Revisiting community benefits agreements: Part Two | Professor Peter Dreier

Peter Dreier is the Dr. E.P. Clapp Distinguished Professor of Politics and Founding Chair (1996-2019), Urban & Environmental Policy Department at Occidental College.  In the CBA discussion thread on the pro-urb list, he wrote a couple posts full of resources, . This is reprinted with permission.

From Peter Dreier:

Community benefits agreements and real estate development projects.  I am on the board of the Los Angeles Alliance for a New Economy (LAANE), which pioneered the first Community Benefits Agreement (CBA) in the 1990s. The idea has now spread across the country. 

LAANE is a member of the Partnership for Working Families, a national federation of local coalition groups that bring together labor, community organizing, environmental, and civil rights groups. PWF published this great report, “Unmasking the Hidden Power of Cities,” that identifies various progressive policies that citizen groups can use to leverage local government to bring about more economic, racial, and environmental justice, including CBAs. 

-- Community Benefits Agreements: Making Development Projects Accountable, Partnership for Working Families
-- "Do Community Benefits Agreements Benefit Communities?," Boston Federal Reserve Bank

Some CBAs require that the commercial tenants in developments pay living wages to employees. Some CBAs require developers to provide affordable housing as part of their projects – either within their otherwise market-rate projects (i.e. inclusionary) or to provide funds for the city and nonprofits to build affordable housing off-site. Almost all CBAs require developers to use Project Labor Agreements to guarantee union-level wages to the building trades workers on the project.

Community Reinvestment Act and banks.  CBAs are a close cousin the Community Reinvestment Agreements, which local community organizing and civil rights groups use to get banks to deal with their own redlining and predatory lending practices. 

These groups used the Community Reinvestment Act to pressure banks to sign these agreements, which got banks to agree to open up new full-service branches in communities of color, make more loans for affordable housing projects sponsored by nonprofit groups, hire more people of color in decision-making positions in the banks, etc. There have been hundreds, perhaps thousands, of Community Reinvestment Agreements between community groups and banks since the 1980s. 

 I wrote an article about this back in 1991, "Redlining Cities." Alex Schwartz wrote a report about them for Fannie Mae in 1998, "From Confrontation to Collaboration? Banks, Community Groups, and the Implementation of Community Reinvestment Agreements." The Harvard Joint Center did its own report in 2002, THE 25TH ANNIVERSARY OF THE COMMUNITY REINVESTMENT ACT: ACCESS TO CAPITAL IN AN EVOLVING FINANCIAL SERVICES SYSTEM.

Local governments as parties to Community Benefits Agreements.  The difference between Community Reinvestment Agreements and Community Benefit Agreements is that in most CBAs the local government is a party to the agreement, because it is the local government’s leverage over zoning, tax abatements, and permits that make these CBAs possible. 

CBAs are possible and effective when local community/union/enviro groups have enough clout in City Hall to get the local government agencies to require developers to agree to these CBAs as a quid pro quo for getting their projects approved. 

Leverage with Banks.  Community Reinvestment Agreements are made possible by the Community Reinvestment Act, but they only work when banks think that activist/advocacy groups have enough clout that federal bank regulators might reject their applications to buy other banks or expand to new areas if they don’t sign an agreement with these advocacy groups.

[Separately, this is how Cleveland was able to get local banks to provide funds for property rehabilitation loans in the city, when otherwise property owners wouldn't qualify for loans. These are called "depository agreements."  Some cities create community benefits requirements in return for earning city business.]

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WRT Community Reinvestment Act reporting, one of my ideas is that banks should be required to publish CRA data by bank branch, presented as a type of infographic, putting out into the community the information on their compliance in an accessible way.  Right now they produce text-based reports that can be incredibly difficult to digest.

Something like this, but with data organized in terms of the "retail trade area" served by the branch, along with city and/or county data, on projects that transcend individual branches.