Board of Aldermen President Lewis Reed introduced a bill on Friday, May 5 that would require developers to give back to the communities surrounding their real estate projects – if the developers are seeking tax incentives.
Adding Community Benefit Agreements (CBAs) to development deals was a call that originally came from City Treasurer Tishaura O. Jones during her campaign for mayor and was particularly attractive to progressive voters.
Reed coming out with this legislation (Board Bill 11) on CBAs could mean that he was listening to these voters. Or it could be that he was trying to get ahead on his nemesis, Alderwoman Megan Ellyia Green, who represents the 15th Ward, was a strong Jones supporter and has clashed with Reed before.
Since January, Green has had a draft of a board bill regarding CBAs that she planned to introduce in the fall. However, she planned on involving the community in finalizing the bill, which was modeled after legislation that just passed in Detroit.
“We want it done right by getting all the stakeholders together – housing advocates, developers, labor unions, aldermen and community groups – to figure out what parts of the Detroit legislation works here,” Green said.
Reed and Green have had a troubled relationship since last fall, when discussions about the stadium deal went sour. Green said that recently Reed made a move to weaken her political power by taking her off several aldermanic committees and putting her on committees that rarely meet. She was not sure whether or not Reed knew about her bill and was trying to preempt her efforts with weaker CBA legislation. But she said that Reed introducing this kind of legislation without talking to anyone working on this issue shows a deep level of “disconnect.”
Reed failed to respond to The St. Louis American’s repeated requests for comment. His chief of staff Thomas Shepard asked if Reed may submit an op-ed about this CBA bill, which he was encouraged to do for next week’s paper.
Reed’s bill has caused advocates for community-development reform to cry foul because of what they describe as weak wording.
“It’s called a ‘Community Benefits Agreement,’ but there is no community involvement,” said Lauren Verseman, a soon-to-be graduate from Washington University School of Law, who works with the law school’s Urban Revitalization Clinic.
This spring, Verseman provided research on CBAs to the St. Louis Development Corporation (SLDC) and has been helping them to identify different options for CBAs that would best fit the city.
Verseman has read both Reed’s and Green’s bills, and said several things jumped out to her. First, in Reed’s bill, the agreement would be negotiated between the alderman and the developer.
“Instead of giving community members a seat at the table to have input of what they would like to see, it puts everything in the hands of the alderpeople who are already doing this,” Verseman said. “It’s what we already have.”
In Green’s bill, SLDC would put out a written notice to the community about the development project and a scheduled “organization meeting,” where the neighborhood would organize its own negotiating team. The alderman would schedule and convene that first meeting but, after that, would not have any direct involvement in negotiating the CBA. Verseman said this process fits the best practices of a CBA.
The other difference that stood out to her was the language used in the two bills. In Reed’s bill, the agreement is made between the real estate developer and “the affected neighborhood(s).” In Green’s bill, it is made with the “host community.”
For Verseman, the phrase “affected neighborhood” draws to mind a neighborhood that is about to have something “happen at you,” but not participate in the process – while a “host community” sounds more like a welcomed, valued partner.
“And the host community has its own personality and sense of itself,” Verseman said. “That’s indicative of the differences in the approaches.”
Megan Betts ran for alderwoman in North City’s 5th Ward during the last primary, and a big part of her campaign platform was establishing a citywide policy for CBAs. She has been part of a group that has done extensive research on the best practices of CBAs. Betts was disappointed to see Reed’s bill, which she called “very backwards,” introduced on Friday.
“It erases all the hard work people have been putting into doing this the right way,” Betts said. “Unless he has no idea of what is happening, this feels backhanding.”
In Reed’s bill, Betts said that developer Paul McKee Jr. and Alderwoman Tammika Hubbard – both of whom have struggled with gaining the trust of the community – can sit down and decide on a CBA, with no input from that community.
“Isn’t that how it’s done already?” Betts said.
Reed’s bill
According to Reed’s bill, developers seeking Tax Increment Financing (TIF) or “sales tax rebates” for real estate development with an estimated contract value of $1 million or more “must present a Community Benefits Agreement for the development project” to the alderman. Basically, the agreement that the developer draws up would be negotiated with an alderman, and then the alderman would introduce a board bill on the development deal.
There is no mention that community members would have a part in that negotiation.
The bill defines three main community benefits that the CBAs would include. The agreement sets the goal that 25 percent of all labor hours are performed by minorities, five percent by women and 20 percent by city residents – which is already a city requirement.
The developer must agree to include livable-wage provisions for job hires. And if the development is for housing, the developer shall set a goal of 20 percent of housing units become affordable housing.
Then it states that, “The benefits can be tailored to the needs of the community.”
Verseman said the affordable housing requirement is basically the only guideline that isn’t already a city policy.
“It’s a backdoor way to get to inclusionary zoning, but this isn’t the appropriate vehicle for that,” Verseman said.
Inclusionary zoning – or ordinances that require a certain share of new construction to be affordable by people with low and moderate incomes – are not usually drafted like this, she said.
The Board of Aldermen would be in charge of enforcing the agreement, and penalties include withholding the TIFs and sales tax rebates for the project.
Green’s bill
As Green’s draft stands now, it looks more at the level of “public support for investment” rather than contract value. And that support includes giving away land for free, tax abatements and grants – along with TIFs.
The bill defines three different “tiers” that start at projects that receive $3 million in public support. Many recent development deals would have met that mark, including Ballpark Village which received $56 million, along with several hotels and office buildings.
For each tier, the bill lists a variety of benefits that could be negotiated into the agreement – including affordable housing, environmental mitigations, neighborhood amenities, educational programs, job readiness training and many more options.
Verseman said that Green’s bill gives a “broader sense” of ways the community could negotiate benefits – both in the language and the process.
“It’s always tailored to the project and the community,” Verseman said. “That’s part of the purpose. You are never going to know beforehand, which is another reason why it’s odd that Board Bill 11 reiterates things that already are requirements. They are not adding anything.”
In Green’s bill, the city would be a “third party beneficiary” that could enforce the agreement, as well as with the host community. And penalties include liquidated damages, clawbacks, or withdrawal of the tax abatements and public subsidies.
Retreat for stakeholders
Green said that she’s been meeting with SLDC every month for the last several months about CBAs and the bill. The last meeting also included people from Forward Through Ferguson, the St. Louis Economic Partnership and Promise Zone. However, she said they knew that there were various other people working on the issue, including community groups and Washington University researchers. They decided to hold a retreat in June so that all of the stakeholders could come together.
From there, they would take the draft and present it to the community before introducing it to the Board of Aldermen, Green said. Her goal is to introduce it in September. Reed has not been part of these conversations, she said. To her, his legislation came out of nowhere.
“Lewis’ bill puts the negotiating power on the aldermen, and this is exactly what you don’t want to do,” Green said. “The point is to engage the community.”
Black Caucus elects outreach leaders
African-American Aldermen elected Aldermen John Collins-Muhammad from the 21st Ward and Brandon Bosley from the 3rd Ward to as the coordinators to lead the African-American Aldermanic Caucus. The African-American Aldermanic Caucus includes 10 members of the Board of Aldermen representing the needs and interest of the city’s black communities, chaired by Alderman Terry Kennedy (18th Ward). Both were first elected in April.
