The Detroit metropolitan
area suffers from one of the highest rates of wealth inequality in the United
States.[1]
In response to such concerns, Detroit voters passed in 2016 a community
benefits ordinance (CBO) law for the first time in the city’s history;
formalizing a set of regulations requiring developers to consult and negotiate
with a local resident council to build a community consensus on infrastructural
and service benefits. Building on a number of other community benefits
agreements that cities around the United States began adopting in the 1990s,
the Detroit law stipulates that qualifying development projects provide
community benefits such as local employment opportunities, subsidized housing,
public amenities and other infrastructural improvements, thereby ensuring that
surrounding communities receive socioeconomic dividends from such project. This
article discusses the current legal scope of the city’s CBO, enforcement
challenges surrounding the ordinance, and suggestions for potential legislative
improvements.
The Detroit CBO law is triggered when a local development
project is (1) $75 million or in value, (2) receives $1 million or more in
property tax abatements, or (3) receives $1 million or more in value of city
land sale or transfer. If triggered, the Detroit Planning and Development
Department (PDD) reviews census tracts and other statistical data to define the
project scope and impact area. The PDD then organizes a series of community
meetings for residents of the impacted area, typically over a three-month
period, and introduces them to the scope, impact, and community solutions of
said project. After, the project is designated with a nine-adult member
Neighborhood Advisory Council (NAC) consisting of residents of the impacted
area and individuals nominated by such residents. Finally, the NAC works with
managers of the development project to discuss the implementation of required
community benefits.
The Detroit CBO law is responsible for around $23.8 million
dedicated to workforce welfare and education initiatives, affordable housing
agreement building and improving around 700 units, as well as $12 million
funding for neighborhood urban planning initiatives.
It has secured key community benefits projects such as a $2.5 million project
building 60 outdoor basketball courts in parks across the city from the Pistons
Practice Facility CBO Process, as well as a major restoration project of an
abandoned school field for sports and recreation use, “including a skate park
and free programming for local youth from the Herman Kiefer CBO process.” For
the past few years, Detroit community advocates have successfully cited the
city’s CBO laws to hold institutional developers accountable for creating
“sacrifice zones” (urban areas that have developed issues such as air pollution
and gentrification as a result of large-scale development projects).
However, despite these success stories, critics continue to argue
that the current Detroit CBO law does not adequately protect the interest of
the city’s most vulnerable communities. Amazon’s recent $400 million
redevelopment project in the old Michigan State Fairgrounds is a prime example
of the law's failure to comprehensively address the inequities which create
“sacrifice zones” when developers can evade the Detroit CBO law. Despite the
massive size of the project, the Detroit CBO was not triggered because the
property sold for less than the CBO threshold, and the developer did not elect
to receive tax incentives from the city.
Many community members are concerned that the project poses a
significant “air pollution caused by truck traffic associated with the distribution
center.” However, since the Detroit CBO law does not apply to this project,
there are few avenues for local residents to mitigate numerous community
concerns implicated by the Amazon project. This is true for other unqualifying
projects such as the $48 million development of the old Cadillac Stamping Plant
and $50 million Corktown hotel project in Detroit. In fact, even agreements
bound by the Detroit CBO law are often violated. For instance, the
controversial Stellantis plant, a Jeep assembly factory located in Southeast
Detroit, racked up its “fifth air quality violation from the state” this year,
pointing to the inadequate compliance and enforcement efforts by the Detroit
city government.
There are too many projects that fall through the legislative cracks
uncovered by the current Detroit CBO law, and the most vulnerable community
members often have little to no avenue for recourse in regard to their social,
economic, and health concerns. This suggests that the current law does not
adequately promote the public interest of the Detroit community, and that the
current policies should be revisited in order to make the law more effective.
The first step is to drastically lower the current CBO law cut-off from $75
million in value to $10 million in fair market value at the time of the
project’s completion—thereby ensuring that the vast majority of large-scale
industrial and for-profit developments are held accountable to the city’s
ordinance law. Second, the law should also be revised to stipulate that the
developers contribute at least 1 percent of the total value of their projects
to community-approved initiatives for impacted residents.
With the scope of the Detroit CBO law widened under the proposed changes above, another effective solution is to adopt a more comprehensive and quantifiable “rubric” for economic and environmental standards required by the current Detroit CBO law. While opponents have long argued that such standards are often inflexible and unrealistic, a number of government agencies such as the Environmental Protection Agency employ similar standards to enforce sustainable environmental practices in all domestic industries—something that the city of Detroit does not yet have. An additional avenue for greater compliance is to authorize Detroit CBO laws to issue fines or injunctions, especially given that the current legal setup does not authorize this. Given that the Detroit city government has not been able to effectively police business behaviors harmful to vulnerable communities, the NACs should be able to utilize contractual means to protect the environmental and economic interests of their own neighborhoods. By addressing the gaps in project eligibility and enforcement regarding current Detroit CBO regulations, neighboring communities can equitably participate in the city’s revitalization as an economic powerhouse.
By Won Joon Ki Choi
[1]
https://www.wxyz.com/news/new-report-finds-major-economic-inequalities-for-african-americans-in-detroit#:~:text=According%20to%20the%20report%2C%20the,times%20higher%20than%20white%20people.