House bill would ban Detroit from enacting Community Benefits Agreement ordinance

Well, no one had this on their lame-duck forecast for Lansing. 

On Tuesday, a bill was quietly introduced that would ban municipalities in Michigan from enacting an ordinance that would require developers to negotiate a Community Benefits Agreement (CBA) with local residents and businesses.

The bill would also prevent municipalities in Michigan from enacting their own specific minimum wage increases. Gov. Rick Snyder signed a bill earlier this year that will increase the state minimum wage to $9.25 per hour by 2018. 

CBAs are legally binding agreements that ensure specific benefits to a community — these often include jobs, housing, and other economic opportunity. 

The only city currently proposing such an ordinance is Detroit. It would be the first of its kind in the nation.

Detroit City Councilmember Raquel Castañeda-López, an avid proponent of the ordinance who could not be immediately reached for comment, wrote on Facebook that the bill would "restrict cities from having a community benefits ordinance."

"Whether you supported the Community Benefits Agreement ordinance or not, what the state govt is trying to run thru today during lame duck continues to strip power & the ability to self-govern from local municipalities," she wrote.

Currently, how the CBA would work in Detroit is like this: A developer who wants a public subsidy, say a tax credit or to purchase Detroit-owned property, would need to include benefits to the community. They would negotiate those benefits into a CBA, and the community is involved. If the development is 100 percent private, then they don't need to negotiate community benefits. They also don't need to involve the community if the value of the credit or property is less than $300,000.

The new law, however, would prevent Detroit from enacting the CBA ordinance; developers would never be required to engage with, or specifically benefit, a community in order to obtain tax-supported development.

And not everyone supports the ordinance. Rodrick Miller, president and CEO of the Detroit Economic Growth Corporation (DEGC), which has negotiated economic deals on behalf of Detroit since the late 1970s, wrote a letter to Detroit City Council in October calling on the body to stop pursuing the ordinance. 

The House Committee on Michigan's Competitiveness held a hearing this morning on the bill (HB 5977), which says, "A community benefits ordinance or any other ordinance, policy, or resolution that is adopted in violation of this act is void." 

The bill, introduced by state Rep. Earl Poleski (R-Jackson), received a mixed response from officials on the panel, as well as those who spoke during public comment.

Brad Williams, vice president of government relations at the Detroit Regional Chamber, echoed points made by the DEGC, saying, a CBA ordinance would be "damaging to the city’s long term economic health." Opponents of the ordinance say Detroit already has adequate mechanisms in place to address the concerns of ensuring long-time residents receive a fair shake out of developments — such as public hearings on particular developments. 

The Detroit ordinance currently being considered, Williams said, would be a "one-size-fits-all" solution — a point contested by proponents of the ordinance, as it would allow for exemptions if a developer can't agree to a CBA with a host community. 

State Rep. Harvey Santana (D-Detroit) said the bill would box residents out of the decision-making process when it comes to future developments.

"The problem that I have ... with this language is what you’re basically doing is you’re telling the people in the neighborhood, 'Sorry for your luck, you get no buy-in to this process whatsoever,'" Santana said. 

State Rep. Rashida Tlaib (D-Detroit), a proponent of the ordinance, told MT that Detroit City Council President Brenda Jones has been working on the CBA ordinance for two years. 

"There should be a limitation with how Lansing meddles with how Detroit moves forward economically," Tlaib said in a phone interview. 

In a statement released Thursday evening, Tlaib said the bill would set Michigan up as "a dictatorship" that tells local units of government "they cannot do what is best for their community, workers and residents when it comes to wages and benefits tied to economic development in that community.”

“If local governments can’t have community benefit agreements or ordinances, then they are at the mercy of developers," Tlaib said. "I’ve seen what happens in Detroit communities when developers come in and do whatever they want, and that’s why HB 5977 is such a bad idea.”

She added: “We give all kinds of benefits to the big developers, and now House Republicans are saying that the people who live and work near these huge construction projects don’t deserve similar consideration and benefits. That’s wrong and leaves residents without a say in what happens in their communities.”

John Philo, executive director of the Sugar Law Center for Social and Economic Justice, contended in a statement that the state law would render any Detroit mayoral executive order null and void. 

If that was indeed the case, that would throw an agreement reached as part of the deal for a new $450 million Detroit Red Wings arena near downtown into contention. Instead of reaching terms for local benefits through a legally-binding CBA, the Ilitch organization negotiated a number of non-binding items with the city as part of an agreement to manage the facility: millions of dollars in infrastructure and landscape upgrades, $200 million in private investment, and upkeep of Cass Park.

The Ilitch's also said they would appropriate 51 percent of the estimated 5,500 construction jobs on the project for Detroit residents, due to a mayoral executive order passed in 2007. The executive order requires that 51 percent of the workforce on construction projects funded in whole, or in part, by the city be bona-fide Detroit residents. 

However, Philo claimed, that would be irrelevant under the proposed state law. 

“The passage of this bill would nullify all city ordinances, executive orders and policies that require any form of local hiring, living wages, paid sick leave, and domestic partner benefits by contractors in Detroit and in every other Michigan city," Philo said. "It would completely void and disable each." 

Mayor Mike Duggan, who was in Lansing this week to help testify in support of a bill that would alleviate tax bills for some 62,000 Detroiters facing possible foreclosure, has also come out opposed to the ordinance. A spokesperson for Duggan said the mayor's office "just found out about this bill ourselves. Our lawyers are just now starting to review it."

CBAs through negotiations with developers aren't without precedent: For example, in 2008, the city of Pittsburgh entered into a CBA with local developers for a new Pittsburgh Penguins arena.

As the Pittsburgh City Paper reported, with $750 million in public money at stake, the Penguins agreed to offer jobs ranging from $12 to $30 per hour, plus benefits; $2 million for a full-service grocery store with certain requirements to employ 95 percent people of color and 65 percent people who live in the host community; as well as a state tax-credit program that "could provide up to $6 million over the next 12 years for neighborhood support.

The bill would also prohibit municipalities from establishing "any requirement related to employee wages, or benefits, such as a minimum wage, particular benefits, a specified amount of paid or unpaid leave time, or the payment of a prevailing wage except as provided by law," according to an analysis from the nonpartisan House Fiscal Agency.

Plenty of cities across the nation have enacted specific minimum wage hikes at the local level: This week, Chicago passed an ordinance to raise the city's minimum wage to $13 per hour by 2019. Seattle approved a $15 per hour minimum wage in June. 

The Michigan bill would also establish that employee wages and benefits are a "matter of state-concern and ... are outside the express or implied authority of municipalities to regulate unless that authority is specifically delegated to a municipality," the House Fiscal Agency wrote. It also would establish that regulations and prohibitions on development — namely, in this instance, CBAs — are "matters of statewide concern and are within the regulatory power of the state." 

A state law banning minimum wage hikes at the local level appears to be uncommon territory. In April, Oklahoma passed a law that banned minimum wage increases at the local level. Rhode Island approved a budget with language that banned municipalities from enacting their own minimum wage increases. Wisconsin and Washington have introduced similar legislation. In August, writer Taylor Malmsheimer examined the the city-specific minimum wage trend for The New Republic.

The Michigan bill would still allow municipalities to adopt policies on wages and benefits for its own employees.