In September 2017, Little Caesars Arena opened to much fanfare. The $863 million facility would be the flashy new home to both the Detroit Red Wings and Pistons, as well as a state-of-the-art entertainment complex. Right in the heart of downtown, it was also the centerpiece of District Detroit, Olympia Entertainment’s 50-block commercial investment in the city.
This story has been told as a key part of Detroit’s economic revival, but its construction is considerably more complex. Nearly 40 percent ($324 million) of Little Caesars Arena was funded publicly. As part of that agreement, one of the few stipulations required Olympia Entertainment to ensure at least 50 percent of its construction workforce was Detroiters. But the contractors never met this requirement — instead they simply paid $2.9 million in fines.
Little Caesars Arena cost taxpayers hundreds of millions of dollars, but Olympia couldn’t even meet basic standards of local hiring, let alone other potential bonuses were a robust community benefits agreement or community benefits ordinance in place.
While the arena was a missed opportunity for Detroit, other major developments are on the horizon — developments that could result in a community benefits agreement (CBA) if advocacy is done right.
Fortunately, there are examples in other American cities where it was. In Oakland, Milwaukee, and Pittsburgh, proactive community groups and local governments negotiated deals on enormous developments that stipulated a bevy of community benefits.
Oakland Army Base — Oakland, California
In the last decade or so, Oakland has been part of the enormous development boom that has overtaken the Bay Area. Property values and rental rates throughout San Francisco, Berkeley, and Oakland have skyrocketed. But median income, particularly for Oakland’s African-American residents, have not increased at a commensurable rate, causing or threatening displacement.
The East Bay Alliance for a Sustainable Economy (EBASE), founded 19 years ago, has been fighting for economic and racial justice in Oakland well before the recent spikes in development. It’s largely done this by building coalitions between community and labor groups who organize for policy campaigns, like the successfully passed landmark minimum wage ballot proposal in 2014, and towards developments that receive public funds.
A decade after it had been decommissioned, talks began about redeveloping Oakland’s Army Base, parts of which were owned by the City and Port of Oakland. Two developers proposed a $1.2 billion plan to develop the 228-acre waterfront property into a warehouse and shipping complex that would create thousands of construction and permanent jobs. EBASE and its coalition Revive Oakland had been waiting for such an opportunity, and successfully won two robust and enforceable community benefits agreements with the city and port.
Those benefits are significant and numerous. The 2012 agreement with the city contained a living wage policy; requirements that 25 percent of jobs be reserved for the disadvantaged, low-income, and long-term unemployed; 50 percent of jobs be filled by Oakland residents; the creation of the West Oakland Job Resource Center that connects workers and employers to ensure community members get hired; banning of pre-screening for prior felonies; and a Mayoral-appointed oversight commission on which Revive Oakland has two seats.
Jahmese Myres“The real groundbreaking part is limits on the use temp agencies,” says Jahmese Myres, deputy director for EBASE. “The warehouse industry relies on them for employment and temps tend to pay lower wages and lead to more exploitation of workers. … Only 40 percent of work hours can be done by temp agency employees. It really encourages direct hiring, which leads to more stability and safer working conditions.”
In 2017, the coalition won a similar agreement with the port that contained an even stronger “ban the box” standard — background checks for applicants have even more restrictions. “This is really important in Oakland,” Myres says. “One-fourth of the population of Alameda County has an arrest record. Around 80 percent of folks who are on probation in the county reside in the port’s local impact area. It’s really critical that folks who live in the community have a fair shot at the jobs being created.”
Myres credits the success of the deals to years of coalition building and working with allies on the city council. Importantly, they didn’t antagonize the developers, instead choosing to cultivate relationships with them.
“We’re in it for long haul,” she says. “We’ll be working with the developers for as long as the project is standing. These leases are for 99 years. It’s really important to have collaborative relationships and open lines of communication on both ends.”
Park East Redevelopment Compact — Milwaukee, Wisconsin
As detailed by the best-selling book “Evicted” by Matthew Desmond, Milwaukee’s low-income population face a number of challenges. And Milwaukee County has confronted poverty among its disadvantaged residents with a truly unique approach.
In 2002, an unused freeway spur was demolished, opening up 26 acres of prime waterfront real estate. Instead of simply selling the land and letting developers determine their own projects, the county created the Park East Redevelopment Compact (PERC).
Within the PERC, each parcel of county-owned land is sold competitively to developers with the best proposal for not just the project itself, but also how it will work with minority and women-owned contractors, hire locally, offer prevailing wages, and provide affordable housing. The county, in turn, agrees to fund 20 percent of all affordable housing units in residential developments.
To ensure that all parties abide by the PERC, oversight is conducted by a board.
“Most of the real estate that we have borders the inner city,” says Rick Norris, director of community business development partners for Milwaukee County. “We have a predominantly African-American community that borders or is adjacent to it. We put agreements together so that when a development is in your backyard, it’s going to benefit everybody and also involve the community in design and construction.”
A common fear of community benefits is that, because there are more requirements, it will discourage development. That hasn’t proven true in the PERC area — five projects have been negotiated so far, including the new $524 million Milwaukee Bucks arena.
Norris says that implicit in the belief that the PERC could hamper development is that minority- and women-owned businesses bring poor quality of service. And that’s simply not true.
“Here’s the beauty of all this,” he says. “You’re going to hire a design firm anyway. You’re going to hire a contractor. You’re going to hire people to work. It’s still your responsibility to vet your team. We have a requirement and provide a list of firms, but it’s up to them to vet the team. We simply ask that you do not treat minority-owned businesses any differently.”
Pittsburgh Penguins Arena, Housing Trust Fund — Pittsburgh, Pennsylvania
One of the earlier community benefits agreements happened in Pittsburgh. A coalition representing more than 100 community groups successfully negotiated the One Hill CBA as part of the construction of the Pittsburgh Penguins arena and nearby hotel.
The agreement contained a hyper-local hiring requirement — 38 percent of all employees had to be Hill District residents, with living wage requirements and the right to unionize. It also stipulated $8.3 million in neighborhood improvements that ultimately led to the construction of a grocery store, YMCA recreation center, and a referral center to provide and coordinate job support.
The CBA was especially successful because it contained clear guidelines for implementation, including monthly meeting requirements for the steering committee and quarterly requirements for the community advisory.
That negotiation process was also the catalyst for the founding of Pittsburgh UNITED, a coalition working for economic justice in the city. Today, its work also includes housing and environmental justice. But its successes are still many.
In 2015, Pittsburgh knew it had an affordable housing problem and created a task force to come up with solutions. “The affordable housing crises has gotten so bad here,” says Celeste Scott, an affordable housing organizer for Pittsburgh UNITED. “There’s a shortage of 20,000 units for low-income residents, mostly black and brown folks. Those people are being pushed out of the city.”
Late last year, Pittsburgh City Council passed legislation to for an affordable housing trust fund, which will be used on affordable housing projects, homelessness prevention, and programs for low-income home-buyers. The $10 million will be raised through a modest increase in taxes on realty transfers over the next three years.
Scott credits the bill’s passing in part to their successful community engagement strategy. “We had a canvas team that hit over 14,000 houses,” she says. “We talked to everybody, knocked on doors, and people remembered that. So when there were public hearings, we were able to bring everybody that was affected. Doing that on the ground engagement and talking to people was really important.”
This article is part of our Equitable Development series, in partnership with Doing Development Differently in Metro Detroit, where we explore issues and stories on growing Detroit in a way that allows people from all races, classes, and abilities to participate and benefit. Read more articles in the series here.
Support for this series is provided by the Knight Foundation, Knight Fund at the Community Foundation for Southeast Michigan, and W.K. Kellogg Foundation.