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Revisiting the Detroit Community Benefits Ordinance

 

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.

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