How Did We Get Here?
Community Benefit Agreements are beginning to be far more common than ever before. But what are Community Benefit Agreements? And why have they become more popular now? To answer these questions, we should look back on their not-so-distant origin to see how we got here.
Back in the late 1990s, Los Angeles began to see an increased presence of unions across the city and around wider California. This growth brought labor unions to a head against several major-scale development projects, namely the development of the LA Staples Center. The building of this arena had a significant impact on the community surrounding its site, displacing 200 households of a predominantly low-income Latino neighborhood, and resulting in a measured increase in traffic, pollution, parking problems, and crime. During Phase II of the project, the community banded together to ensure that those problems would be addressed through the remaining development. What followed was one of the most successful ever cases of establishing a Community Benefit Agreement.
Now in 2024, Community Benefit Agreements (CBAs) are becoming increasingly more common across the country. But why has this relatively new practice begun to see such a quick rise to widespread use? And what benefits do they provide to justify this new found support not just from unions, but even corporate interests and the federal government?
Let’s start simply but defining what exactly a CBA is. As defined by the Department of Energy (DoE), a Community Benefits Agreement is the result of negotiations between a developer proposing a particular land use and a coalition of community organizations that claims to represent the individuals and groups affected by the proposed development. In the simplest of terms, it is a contract that outlines the mutual interests of both sides of the negotiation and how those mutual interests are to be accomplished as the development comes to fruition. While simple on its face, the value of a CBA comes from the benefits it provides to both parties, often resulting in a more mutually beneficial arrangement overall. The developer usually agrees to provide some amenities for the community. In return, the community agrees to support, and perhaps more importantly to not oppose, any further applications the developer needs.
In recent years, the DoE has encouraged their use in the more developing energy sectors, such as solar or wind farms, and has outlined several common benefits to both developers and community members. Specifically, the DoE claims that having the community support offered by a CBA reduces risk for developers and encourages cooperation throughout a project’s life cycle. This can take the form of public subsidies or even the more reliable procurement of government approval. Simultaneously, community members can be offered guaranteed job formation and can verify the implementation of more local and diverse hiring commitments, as well as established living wages. These benefits often take the form of community-wide additions, supporting or encouraging the use of educational partnerships, support to local small businesses or providers, and investment into community spaces, either with local gardens and parks or to encourage affordable housing initiatives. These lists only showcase a few of the advantages a CBA can offer to a community.
Why It Matters
On the surface, the increased frequency of these agreements appears beneficial. Their use is encouraged to provide transparency and commitment between two vast parties, oftentimes predicted to have benefits that last decades as the community and developers’ individual means fully come to fruition. In this way, the increase in their usage should be viewed optimistically given what end goals they seem to encourage.
However, the reality of their use on a case-by-case basis is often hazier. Like any contract, a CBA can be weak or non-binding if not properly implemented. This means, whether intentionally or not, the years of work constructing or pushing for the use of a CBA can be wasted if the parties do not properly draft the agreement, typically leaving the affected community the ones worse for wear. These risks are not insignificant given that businesses are not usually required to formally engage in these types of negotiations. This can mean that a community that pushes hard for a CBA against a party that is not interested can waste a lot of time and finances. This is where the more social aspects of a CBA come into play, and why governments and nonprofits should continue to encourage their usage, even if implementation is challenging.
A recent poll conducted by the group Data For Progress found that CBAs are overwhelmingly popular, finding that 59% of likely voters support the use of CBAs on development projects. These metrics even hold consistently on a partisan basis with Democrats shown to be 61% in favor, Republicans 63%, and independents holding around 53% in favor. The data referred to above can be found here. This level of popularity, found with most of the voting population, showcases one of the most important aspects of CBAs: social value. While hard to individually calculate, social value has a near-universal benefit to all parties involved in the CBA discussion. Not only does positive public perception often help or encourage the support of newly developed projects or businesses, but it often directly impacts the public value derived from the project. This can take the form of job and job loyalty, individual pride in the impacts of a project or group, and even just positive public perception, often resulting in fewer hurdles and fights over public outcry and discontentedness. These metrics are harder to formally captivate in a study but showcase the values of CBAs and why we should view their increased frequency of their usage in the past several decades s a positive trend.
Additionally, CBAs offer a platform for developers or groups to naturally accommodate policy or legislative requirements. For example, the Community Reinvestment Act of 1977 was intended to help reduce redlining via banks and came out of the civil rights era of legislation. By using a CBA between a bank and an affected community, terms can be openly arranged and discussed amongst community members to ensure transparency and sustainable conditions, while also allowing the bank to meet its requirements under the Community Reinvestment Act.
How It’s Done
While each CBA is different by design, how they should be approached has thankfully become more formulaic as time has gone on. However, the conditions and goals of a CBA will vary wildly based on who is encouraging and seeking out the agreement. That being said, there are several trends to try to align with when establishing a CBA to make it fair and enforceable:
● Negotiations should begin before a project developer has secured a land-use agreement with the government. A community can begin to be affected at the very beginning of a project’s life cycle. Establishing the expectations of both parties at the outset will result in the highest probability of success.
● All community groups involved in the CBA drafting process and negotiations must communicate internally and with the community at large. When covering the interests of an entire community, it is important that all voices are readily available and can be heard. Having regular meetings or communications will help the core groups to inform the larger community about the progress of CBA negotiations, accept feedback, and allow room to address new issues that arise. If the scale of this communication becomes too large for a given community, organizations can be brought in with a specialty in CBAs to help keep parties organized.
● Drafters should be targeting the benefits of the CBA to marginalized communities or those most affected by the development project. CBAs offer a prime opportunity to encourage restorative justice and to ensure the quality of life of marginalized groups does not come at the expense of project progress.
● A successful CBA should be as widely encompassing as possible. Oftentimes the parties who have organized the community come from labor unions, environmental groups, faith organizations, and even local businesses. As a result, one must bear in mind that these disparate groups have a wide array of interests they are seeking to protect. Negotiators must be careful not to prioritize one of these at the expense of others.
● While it may sound obvious, a CBA must offer a meaningful benefit to the community that it is targeted towards. A town with a noticeably low population may not need a developer to invest in 5 parks and may instead have a greater need for investment in its local education. While a CBA may lead to governmental and financial support for the developers, for a CBA to be meaningful negotiators must build it around the community it seeks to affect.
● The goal of a CBA is to create an enforceable contract that binds the parties to their promised actions. Thus, a CBA needs to be both legally binding and enforceable, detailing how the measures enclosed are to be accomplished and pursued over the lifespan of the project. Specificity is key here and will allow the parties involved to hold each other accountable as investments continue to develop.
● Finally, keeping community members informed of the development of negotiations allows for an increase in community morale and to incentivize involvement from the group. Oftentimes these negotiations can be time-consuming, so allowing all parties to be aware of progress and where certain bottlenecks might occur will help foster engagement.
While CBAs are still a relatively new phenomenon, this should not be viewed as a blemish on what they represent. While new in the legal world, they offer no shortage of opportunities for communities to bargain for their shared values and wellbeing.
