Thursday, September 30, 2010

Liu’s CBA task force recommends reforms; dissenters say it will foster too many CBAs; report buffs AY CBA but guidelines might have reined it in

In a report issued not without dissention, the Task Force on Public Benefit Agreements (PBAs) yesterday delivered to Comptroller John Liu “a proposed framework for public benefit agreements in New York City that would create clear expectations, encourage broad-based participation and result in enforceable public benefits that comply with legal standards.”

Included is an increased opportunity for community input by community boards, local elected officials, and small businesses; by contrast, the Atlantic Yards CBA was negotiated very quietly. Also, given that CBAs like the Atlantic Yards CBA are essentially unenforceable (except by signatories with no incentive to go to court), the Task Force recommended several enforceability mechanisms. Such CBAs also would be monitored by the Comptroller.

Notably, the report (PDF and embedded below) states that “the primary purpose of a benefit agreement is to mitigate project-related impacts”--a rationale absent from the Atlantic Yards CBA, in which the single largest component is affordable housing, a provision that could have been incorporated into any upzoning but which is not a specific response to the loss of housing on the AY site.

Still, the report’s rather rosy view of the Atlantic Yards CBA, the first in the city, may have contributed to the willingness to endorse CBAs.

Dissention and fudging

Four who resigned from the task force, however, disagreed with a report that would incorporate a role for the city in such Community Benefit Agreements (CBAs), eliminate some uncertainty in the development of large subsidizied projects, and, presumably, ensure proliferation of CBAs by ensuring an independent consultant be designated to help elicit and coordinate public participation, as well as to staff the planning process and mediate negotiations.

Four others refused to sign it, according to the Wall Street Journal, while 29 did sign it:
In a letter to the task force co-chairs, four dissenters wrote that the task force's recommendations would create "additional red tape and bureaucracy and ultimately waste taxpayer funds on a new set of city-funded consultants."
(The cost would be proportional to the public assistance provided to the project, and is estimated at between $10,000 and $30,000 per month.)

"I think communities have very serious and legitimate concerns about mitigating the impacts of large developments--which is why I agreed to serve on the task force in the first place," former Task Force Member Julia Vitullo-Martin of the Regional Plan Association told me.

"I was unhappy with the substance of the report, which didn't seem to relate in any way to the recommendations, which were certainly aggressive," she added. "There was no evidence or even solid reasoning for why we should do public benefit agreements in the first place--much less implement them in the proposed cumbersome, bureaucratic fashion that formalizes PBA negotiations before ULURP starts. Then, having distributed whatever benefits & resources are agreed to in this initial phase, the developer must run the familiar, time-honored ULURP gauntlets. Is this any way to do business in a down economy? And do we really want to mandate Atlantic-Yards-type negotiations for every major development in the city?"

In Crain's, columnist Alair Townsend criticized the report in a piece (subscribers only) headlined Alair Townsend: It's absurd to buy project support:
Mayor Bloomberg must speak out forcefully about the absurdity of institutionalizing and codifying the buying of political support.
Major projects

The report suggests standards for “major projects,” which are defined as having at least one of these characteristics (of which AY has the first two):
  • seeking floor area of 500,000 square feet in excess of what is permitted as-of-right
  • with publicly subsidized financing valued at $75 million or more
  • generated through large-scale plans and Special District designations in excess of 27 acres.
The report states:
The most effective way to ensure long-term compliance with this new process is by adopting it into law. In the meantime, we recommend that the Economic Development Corporation voluntarily implement the proposed process by enabling technical assistance to be provided to community coalitions and including PBA terms within development agreements. Because the desirability of adopting benefit agreement standards for New York City- assisted projects applies equally to New York State-assisted developments, we commend the Empire State Development Corporation to do likewise.
Rosy view of AY CBA

As discussed below, the report makes no mention of the payments developer Forest City Ratner has made to its CBA “partners”--a practice CBA experts warn against, nor FCR's bail-out of ACORN.

Nor does it cite the criticism by three local Community Boards that FCR overstated their involvement.

Among the Task Force Members were Bruce Bender and Scott Cantone of Forest City Ratner, and Darnell Canada of Real Economics Building Unity and Innovative Local Development (REBUILD), notable for his public threats at a hearing on AY environmental impacts. Task Force member Bettina Damiani of Good Jobs New York in 2005 publicly criticized the AY CBA as diverging significantly from more transparent ones in Los Angeles.

Vitullo-Martin added, "Part of the problem is that Atlantic Yards is now so embedded in how people think about CBAs that it can't easily be ripped away--and once you start, you're likely to conclude CBAs aren't a good idea."

According to Gotham Gazette’s Wonkster:
The report is silent on the city’s Industrial Development Agency and its deals (which we covered extensively), despite Liu giving an early indication it might be included in the recommendations.
The rationale

Liu noted the rationale for the study:
“The City fell into the habit of announcing marvelous benefits for the public, such as jobs and affordable housing, in exchange for granting special subsidies to private developers. Too often, however, the promises fail to materialize long after the private developers have received their special subsidies.”
The report acknowledges that the current “project-based arrangement that ties benefits to a particular neighborhood.... [is] a poor substitute for a citywide process that evaluates current and prospective demands for better housing, jobs, health care, child care, schools, opens pace and transit.”

"The Task Force took extra care with recommendations that would meet a community’s needs while not adding undue costs and delays to an already-lengthy and expensive land use process,” Priscilla Almodovar, Task Force Co-Chair and former President of New York State’s Housing Finance Agency and the State of New York Mortgage Agency, said. “If implemented, these recommendations will make development of large projects in New York City more predicable for all stakeholders, including developers, the City, the community and lenders."

The recommendations

The recommendations, according to the official press release, include:
  • Encourage vigorous, broad-based and informed community participation to make public benefit agreements more accountable and more responsive to community needs and potential project impacts.
  • Better equip the respective elected officials and community boards with third-party subject-matter experts who can assist in developing strong terms of accountability and delivery of tangible benefits to the community.
  • The total value of a negotiated package of benefits should be proportional to the size of the subject development, as the primary purpose of a benefit agreement is to mitigate project-related impacts.
  • Contain within public benefit agreements clear, concrete terms and a schedule for delivery of implementation.
  • Ensure enforceability by incorporating public benefit agreement terms into a legally-binding regulatory agreement between the developer and the lead agency and/or a restrictive declaration for review by the City Council.
  • Monitoring by the New York City Comptroller all benefit agreements, related restrictive declarations and development agreements, and issue an annual public benefits agreement compliance report card.
  • Have executed agreements publicly available to facilitate monitoring of implementation, discourage conflicts of interest and to inform residents of potential employment opportunities and other negotiated benefits.
“Time after time, we see press conferences announcing new multi-million dollar subsidized developments that pledge benefits to the community in the form of job creation and economic growth,” said Bettina Damiani of Good Jobs New York in the press release. “Yet, down the road, evidence often indicates shortfalls on permanent job creation and tax-base growth. It is exciting to see a first plan to create a framework for holding developers accountable to the promises they make.”

The overview

As noted in a report from City Hall:
The task force evaluated the four CBAs that have been signed in the city: Atlantic Yards in Brooklyn, Yankee Stadium and the Gateway Center in the Bronx and the Columbia expansion in upper Manhattan, as well as 14 CBAs from elsewhere in the country.
In New York, the problems were grouped into five categories the taskforce found lacking: accountability, fairness, transparency, feasibility and enforceability.
The report cites a March 2010 City Bar Association report that concluded that the city should either refuse to consider CBAs in the land use approval process or consider only those CBAs that conform to clear standards. However, given the high stakes and potential impacts, “communities are unlikely to resist seeking concessions, and developers would be unwilling to cease trying to attract their support,” the Task Force states. “Accordingly, the responsible course of action is to ensure that CBAs conform to clear standards and are guided by the principles of accountability, transparency and enforceability.”

Accountability questions

The report acknowledges numerous questions have been made about accountability:
There is a clear tension arising out of the question of who represents the community. While groups negotiating benefit agreements may take care to involve community residents and local businesses, protect against conflicts of interest, and ensure an inclusive bargaining process, at bottom, there is no consensus as to what the “community” is – whether it is the immediate neighborhood surrounding a proposed project, a larger area, or an advocacy group. In addition, there is no consensus on how a negotiating process can be made more accountable.
The AY summary

The report states:
The first Community Benefits Agreement (CBA) in New York City was executed in connection with the 22-acre development of the Long Island Vanderbilt Railroad yards. In December 2003, Forest City Ratner Companies (FCRC) announced plans to construct a 19,000-seat sports and entertainment arena that will be the home to the NBA's New Jersey Nets, along with 6,430 units of housing, office and retail space, a hotel and parking on the site. The proposed $4.9 billion project would be the largest NYC development outside Manhattan in more than 25 years.
Actually, when project was announced, it was to have 4500 residential units, with about 2 million square feet of office space, housing 10,000 jobs. Later office space was swapped for 1930 condos. The development would include the 8.5-acre railyard as well as adjacent properties and blocks, rather than be limited to the yards.

The CBA process?

The report states:
In July 2004, FCRC convened a meeting of community groups, including the New York chapter of the Association of Community Organizations for Reform Now (ACORN), Brooklyn United for Innovative Local Development (BUILD), the Downtown Brooklyn Oversight and Advisory Committee (DBOAC), as well as members of Community Boards 2, 6 and 8 to discuss a community benefits agreement. Regular meetings continued until June 27, 2005, when FCRC signed a CBA with eight organizations (the Coalition) in exchange for their public support for the project.
While this draws on the City Bar report, it’s not accurate. According to an affidavit from Gib Veconi of the Prospect Heights Neighborhood Development Council, discussions began in February 2004 and did not represent all community groups.

Provisions

According to the report:
Under the agreement, FCRC committed to provide an array of benefits, including:
• intent to award at least 20 percent of the total construction contract dollars to qualified minority owned businesses (MBEs) and at least ten percent of the total construction contract dollars to qualified women-owned businesses (WBEs);
• good faith efforts to ensure that at least 35 percent of the construction workers are people of color and 10 percent are female;
leasing of at least 15 percent of the gross retail space to qualified community based businesses;
• a promise to make 50 percent of the 4,500 residential rental units affordable to low- and moderate-income families pursuant to a separate Memorandum of Understanding with ACORN;
• community amenities, including a health center, Intergenerational Center, and at least six acres of parks and open spaces;
environmental mitigations;
• arena-related programs, including seats for community use groups at least ten times per year:
• development of four schools and the funding of capital improvements to libraries and recreational centers at NYCHA properties;
However, none of these have been officially reviewed, and some are essentially meaningless; for example, the environmental mitigation is achieved by following the state-mandated process. And the affordable housing is subject to the availability of subsidies.

Implementation

The report states:
The CBA sets forth a detailed structure for the implementation of the agreement's provisions. To oversee overall implementation, an Executive Committee composed of representatives of the Coalition and FCRC is to meet bimonthly. The agreement also establishes eight councils to be headed by a Coalition member to address each major subject area. In addition to participating in the Executive Committee and heading its respective Council, specific responsibilities are also delegated to each Coalition member. For example, BUILD is responsible for coordination, management, implementation and initial oversight of workforce development and small business initiatives.
None of the signatories has had a public meeting describing their work

Reporting, Monitoring and Enforcement

The Task Force Report states:
The Atlantic Yards CBA contains clear reporting provisions with respect to the workforce and contracting requirements. Within 30 days after the end of each quarter, FCRC is required to report on the actions taken to fulfill the agreement, including the:
• number of community residents enrolled in the pre-apprentice training initiative, the percentage of minority and women workers, the number who completed training and were hired, the length of time they were employed;
• number of persons placed through the CLE program;
• total number of construction workers and journey level workers, the percentage of them that are minority and women workers;
• total non-construction and construction contracts award and the percentage awarded to community-based, minority or women-owned businesses; and
• status of job fairs, including the number of employers participating, the number of attendees and the status of any applicants filed by them with FCRC or affiliates.

Specific implementation timeframes and reporting requirements are absent with respect to the other CBA terms.

In the event FCRC fails to perform a term or provision, the Coalition must provide written notice documenting the alleged default and offer to meet to resolve the issue. FCRC then has 60 days to cure the alleged default. If the parties are unable to resolve the disagreement, they may request assignment of an independent mediator at FCRC’s expense. The Coalition may also elect to waive the default to pursue binding arbitration or judicial remedies. There are also similar provisions in the agreement to address default by a Coalition member.
But Forest City Ratner is not subject to any oversight beyond its chosen partners.

Implementation

The report states:
The Atlantic Yards project secured approval from the Empire State Development Corporation in early December 2006 and the Public Authorities Control Board in mid December 2006. The project experienced a series of delays due to prolonged litigation. The project's official groundbreaking occurred in March 2010 and the arena is projected to be completed in the summer of 2012 with residential and commercial components to follow.

Delays in starting the project pushed back implementation of the CBA’s terms, but progress has been made in some key areas (according to information provided by Cantone):
During the initial phases of demolition and construction, FCRC exceeded the total M/WBE prime contract and total contract dollar goals;
• 35 residents from the local community have been placed through FCRC’s Community-Labor Exchange (exceeding the CBAs 1-to-4 requirement);
• A Project Labor Agreement has been negotiated and executed with the construction trade unions and thus far FCRC has secured 200 slots from the construction trade union pre-apprenticeship programs for BUILD graduates;
• BUILD has recently commenced its pre-apprenticeship program and training is underway for 30 individuals; and,
• Discussions are underway with FCRC and the Coalition to implement the affordable housing component of the project’s first residential building, the establishment of a community charitable foundation, and a new charter school as well as other terms of the CBA.
None of this has been subject to public scrutiny.

Missing from the list

In Appendix D of the report, which lists New York City Subsidized Development 2006-2009, which lists developments with subsidized funding in excess of $75 million, Atlantic Yards is not on the list, though it has received at least $131 million in direct funding.
PBA Task Force - Final Report[1]

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