Common Sense for Detroit: Why the Community Benefits Agreement Ordinance Will Spur Inclusive Development

Common Sense for Detroit: Why the Community Benefits Agreement Ordinance Will Spur Inclusive Development

Haas Institute for a Fair and Inclusive Society

Economic growth and equity and inclusion can go hand in hand. With Detroit’s proposed Community Benefits Agreement ordinance, the city has the chance to join the ranks of other municipalities that have embraced this effective tool to improve the well-being of both its businesses and residents. Large developments inevitably affect their communities. It’s simply common sense to ensure that those effects are positive.

Community Benefit Agreements (CBAs) successfully address a very real, endemic problem by making sure that economic growth is shared and that communities hosting large developments have a seat at the negotiating table.

While traditional development projects almost always generate benefits, benefits are too often neither inclusive nor fairly distributed, which means development cannot enrich an entire region. Such policies are a result of a lack of proactive thinking about equity, not malicious intent. Many development plans inadvertently favor larger, better resourced firms and communities. For instance, research I conducted on the distribution of Recovery Act funding revealed that, despite its intent to boost economies across the country, African American firms and workers were disproportionately left out. This had much to do with the fact that African American communities had fewer “shovel-ready” projects. Additionally, during the recession, more small and minority-owned firms went out of business, lost bonding, or lost insurance. These additional barriers hindered their ability to compete.

The economic benefits of CBAs are well-documented. Developers operating with CBAs make major investments in workforce training, affordable housing, and other invaluable community assets that increase local tax revenue while decreasing strain on taxpayer-funded programs. CBAs integrate substantially higher percentages of local and disadvantaged workers, underrepresented racial and ethnic groups, microenterprises, and small businesses. This can reduce gaps in income and wealth and increase the likelihood that a rise in the cost of living is accompanied by greater income, which reduces displacement in communities. In addition, CBAs that reflect the vision of a broad set of community stakeholders reassure developers, investors, and officials that projects will be supported and obtain timely approvals. This saves money and fosters trust by clarifying the metrics by which development projects will be judged.

Community benefits policies are especially essential for older industrial cities. For instance, Milwaukee standardized its requests for proposal process so it favors bidders who create construction training and apprenticeship opportunities, hire local residents, use green building principles, include affordable housing, and put disadvantaged businesses to work.

Reducing inequality isn’t simply about morality and social inclusion. It is essential for economic growth. As researchers at the International Monetary Fund put it, “it would still be a mistake to focus on growth and let inequality take care of itself, not only because inequality may be ethically undesirable but also because the resulting growth may be low and unsustainable.”

Around 80 cities have included CBAs in major developments, and some 50 more are in the works across the country. Detroit’s unique Community Benefits Agreement ordinance, however, would make history. It has the potential to set Detroit on a path not just to recovery, but to renaissance. We strongly encourage the city council to adopt this legislation.

Professor john powell
Director of the Haas Institute for a Fair and Inclusive Society
University of California at Berkeley

Julie Nelson
Director of the Government Alliance on Race and Equity
Haas Institute for a Fair and Inclusive Society

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