The conversation over a Community Benefits Agreement ordinance in Detroit began last year, after it was reported that Marathon Petroleum fell well short of hiring Detroiters as part of a $175 million tax abatement it received to expand its footprint.
For weeks, reports have framed Detroit's proposed Community Benefits Agreement (CBA) ordinance as a red-tape nightmare that would mandate major developers to sign such a deal with the community.
That's not the case, according to a report issued this week by Detroit City Council's Legislative Policy Division
(LPD). It would only pertain to large-scale developments that propose the use of significant public tax dollars.
The council has been presented two versions of the ordinance that would require a CBA, the report says, "where (and only
where it should be emphasized) large developers seek public subsidies for their projects."
"Significantly, what is technically required of such a major developer seeking public subsidies is engagement with community for the purposes of a Community Benefits Agreement, not an absolute requirement that the developer sign an agreement," the report dated Oct. 14 says.
As Metro Times reported
this week, under the ordinance as drafted, any development project with a combined investment of more than $15 million, or a proposed expansion or renovation of at least $3 million would be inbounds for the ordinance. Any developers seeking city-owned land or at least $300,000 in public tax dollars to supplement construction costs would also be required to abide by the ordinance.
Called a "Urban Developments Agreement" ordinance, it would carve out exemptions under different scenarios, "and ultimately council can also weigh in to whether there's a needed urban development agreement or not," Councilwoman Raquel Castaneda-Lopez told MT
Not everyone is cheering on the proposal. Rodrick Miller, president and CEO of the Detroit Economic Growth Corporation
(DEGC), which has negotiated economic deals on behalf of Detroit since the late 1970s, warned council against adopting such an ordinance.
"We know from years of recruiting companies that Detroit still has big obstacles to overcome related costs, image, and workforce to compete against other cities and suburbs," Miller wrote in a Oct. 7 letter to council . "... If we raise the height of the barriers with CBAs we will simply have to pay more in public incentives to get businesses to jump over them. We can't afford that."
Miller's point of view was supported by Mayor Mike Duggan. "The Mayor hasn't said much right now on the CBA because he is in ongoing discussions with City Council on the matter, however, he does agree with the concerns Rod Miller expressed in his letter to Council," Duggan spokesman John Roach told MT
Miller said the city already possesses a set of tools that could wield the kind of stipulations City Council wants for communities. What those tools are, however, wasn't made clear in the letter.
In its report, LPD recommends, "At minimum, Council should hear from the DEGC and/or the Mayor what they refer to as such tools, and their plans to better enforce the existing tools. If there are any such tools and plans, this should be communicated to Council and the public. In addition, Council may wish to ask what the new DEGC director means by asking 'isn't it more cost effective to lower these barriers?' What barriers is he referring to that should be lowered, and how?"
At the center of the debate over whether or not to adopt a CBA is if developers of big-time projects should be held responsible for upholding their end of the bargain when public subsidies are granted. The conversation over a CBA ordinance began last year, after it was reported that Marathon Petroleum fell well short of hiring Detroiters
as part of a $175 million tax abatement it received to expand its footprint.
The LPD report concludes: "Whether or not a version of the proposed Community Benefits Agreements Ordinance should be adopted because it will be a positive contribution to economic development policy in the City of Detroit, or alternatively rejected because it would not be, is an issue that deserves to be thoroughly debated, in an atmosphere of mutual respect, intellectual integrity and based on facts and fair-minded analysis, rather than aggressive and irresponsible partisan rhetoric."
You can read the LPD report and the current draft of the Urban Developments Agreement ordinance below.
City Council CBA report Oct. 14