies every day think there need to be some serious rule changes.

This is a very mainstream sample: IEDC is the nation’s largest professional association of economic development officials: it has about 4,500 members (the vast majority in the U.S., despite its name) and the survey was conducted in January, with a reported 350 respondents. (As well, IEDC has corporate members, including site location consultants; no cross-tabs of responses by type of member are provided.)

Look at what they said (words in quotes come from IEDC’s January 18 summary, which does not reproduce the survey instrument and is member-password restricted):

98.6 percent said “incentives should be structured in such a way that the community receives a tangible return on investment (e.g., employment, capital investment).”

(On that issue, see our Money for Something.)

“96 percent believe that part or all of the granted incentives should be returned if a company does not meet agreed-upon projections [i.e., clawbacks].”

(On that, see our Money-Back Guarantees for Taxpayers.)

67 percent “do not think it is ethical for location consultants to be compensated as a percentage of the incentive package they negotiate…”

(On that, see Chapter 2, Chapter 3 and Chapter 9 of my 2005 book.)

61 percent “believe location consultants’ compensation in a deal should be public information…”

In an open-ended comment section, “[p]erhaps the most frequent comment was that incentives practices are ‘out of control’…”

To be sure, despite these frustrations—and even though 57 percent said the frequency of incentive use is “too many,” the development officials responding generally don’t favor getting rid of subsidies. Instead they asked for help not getting snookered:

78 percent “responded that they approve of the practice of using financial incentives to influence business location decisions.”

But more than “80 percent responded that they or their peers or colleagues would benefit from more training in analyzing incentives deals.” Their most commonly requested new skills were how to calculate Return on Investment (ROI), fiscal impact, and the value of non-cash incentives.

“83 percent responded it would be helpful to have a set of guidelines or best practices for negotiating incentives packages.”

(On that point, see this publication of ours and this one, too.)

Without seeing the survey instrument, I am struck at how the responses all seem to overlook site location business basics: labor, occupancy, logistics, proximity to suppliers and customers, etc. That is, they apparently ignore the more than 98 percent of a typical company’s cost structure that is not state or local taxes and therefore cannot be influenced by subsidies. Clearly, some respondents believe that companies bluff and others said things like (quoted comment): “public monies are needed to provide public services and we shouldn’t be coerced into subsidizing large companies that don’t need the assistance.”

The development staffers also made it clear that politicians are no help. Many said there is a “‘general need in our industry for sharper benefit/cost analysis skills.’ Yet ‘a lot of times, elected officials don’t really care about the details of these numbers.’”

The IEDC survey has a second part, on the uses of subsidies, to be released soon. Clearly, this is a raw issue for Council members, especially those in smaller localities: last April IEDC published a guide on how to deal with site location consultants.

As someone who began training public officials on these issues in the late 1980s, I have seen a sea change in attitudes. Most feel trapped in a game whose rules they would never have written, and this IEDC survey attaches numbers to my takeaways.

So when will elected officials finally heed this consensus and start fixing the rules? If two-thirds of development officials agree it is unethical for site location consultants to pull down commissions on subsidies they negotiate, which state will step up and become the first to register and regulate these secretive, powerful players as lobbyists and thereby deny them success fees, a.k.a. commissions?

Living Wage Bill passes in the Big Apple

May 2, 2012
photo by Good Jobs New York

James Parrott of the Fiscal Policy Institute at a press conference on the Fair Wages for New Yorkers Act.

What started out as an attempt to guarantee benefits to Bronx residents at a redeveloped armory over a decade ago found its way to City Hall Monday with the passage of Fair Wages for New Yorkers Act. The bill was sponsored by Bronx Council Members G. Oliver Koppell and Annabel Palma.

Efforts to redevelop the city-owned armory fell through in 2009 when the city prevented a developer from entering into a Community Benefits Agreement with the Kingsbridge Armory Redevelopment Alliance. In response to that campaign and concerns regarding wages in city-subsidized developments, a new city-wide campaign for better wages took hold led by the Retail Wholesale Department Store Union and Living Wage NYC a coalition of community, civic and religious organizations.

The final version of the Living Wage bill is narrower than campaign organizers would have liked (tenants of subsidized project won’t be covered, for example). Still, supporters of the bill report it is the strongest living wage law in the country and assert this is only a first step to expand Living Wage ordinances in the city.

Information on the Fair Wages for New Yorkers bill can be found here, but the fundamentals are:

  • Commercial and Industrial firms receiving $1 million or more in discretionary subsidies and have gross revenue of $5 million or more would have to pay their employees at least $10.00 an hour or $11.50 if no health benefits are provided;
  • Developments on property sold by the city for more than $1 million below market value would be covered;
  • Manufacturers and nonprofit organizations would be exempt;
  • Tenants of subsidized firms (e.g., retail stores, restaurants) would be excluded.

On a worthwhile transparency note, the bill would require firms that receive more than $1 million in subsidies (whether or not a firm would be subject to the living wage requirement) to provide wage data for all employees in lower-wage sectors such as retail and restaurants. This goes beyond what is currently required in an already laudable transparency bill approved in December of 2010.

However, it is unclear whether this bill will go into effect. Last week, Mayor Bloomberg gave an address attacking wage requirements at subsidized firms and during a radio show compared them to Communism. Bloomberg has vowed to veto the bill and if that is overridden (as is expected) he will continue to fight it in the courts.

Regardless of the bill’s future, a victory lap is being taken by City Council Speaker Christine Quinn, whose political dexterity has allowed her to use the issue advantageously as she positions herself to run for mayor next year, (Mayor Bloomberg is term-limited out of office). In the New York City Council, where bills generally only move forward with support of the Speaker, Quinn skillfully maneuvered the living wage bill through controversial waters. In the year ahead, irrespective of her audience, she can take credit with community and labor groups for her support of a campaign to help lift workers out of poverty and with the city’s business interests for curtailing the bill so much it would cover a relatively small portion of the city workforce.

Quinn has received both praise and criticism for walking out of a press conference celebrating the living wage bill when a heckler refused to apologize for calling Mayor Bloomberg a “Pharaoh”.

Bass Pro Exposé: Reeling in Subsidies

June 9, 2010

The Public Accountability Initiative in Buffalo has just released an excellent national investigation of big-box retailer Bass Pro. It finds that the privately-held company has been given more than half a billion dollars in economic development subsidies, yet in many cases, the arrival of a Bass Pro store has not resulted in the revitalization, tax revenues or job creation that the company touts. For example:

 “A Mesa, AZ development anchored by a Bass Pro has been described as a ‘ghost town’ and ‘dead’ and spurred the state to pass a ban on retail subsidies.”

 “A taxpayer-subsidized Harrisburg, PA Bass Pro is struggling to attract tenants to the mall it anchors, leading to lawsuits, stalled renovations, and increasing stigma. Though the Bass Pro was expected to hire 300-400 employees according to initial projections, it had hired only 101 employees three years after opening.”

 “Bass Pro has gone on a building spree over the past ten years that significantly undermines its claims that each new store is a major tourist destination. Bass Pro sometimes builds stores in close proximity to each other, despite having promised to maintain a store’s attraction as a retail destination that will draw visitors from hundreds of miles away.”

The study, “Fishing for Taxpayer Cash,” figures into a hot debate in Buffalo, where Bass Pro has been offered $35 million, as part of a $154 million overall project package, to build a store. The Erie Canal Harbor Development Corporation hopes the Bass Pro shop will anchor a comeback of an area in the noisy shadow of elevated Interstate 190 close to the shore of Lake Erie.

The deal has been long-delayed and hotly contested, as a coalition of more than 40 community groups, the Canal Side Community Alliance, has come together to demand a Community Benefits Agreement, including living wages for permanent employees, green building standards, and space for local merchants. The City owns much of the land in the project footprint, and the Buffalo Common Council, in response to the Community Alliance, has passed a resolution essentially saying “no Community Benefits Agreement, no land transfer.”

Followers of Good Jobs know that we have long been critical of big-box subsidies like those to Wal-Mart and to mall giants like General Growth Properties, and we strongly recommend Stacy Mitchell’s seminal book Big-Box Swindle. And we have written articles in both progressive and conservative journals about the unusual subsidy dispute among top three outdoor sporting goods chains (Gander Mountain versus Bass Pro and Cabela’s).

Led by Community Groups, Newly Elected Officials Put Accountable Development in NYC on Front Burner

February 22, 2010

The rotten political culture in New York has forced ordinary New Yorkers to become increasingly savvy at making their voices heard, particularly when it comes to big development projects. And it’s making a difference. Advocates in the Northwest Bronx, for example, led by the Kingsbridge Armory Redevelopment Alliance (KARA), spent years organizing for a plan for the Armory that would bring good, permanent jobs to neighborhood residents. In a dramatic climax at the end of 2009 to their dogged efforts, they managed to defeat a proposal that fell short of these basic standards.

Blocking the city’s determination to take the low road represents remarkable progress, but what New York desperately needs is development policies that guarantee concrete benefits for local residents. Could a brand new crop of elected officials who are talking tough on accountable development provide a critical moment for advocates to finally accomplish just that?

Early signs are promising. Take the city’s new Comptroller John Liu, who spiced up February’s board meeting of the New York City Industrial Development Agency by voting ‘no’ on tax breaks for several projects, including a Western Beef grocery store proposed for the Bronx that, according to its application for benefits, would pay employees an average wage of about $19,000 a year with no benefits. Stating his concern that the current system lacks “clear processes and standards for project development and approval,” Liu pledged to “examine how scarce public resources are used to advance our City’s economic development.”

The proposed Western Beef would fulfill an urgent need for grocery retailers in this part of New York City, but Liu’s call to examine IDA’s way of doing things more closely could lead to more analysis of the consequences of subsidizing companies that pay poverty wages in order to address other legitimate problems such as food deserts.

Just over a week after his debut at the board meeting, Liu was at it again, suggesting in a bold op-ed in the Daily News that New York is behind other cities like Los Angeles and Milwaukee in embracing equitable economic development policies, a point neighborhood advocates have also fought hard to convey. He called for city developers to stop “stifling” neighborhood voices, and for remarkably high standards of transparency, accountability, and inclusiveness in Community Benefits Agreements, a promising tool that has thus far proven little more than a sham in New York City.

Other public officials appear to be hopping on the accountable development train, too. In another recent Daily News op-ed, the city’s newly-elected Public Advocate Bill de Blasio toughly proposed a citywide code of conduct for businesses that receive public subsidies, and called for requiring firms to pay a prevailing wage, and to stay neutral when workers try to form a union. These are all positive signs that some of the city’s newly elected officials may have gotten the message that voters have long been pushing. Now is a critical time for advocates to stay on alert and keep these officials on the right track.

Not to deny the handful of veteran public officials who have been pressing for policy reform, like Manhattan Borough President Scott Stringer, who has been advocating for stronger accountability at the New York City Industrial Development Agency for some time now. Stringer’s appointee to the IDA board, Kevin Doyle, stands out as one of the few board members willing to ask challenging questions about IDA’s decision-making processes.

In addition to ensuring that large development projects are a boon to local residents, creating more equitable development policies will also help exorcise the larger culture of corruption that bedevils the city and state. This was most recently played out in the indictment of Bronx City Councilman Larry B. Seabrook on charges that he stole cash from the city through a series of money laundering schemes, including one connected with the new Yankee Stadium. It’s all too easy to view such scandals as the bad behavior of stray individuals, and stop there. But by condoning a process that excludes community input and encourages wheeling and dealing behind closed doors over transparent, democratic means, our current approach to development reinforces the very culture that incubates such tainted public officials.

Ordinary New Yorkers are clearly prepared to keep fighting for a different way. Hopefully Liu and de Blasio will do them justice by continuing to show real leadership on these issues, creating momentum for other elected officials to fall in line.



In the Bronx, could a loss lead to a win?

October 22, 2009

blogphotokara2No, it’s not baseball, it’s NYC’s land use process. This week, the New York City Department of City Planning voted 8 to 4 in favor of a plan to develop the Kingsbridge Armory in the Bronx into a mall, even though the deal lacks a Community Benefits Agreement (CBA). So why are supporters of creating a CBA optimistic?

In New York City, where heads of commissions and board leaders are predominantly mayoral appointees, rarely is there dissent or even serious questions raised about proposed projects. But years of organizing and learning the ins and outs of development policy by members of the Kingsbridge Armory Redevelopment Alliance (KARA) have put officials on a bumpy ride. “No” votes from Planning Commission members representing Manhattan, Brooklyn, the Bronx and the city’s Public Advocate (there was one recusal from a Mayoral appointee) opens up significant leverage for organizers as the project needs final approval from City Council members in those boroughs.

With the strong backing of the relatively new Bronx Borough President Ruben Diaz and a unique showing of labor support – including the retail workers, building trades, Central Labor Council, teachers and SEIU 32BJ – KARA is in a strong position to push for CBA negotiations with Related Companies even though the developer is not required to participate in such talks.

“We are not asking for anything radical or extreme. We are simply asking that, in a borough that has the highest poverty rate in the nation and has consistently seen the highest unemployment numbers in New York State, Related and their future tenants provide living wage jobs with benefits that allow Bronxites a chance to provide for their families and to build a better life,” said Diaz.

As the project winds its way through the City Council for the final phase of approvals, KARA and the Bronx Borough President hope that the developer who wants to develop “Shops at the Armory” (with tens of millions of dollars of subsidies, a rock-bottom purchase price of $5 million for the landmarked building and the benefit of a $30 million new roof thanks to New York City taxpayers) will come to the negotiating table.

Considering that massive development projects in New York City, and the Bronx in particular (think Yankee Stadium, Gateway Mall, Croton Water Filtration Plant), have been easily approved without real community benefits, KARA is ahead of the curve and could shepherd in the first real CBA in the Big Apple.

Standing Strong at the Kingsbridge Armory

September 8, 2009

esnuestroIn a move rarely seen in The Bronx lately, an elected official is standing up for the creation of good jobs and accountable development. Newly elected Bronx Borough President Ruben Diaz Jr. has voted no on a land use proposal to build a subsidized mall inside the Kingsbridge Armory because the developer refused to sign a community benefits agreement.

This must come as a shock to Related Companies, which plans to develop the mall and has gotten subsidies and sweetheart real estate deals from the city in the past. Related was awarded the contract to purchase the armory from the mayoral-controlled Economic Development Corporation for the bargain basement price of $5 million. The armory is a landmarked building that spans an entire city block, has a new roof, and is directly across the street from a subway and bus lines. 

The city seemed to move in the right direction in 2006 by involving community leaders in developing a Request for Proposal and including language that applicants supporting a living wage provision for the permanent jobs associated with the project will be viewed favorably. But after that the community hasn’t been involved.

Diaz’s vote doesn’t mean the proposal can’t happen; the project now moves through the city’s 60-day labyrinthine land-use approval process that includes hearings and votes by the City Planning Commission and the City Council. If other elected officials follow Diaz’s lead, the city could leverage the subsidies to bring Related back to table with the community and still hammer out an agreement.

For nearly a decade the Northwest Bronx Community and Clergy Coalition advocated for community use of the armory. In 2005 the group joined with the Retail, Wholesale, Department Store Union to create the Kingsbridge Armory Redevelopment Alliance (KARA), which called for a project that creates living wage jobs,  promotes retail that doesn’t compete with long-time businesses and builds much-needed community, educational and recreational space for neighborhood youth.

The Borough President’s stance comes not a moment too soon. Unfettered, subsidized development has grown rampant in The Bronx: Gateway Mall (developed by Related) near Yankee Stadium and the Water Filtration Plant have not brought promised jobs, have run far over budget and/or have moved forward in the land use process under the guise of fake Community Benefit Agreements.

Kudos to Diaz for standing up for his constituents and hopefully setting a new standard that won’t allow subsidizing mega developments to come at the expense of locally owned stores and diminished wages, taxes and jobs.

Making Development Work for Local Residents

October 21, 2008

Community benefits agreements are changing the power dynamics of local economic development in many parts of the country. Among the most important of the benefits that these agreements can bring about are high-quality jobs for low-income workers. The Partnership for Working Families (PWF), which is spearheading the CBA movement, recently published a report, Making Development Work for Local Residents, that describes the gains that have been made with local hiring programs.

Written by Kathleen Mulligan-Hansel, the study finds that “the best local hire programs create first source referral systems to coordinate worker recruitment and screening, liaise with developers and employers, refer workers and support them as they navigate the hiring process, and link workers with support services that can help them stay on the job.” The report emphasizes the need to recognize the significant differences between the hiring process for temporary construction jobs and for permanent positions at the development site.

The findings in the report are based on nine case studies, mostly in California. One of the most successful was the Hollywood and Highland Center project, which included construction of the Kodak Theatre, now home to the Academy Awards. In the project, completed in 2001, 19 percent of the construction hours were worked by local residents, and 36 percent of the permanent jobs went to locals.

PWF is using the release of the report to kick off a broader effort to use local hiring programs to transform regional economies. That effort includes the launch, in cooperation with Cornell University’s School of Industrial and Labor Relations, of the Construction Career Opportunities Project. Its goal is “to identify, study, support and promote promising approaches to elevating union density in the construction industry and increasing access to building trades careers for low-income urban residents.” That’s real development.

CBA Moves Forward in Pittsburgh

October 1, 2008

Pittsburgh has joined the list of cities with community benefits agreements. The plan is moving forward after the Pittsburgh City Council gave its blessing to the agreement, which was signed by several public entities as well as community groups and a private company. The One Hill CBA Coalition negotiated the deal with the owners of Pittsburgh Penguins hockey team, as well as the City of Pittsburgh, AlleghenyCounty and the county Sports and Exhibition Authority. The $750 million project includes a new arena for the Penguins and redevelopment of the arena where the team currently plays.

The One Hill CBA Coalition was formed in April 2007 when city and county officially agreed to subsidize a new arena for the team in the city’s Hill District. The Coalition consists of 97 community groups, church groups, small businesses and historic preservation groups. Carl Redwood, Jr., Chairman of the Coalition, told me he wanted to make sure the development was beneficial to Hill residents: “We needed to determine our community’s future and development projects that fit into our plan.”

Pittsburgh UNITED, a chapter of the Partnership for Working Families, played a crucial role in the coalition’s success by mobilizing allies from around the city. For instance, the group organized a bus tour for progressive allies and for members of the media to show them areas of the Hill that would benefit from a CBA. Ultimately, the media started talking about the importance of family-sustaining jobs, community involvement and giving workers freedom to organize.

Local elected officials and the owners of the Penguins were originally resistant to the idea of a signed CBA. After months of public actions and press coverage, the Penguins and the elected officials had no choice but to bargain with One Hill. Subsequently, the final negotiations involved community leaders, County Executive Dan Oronato, Mayor Luke Ravenstahl and Penguins President David Morehouse.

The CBA will involve the people who live in the Hill District in numerous ways and help to rebuild their infrastructure and economy. First, the Penguins and the city’s Urban Redevelopment Authority will each provide $1 million for a locally-owned full-service grocery store in the district. Additionally, residents will have access to a local employment center that gives district residents access to jobs created at the new arena and the redevelopment project that will pay $12 to $30 an hour. The CBA also calls for the creation of the master planning committee which sets forth development guidelines. Along with the construction of a community center for youth, families and seniors, the Hill District will also see the creation of a Neighborhood Partnership Program centered on social services for the neighborhood.

While the CBA is seen as a victory, Redwood admits that there are some people in the community who feel the agreement did not go far enough given the $290 million subsidy. Redwood emphasized the need to continue community involvement: “To have a victory like this is important but we need to build upon it.”

Accountable Development Victory in New Jersey: Major Project to Include Housing and Job Quality Standards

August 5, 2008

The redevelopment of the Military Ocean Terminal in Bayonne will now promote good jobs and affordable housing in northern New Jersey. Much of the credit for this goes to the Garden State Alliance for a New Economy (GANE), which persuaded local officials to include job quality and housing affordability language in a Request for Proposals (RFP)to redevelop the decommissioned army facility.

The $10 billion 16 million-square-foot mixed-use redevelopment project—which is expected to create some 3,000 waterfront residential units, up to 1,000 hotel rooms and commercial and light industrial space—is eagerly anticipated in the community. Kate Atkins, executive director of GANE—a recently formed affiliate of the Partnership for Working Families —said involvement in the project was too important to pass up: “It will have a major impact on the region’s economy for many years to come.”

Representing a coalition of five unions and four community groups, GANE testified at local redevelopment authority meetings and held meetings with Mayor Terrence Malloy and other local officials. According to Atkins, “The coalition has been united on making sure that throughout the project the larger public benefit is really kept in mind–for example, making sure that construction jobs are good union jobs, and the permanent jobs are also high quality jobs.”

GANE’s goals are not only to educate public officials about their capacity to set high standards for developers, but also to send the message that it is possible to promote economic development that is financially beneficial to the community both in the short-term and in the long-term.

While GANE is pleased with its impact on the RFP, its job is not done. The group will monitor the process of selecting the developer to make sure that the project continues to promote equitable economic development.


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