The debate continues on Buffalo's waterfront and possible community benefits

Earlier this week, the Erie Canal Harbor Development Corporation (ECHDC, a subsidiary of the Empire State Development Corporation) finalized an agreement with the New York Power Authority to issue $105 million in bonds for Buffalo's waterfront redevelopment project. As of today, this news is up on NYPA's website, but not ECHDC's, even though you would think (hope) the lead agency on the project would want to be more open about its dealings. According to the Buffalo News, NYPA's investment, which includes $55 million in funding for waterfront developments, is "helping to make amends for past decisions that... shortchanged Western New York."

Just after the agreement was finalized, the Buffalo Common Council held a public hearing over the waterfront development, which is continuing to generate controversy, mostly over living wage issues. The city, which controls part of the property, doesn't want the project to go forward without a CBA, and a lot of community groups agree. They want to ensure that quality jobs, not just any jobs, are provided for local workers and that there's support for independent and local businesses.

The ECHDC though, along with pro-business advocates, think that a CBA will stymie development. A living wage requirement certainly would not go down well with the project's proposed anchor tenant, Bass Pro, which is notorious among subsidy wonks for playing the public fisc for all it can get.

Buffalo State College economics professor Susan M. Davis pointed out "the irony of business people asking for subsidies and then turning around and calling it [a living wage] 'socialism[.]'" On the other hand, Julia Vitullo-Martin from New York City's Regional Plan Association claims that "[w]hat they [CBAs] really do is increase the costs of development tremendously--and often halt it altogether." She cites the recently failed Kingsbridge Armory Redevelopment project in the Bronx, which fell apart after community groups and city leaders refused to approve the subsidized retail project without a living wage guarantee. I can't really argue with her. There are a lot of companies that don't want to deal with CBAs and meddling community groups. And CBAs do increase costs, but I would phrase it differently: they force developers to pass on public subsidies to *gasp* the actual public. I would also say to Ms. Vitullo-Martin, have some optimism; the Kingsbridge failure might be a blessing in disguise. The next development proposal for the property might offer something a lot better.

Jordan Levy, chairman of the ECHDC, says that the CBA campaign is interfering with the authority's negotiations with Bass Pro. "We're hopeful we are going to bring them to conclusion," Levy said, "but if this community is saying we don't want Bass Pro, I'm not sure that even an act of Congress is going to get them to come here."

Yes, Mr. Levy, this project is about the Buffalo community, and the interests of the community should come before Bass Pro's bottom line. Maybe it's time to start listening to what the community wants.

NYC Comptroller Liu's CBA task force & more to come from the DuBois Bunche Center

Last week, New York City Comptroller John Liu announced the formation of his task force on Public Benefit Agreements. (Why he chose the "PBA" nomenclature is unclear.) According to Liu's website, "The Task Force will develop recommendations on best practices and draft a framework for a more effective and equitable process to guide public subsidized economic development projects in the City of New York, including accountability and enforcement mechanisms that would apply when tax dollars, rezonings, and other public resources are used to facilitate private development."

The task force has more than 30 members, and Eliot Brown at the New York Observer says that it has "lefty bent." Norman Oder at the Atlantic Yards Report breaks down the membership "through an AY lens" and points out that three of the task force members support the much criticized Atlantic Yards CBA.

One of those three task force members is Roger Green, the executive director of the DuBois-Bunche Urban Policy Center (and former New York Assembly member). The DBC announced that it will be undertaking its own study of CBAs, which will "review the origins of the various Community Benefits Agreements to determine their effectiveness in enhancing minority business and equal employment opportunities."

Brian Lehrer and Seth Pinsky discuss CBAs and economic development in New York City

Seth Pinsky, president of the New York City Economic Development Corporation, spoke on the Brian Lehrer show on Monday. Responding to a question about Mayor Bloomberg's recent criticisms of CBAs, Pinsky said that "it's important to distinguish between garnering community benefits through the legally prescribed process and community benefit agreements. The objection that the mayor has is that communities, and who these community members are, have often tried to make agreements separate from the political process to benefit only those communities in ways that are completely unenforceable by the city and also in ways that cost the city and cost city taxpayers substantial amounts of money."

I would point out that Bloomberg endorsed the Atlantic Yards CBA, even though there was no city review of the project at all, and he provided substantial funding to help Columbia negotiate a CBA through the West Harlem Local Development Corporation. So to a certain extent, if these CBAs are costing city taxpayers and operating outside the city planning process, it can be attributed to the administration's previous policy stance. Moreover, the New York City CBAs, for the most part, are not "completely unenforceable." There may be difficulty in enforcing them, but they're still valid contracts. (On that note, the Yankee Stadium CBA, which has the most legal problems, will soon be going to court.)

Pinsky continued by emphasizing the importance of a more formal process: "What the mayor feels is the appropriate way to ensure that communities in the city as a whole benefit, is to use the political process that we have, the Uniform Land Use Review Process, through which the community board, the borough president, as well as the city council are able to ensure that the communities get the benefits that they need."

Opposition to government-designated CBA coalition in Santa Rosa

The Accountable Development Coalition (ADC), which negotiated the recent Sonoma Mountain Village CBA, is coming under more fire. It seems that the SMART rail district, a quasi-public entity, is requiring developers of the New Railroad Square project to negotiate a CBA, specifically with the ADC. Attention has also been brought to the fact that the Sonoma Mountain Village CBA provides funding for the ADC: $5,000 upfront and $6,000 per year after that. 

This has some people upset. As an editorial in the Press Democrat explained: "The coalition represents many important interests, but we don't believe it speaks for the entire community and, as a private organization that potentially could stand to benefit financially from such an agreement, it should not be allowed to dictate terms on a public project like this."

Regarding the issue of who speaks for the community, ADC critics have a good point. No coalition is ever going to be able to represent the whole community, and even if this were possible, the government probably shouldn't be involved in deciding which coalitions get to make CBAs. 

Fortunately, the developers aren't being limited to negotiating with the ADC, and they've reached out to other community groups interested in being involved in the CBA. Kudos to them. The ADC would do well to open itself up as well.

Regarding the payment issue, CBA coalitions are regularly advised not to accept direct funding from developers. John Goldstein of the Partnership for Working Families has explained as much:   

As a matter of principle, groups in our network don’t take money from developers. We want to avoid any appearance of a conflict of interest.... We have advocated in CBAs that developers give to the communities they’re developing in.

So the ADC may want to revise its policies somewhat. But critics should also acknowledge that the ADC is a mostly volunteer organization and that $6,000 a year isn't all that much. In other words, this doesn't seem like the type of case where coalition groups are getting bought off. The Atlantic Yards project, in contrast, involves much larger grants to all of the organizations that signed the CBA. (See the Atlantic Yards Report for more on that.)

Finally, there has been more criticism that the ADC has too much political influence and that it will scare developers away from non-union contractors. This is a straw man argument. If non-union contractors are going to suffer because of precedents set by the Sonoma Mountain Village CBA, the problem is that the CBA provisions are appealing to developers and lawmakers, not that the ADC has somehow improperly influenced government decision makers.

More push back against CBAs in Sonoma County

Apparently, New Yorkers aren't the only people to be skeptical about CBAs. Bucking the California trend, the CBA for Sonoma Mountain Village has not been well received.

Last month, CBAs were accused of creating an anti-business climate. An op-ed this week calls them anti-competitive "special interest giveaways," and claims that coalitions use "power politics" to prevent non-union contractors from winning bids. The article's author, John Corry, is on the board of the Associated Building and Contractors Golden Gate Chapter.

The way it works, Mr. Corry says, is that supposed "community" groups force developers to enter into project labor agreements (PLAs), which require union labor. Developers weigh the added costs of union labor against the likely costs of community groups' threatened litigation, and often give in. One commenter helpfully calls this "greenmail."* This manipulative behavior doesn't just cost the developer more, it also forces non-union contractors out of the bidding process.

Mr. Corry makes some good points: a CBA doesn't represent the community just because it says it does; CBAs often use "power politics;" and they can favor special interests.

But Mr. Corry's article is tall on criticism and short on context.

CBAs, by their nature, favor special interests, but this is not necessarily bad. The development process has long been dominated by different and more powerful interest groups: tycoons, monopolists, propertied gentry, chambers of commerce, building trades associations, national development companies, etc. Unions can be put on this list too, but that doesn't reflect on their inherent societal value. Mr. Corry also fails to recognize that CBA coalitions represent more than union viewpoints. Commonly, coalitions bring together neighborhood groups, environmentalists, civil rights supporters, faith-based organizations, urbanists, affordable housing advocates, community development groups, living wage supporters, etc. CBAs give these historically disempowered groups a way to engage successfully in interest group politics, and the diversity of viewpoints that they bring to the table can ideally strengthen the democratic nature of the planning process.

Similarly, the fact that CBA coalitions use leverage, or power politics, to achieve their goals is not necessarily manipulative; developers, after all, certainly use political influence to their own advantage as well.

Mr. Corry's complaints that PLAs and CBAs end up costing taxpayers more is arguable. I'm not one to make absolute statements about this type of economic issue, but I will point out that many government entities, including New York and the White House, have determined that PLAs can be an effective method for lowering construction costs and decreasing the likelihood of labor disturbances. Moreover, PLAs can help to ensure that workers receive living wages and other labor benefits, even if they are not part of a union. (PLAs, contrary to Mr. Corry's statements, do not always foreclose non-union contractors and non-union employees from working on projects. See here for more details.) Regardless, PLAs are typically negotiated separately from CBAs, and even when they are included, they are but one negotiation element among many others.

Finally, Mr. Corry fails to acknowledge the breadth of qualitative and quantitative positive impacts that CBAs can have. It may be true that some CBAs will be astroturf, or unenforceable, or overly expensive, or extortion, but Mr. Corry's generalizations are too simplistic to give us any help in avoiding such outcomes.

* "Greenmail" it seems, is already a term for a type of corporate takeover strategy. (Wikipedia.) A quick google search will get you only a few results using greenmail to mean environmental blackmail. (National Right to Work Committee; NYT (quoting Mr. Corry's organization); The Register.)

Reactions to the Sonoma Mountain Village CBA

The Sonoma Mountain Village CBA, announced last week, has already garnered some negative reactions. Lisa Schaffner, the mayor of Healdsburg, California, and the executive director of the Sonoma County Alliance, a public interest group and political action committee, is one of the agreement's critics. She believes that CBAs should only be negotiated for projects receiving public subsidies, and that the CBA for the privately financed Sonoma Mountain Village sets a precedent that could harm the area's business and development climate.

On the other hand, the developer and CBA coalition members see the agreement as contributing to the project's sustainability goals. The developer, Codding Enterprises, has pointed out it's "not an average kind of developer," and that "there is no one-size-fits-all way of looking at development." I would add that the chances of the CBA becoming a precedent for all privately financed developments is limited, given that CBAs are voluntary agreements. If a developer chooses to emulate Sonoma Mountain Village and pursue a triple bottom line, or if a developer wants to obtain community support or quell community opposition, a CBA may be a good fit. But entering into a CBA is not a mandatory part of the land use approval process, and experience with CBAs has demonstrated that developers often resist negotiations.  

Moreover, I would ask whether it really matters if a project receives subsidies. Sure, the receipt of public funds strengthens the case for a CBA, but the impacts of the project on the community will be the same regardless of how it's financed. And I question whether Sonoma Mountain Village is completely financed by private sources; most billion dollar projects receive some form of subsidy, whether it takes the form of infrastructure, tax abatements, environmental remediation, below market property sales, affordable housing incentives, or outright cash grants.

And setting a precedent for CBAs won't necessarily scare developers off. CBAs offer a lot of benefits to developers: they help to achieve positive community relationships; they ward off costly litigation and development delays; they can help a developer to meet sustainability and social equity goals; and they're great for public relations. 

But I would agree that CBAs set precedents for community coalitions, which can use the clout of past victories to attract new members, gain public and political support, and increase their leverage in future CBA negotiations. The Accountable Development Coalition, which neogiated the Sonoma Mountain Village CBA, has done just that. It's currently in talks with the developer of the New Railroad Square Project.

Crain's bashes CBAs

Crain's New York Business published an article last year calling CBAs "extortion" and "zoning for sale." These criticisms were repeated last week in an article written by the same author, Alair Townsend, this time bashing the Kingsbridge Armory CBA campaign.

Townsend points out that the Bronx has a higher unemployment rate than other parts of New York, and she faults the borough president and CBA supporters for opposing a project that would create hundreds of jobs. But the Kingsbridge Armory Redevelopment Alliance is not opposing development, and it's certainly not opposing new jobs; the coalition, rather, is opposing low road development and dead-end, poverty wage jobs.

Townsend also contends that the city council can't force the developer to pay a living wage or require union neutrality. Such conditions on project approval might be found to be unconstitutional exactions (see here for background), but Townsend oversimplifies the issues. Most importantly, the wages and unionization issues are not the only concerns that have been raised about the project. The borough president cited concerns about the project's impacts on traffic and existing retail establishments, among other things, and similar issues were also discussed in the draft environmental impact statement. It's completely permissible for the city to take these issues into account when deciding whether or not to approve the project. (See sections 2-04 to 2-06 of the city's Uniform Land Use Review Procedure Rules for more on this.)

Supporting a CBA for the armory redevelopment is not "pay to play," as Townsend suggests. The CBA campaign in this case has a wide base of community support, and local politicians would be remiss if they didn't consider the community's needs during the planning review process.

CBAs as "shakedowns"

From yesterday's New York Post, in an article about the controversial Willets Point redevelopment project:

Outgoing City Councilman Hiram Monserrate and some particularly dubious allies have succeeded in squeezing City Hall for a "community benefit" agreement requiring a vast tract of low-income housing to be included in whatever ultimately rises at Willets Point.

"Community benefit," of course, is a euphemism for "legal shakedown."

From a potential developer's perspective, it represents a pre-negotiated bribe paid to politicians and their allies for the right to attempt to create new jobs, and to bolster the city's revenue base.

But the practice is all the rage in New York these days. Similar requirements accompanied the recent Harlem rezoning deal, and "community benefit" shakedowns were integral to the new Yankee and Shea baseball-stadium projects.

The successful Willets Point developer now must agree to dedicate fully 35 percent of the undertaking to low-income tenants - up from a barely tenable 20 percent in City Hall's original proposal.

...

But Mayor Bloomberg and City Council Speaker Chris Quinn are behind it. And Monserrate and his allies are happy.

Now to find a developer.

Good luck with that.

More opinions from Crains.

The letters to the editor in the May 19th edition of Crain's New York Business followed up on Alair Townsend's recent remarks about CBAs being "zoning for sale" and "government sanctioned extortion."

Jesse Masyr, the attorney who worked with the WHLDC to negotiate a preliminary agreement with Columbia, wrote in to express support for community coalitions and the CBA process. He also explained that "the time has come for the city of New York to have an open, honest dialogue about whether CBAs should be a part of the land-use landscape."

Into the cookie jar... another criticism of CBAs

Last week's Crain's New York Business ran an opinion piece on CBAs written by Alair Townsend, who called them "zoning for sale" and "government sanctioned extortion." Ms. Townsend cited the Yankees Stadium and Columbia deals as illustrating that CBAs have "little to do with adverse impacts but are instead designed to grease the approval process. Groups use rezoning proposals as leverage to extract whatever they can--jobs at specified wages, cash, housing, and neighborhood facilities." She also stated that it's "blatantly untrue" that CBAs are private deals.

There is some truth to Ms. Townsend's criticism that the Yankees Stadium and Columbia CBAs were not "private matters," as local officials were extensively involved in each case (especially the Yankees deal, where the local officials signed a CBA without any community groups, although that's another story). However, just because public officials take cognizance of a developer's commitment to work with the communities that a project will impact or facilitate that type of cooperation does not prove that a CBA amounts to extortion. This is especially true where developments are supported by significant public subsidies, as in the case of Yankees Stadium. Ms. Townsend also failed to comment on the Atlantic Yards CBA, which was a mostly private deal not involving public officials and which can hardly be called extortion (although it can certainly be faulted for other reasons, especially its reliance on "astroturf" community groups)--not to mention the dozens of other CBAs from outside of New York State that have been well received by the public, the government and developers alike.

Ms. Townsend's article is available here, but a subscription is required.

Asarco redevelopment in Tacoma, Washington

As reported in the Tacoma News Tribune, a lawsuit was filed against the City of Tacoma and Point Rouston LLC this week alleging errors in the environmental review and permitting process for the redevelopment of the old Asarco smelter site. The developer had earlier refused to negotiate a CBA with Washington Jobs for Justice, and while the developer believes that the suit was brought in retaliation for not signing a CBA, Washington Jobs with Justice sees the lawsuit as part of a larger campaign surrounding the project.

Retaliation probably isn't the best term to use in this context. Citizens groups, after all, have a right to oppose projects that they don't support, and CBAs were developed as a tool of compromise to allow community members and developers to find middle ground.