Saturday, December 26, 2015

So, even the much-praised Los Angeles CBA had its problems (and AY CBA a "borderline calamity")

Thanks to NextCity's 12/24/15 What One L.A. Development Deal Says About the Future of Community Benefit Agreements, we now know that CBAs--even the one promoted as the template for "good" agreements--don't work as promised.

The essay points to Nicholas Marantz, a scholar at the University of California at Irvine, who wrote a study, What Do Community Benefits Agreements Deliver? Evidence From Los Angeles, for Journal of the American Planning Association about the CBA, negotiated in 2001, regarding the development of the Los Angeles Sports and Entertainment District (LASED) around the Staples Center

His takeaway:
Although CBAs may not fulfill all the claims that advocates make on their behalf, they can play important roles in community development by directing public and private spending to under-served neighborhoods. But collecting and verifying the relevant data may be challenging, even if reporting requirements are clearly spelled out in the CBA. As the complexity of a CBA increases, so do the challenges of assessing outcomes and assigning responsibility for those outcomes.
Of course, that's if CBAs actually represent under-served neighborhoods. With Atlantic Yards, the evidence has been murky and, of course, the absence of a promised Independent Compliance Monitor means we don't know exactly how the developer money has spent.

The Atlantic Yards CBA, writes NextCity's Oscar Perry Abello, is considered a "borderline calamity."

The outline

The L.A. CBA summary, according to Marantz:
It includes wage and targeted hiring goals, as well as guarantees requiring developer contributions to affordable housing projects, parks, and recreational facilities. Both the CBA and a separate agreement between the developer and the city require the developer to provide annual public reports detailing its compliance with the CBA; the CBA also funds a non-profit organization to oversee a targeted hiring program and provide annual public reports.
The research questions:
I ask two questions: first, have the parties to the LASED CBA complied with the provisions concerning jobs, housing, and parks and recreational facilities? Second, even if so, did the developers of the LASED provide benefits beyond those required under existing laws and regulations?
The results:
Based on analysis of relevant documents and interviews with participants in the LASED CBA, I find that the multiple developers subject to the CBA have technically complied with many, although arguably not all, of the CBA's provisions. But it is not clear that the benefits provided by the LASED developers exceeded the contributions that would have resulted from pre-existing laws and regulations. For example, a nearby project that did not involve a CBA included the same proportion of affordable units as required by the LASED CBA, but imposed even more stringent income targeting requirements. Moreover, the LASED developers may request credits against otherwise applicable impact fees for funds spent on parks and recreation pursuant to the CBA, and the CBA obliges the coalition to support such requests.
It is difficult to identify the independent impact of the CBA for four reasons. First, the CBA requirements overlap with other contracts, such as employer-union agreements, and with laws related to job quality and affordable housing. Second, as a result of the CBA, the developers may not be required to pay some pre-existing impact fees, although I have been unable to determine the amounts involved. Third, some provisions of the CBA are not legally binding. Fourth, the required living wage reports do not distinguish outcomes specifically attributable to the CBA, and I have been unable to obtain the required targeted hiring reports despite extensive efforts.
Yet, as noted in the takeaway, he's still optimistic.

Some details

One reason the coalition emerged and sought an independent means of obtaining a range of benefits was that the City of Los Angeles and its Community Redevelopment Agency were unable to enforce the city's living wage ordinance or ensure that "units created for low to moderate income housing [were] actually being used for that purpose," to quote an article cited in the paper.

The 29-member coalition, far larger than the eight groups (most of them fledgling) in Brooklyn, "gained leverage from a threat to challenge the project under the California Environmental Quality Act," as opposed to the situation regarding Atlantic Yards, where they were supporters from the start. (The paper notes that tensions within the coalition lessened the threat.)

The coalition had "[s]easoned negotiators and experienced legal counsel," as opposed to the situation in Brooklyn.

Writes Marantz, "Under the Cooperation Agreement, coalition members promised to support the project by, for example, providing testimony at public hearings and waiving legal claims, including certain claims involving the California Environmental Quality Act." In Brooklyn, there was no need for such an agreement; it was inherent to the deal.

Regarding jobs

Marantz writes:
The CBA required AEG to submit an annual report to the city indicating the status of the 70% living wage goal, and it also indicated that the non-profit administrator of the targeted hiring program would submit annual reports to the city, providing detailed information about the employment of targeted job applicants in the LASED. AEG did not comply with its public reporting obligation until 2014.8 The 2014 report, summarized in Table 3, indicates that the project attained the 70% living wage goal by 2013, but it does not indicate whether the project was in compliance prior to 2013. Despite repeated inquiries, I was unable to obtain the targeted hiring reports from the non-profit entity responsible for submitting those reports to the city, and neither the city clerk nor AEG had any record of such reports.

Although the living wage goal was reportedly attained by 2013, the role of the CBA in attaining that goal is ambiguous for three reasons. First, many employers in the LASED were probably covered by the city's living wage law, independent of the CBA.
Regarding housing

Though the CBA required residential developers to either develop or subsidize one affordable unit for every five housing units. “Ambiguous language in the CBA ultimately allowed the LASED developers to fulfill the latter requirement in a way that covered only a fraction of the development cost for each required affordable unit,” Marantz concludes. Worse, most affordable units wound up as part of a college dorm!

In Brooklyn, the language was inherently ambiguous and non-binding. There will be units for families, though fewer than proposed, and units are already aimed at households with a higher income than long promised.

Another lesson is to be wary of changes. As Marantz writes, originally the city "would not issue building permits for more than 250 market-rate units in the LASED without proof that at least forty affordable units had been constructed in compliance with the CBA," but after selling some of the land, the Development Agreement with the city was revised, limiting "the developers' future contributions to $40,000 for each affordable unit required by the CBA, with no adjustment for inflation."

Regarding parks

Writes Marantz:
The LASED CBA, overall, appears to have succeeded in the goal of directing funds to parks and recreational services in under-served communities near the LASED. At the same time it may not have produced a net increase in spending on parks and recreation. Nor did it ensure the timely completion of one of the two funded projects, even though the CBA included a strict timetable for project completion.

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