Detroit officials say benefits policy for communities needs reform

Christine Ferretti
The Detroit News
The policy division proposes amendments that would mandate more community meetings and information sharing about the development projects as well as requiring projects with residential housing to earmark at least 20 percent as affordable for those earning 80 percent of the area median income.

Detroit — City officials want to put more teeth in a controversial voter-approved law requiring developers to commit to certain housing, hiring and other benefits on major development projects.

The so-called Community Benefits Ordinance, approved by Detroit voters in November 2016, made Detroit the first city in the nation with sweeping requirements to ensure quality-of-life commitments for its residents. 

But some city leaders, an advocacy group and neighbors who have participated in negotiations under the ordinance argue it's confusing, lacks enforcement and doesn't give the community enough say.

District 6 Councilwoman Raquel Castaneda-Lopez told The Detroit News she favors changes that would expand community participation and provide residents with deals that are binding.

Castaneda-Lopez recently said a "significant chunk" of the neighborhood advisory groups selected so far to hammer out deals with project developers have felt "powerless" and "like it's been a waste of time."

"In general, communities don't feel like they have a voice in the process. That it's incredibly rushed," said Castaneda-Lopez, who noted some only had a week or two to organize and had trouble obtaining plans from the city administration and developers.

The law has come into play for a half-dozen projects in Detroit, including redesigned parks, affordable rents, job training and youth programs.

City Council President Brenda Jones recently called on council's Legislative Policy Division to evaluate potential amendments to the ordinance. The department last week issued a report with multiple proposed amendments, saying "the city's limited experience to date with implementation of the ordinance" has "generated calls for further reform."

The policy division proposes amendments that would mandate more community meetings and information sharing about the development projects as well as requiring projects with residential housing to earmark at least 20 percent as affordable for those earning 80 percent of the area median income.

Among other things, it also recommends the law be renamed as the "Community Engagement Ordinance" to "avoid misleading the public regarding the scope and purpose."

At the same time, a coalition representing several dozen community groups and volunteers is pushing for nearly a dozen changes to the law.

The Equitable Detroit Coalition put together recommendations after a year of monitoring advisory group, city council and planning staff meetings, said Linda Campbell, a founding member. 

"We're going to keep fighting for Detroiters to have a fair say, have involvement and have a meaningful CBA," said Campbell. "As long as they are giving away hundreds of millions of public dollars, we're not going away."

The group has reviewed seven projects with investment of $2.4 billion and $832 million of incentives since the ordinance was enacted, based on an analysis of city documents.  

The law has come into play for developments worth at least $75 million or certain projects where a developer seeks city-owned land or tax breaks of at least $1 million. Castaneda-Lopez is suggesting the threshold be lowered to $25 million.

The legislation, coined Proposal B on the 2016 ballot, was backed by the Duggan administration and some union and business groups who argued that a policy too restrictive could drive business out of Detroit. The law was touted as a compromise to a community-driven Proposal A with stricter provisions and lower investment thresholds that appeared on the ballot alongside it.

The community ballot proposal mirrored an ordinance previously drafted by Jones, who says she wants the law to "serve the purpose it was supposed to serve."

The law in place calls for neighborhood advisory councils to be established for areas affected by developments primarily with appointments from the city's planning director and in consultation with the council. But project developers aren't required to enter into legally binding agreements with the neighborhood groups.

Equitable Detroit wants the city to lower the investment threshold to at least $50 million and have it apply to projects with $300,000 in public investment. They also want legally enforceable deals, a longer timeline to engage residents, quicker turnaround on plan documents and penalties for noncompliance, among other changes.

Vince Keenan, major projects manager for the city's Department of Neighborhoods, contends the current process has been transparent, and it's delivering unique benefits for impacted neighborhoods.

"It gives unprecedented access to some fairly complicated deals," he said. "Very few cities have what we have."

The projects, totaling more than $2.3 billion, are getting about $87 million in tax incentives. The city expects to get about $296 million in revenue during the abatement period, primarily in income taxes, according to figures provided by the Detroit Economic Growth Corp.

The city will take in about $11 million in property taxes cumulatively in the first year after abatements end. 

Keenan said he's concerned about efforts to move away from what city voters wanted.

"We've got (a law) that's working, that's voter-approved and trying to work in the elements that the voters rejected doesn't make a whole lot of sense," he said.

But Council President Pro Tem Mary Sheffield, who previously backed the resident-driven ballot measure, is studying proposed changes and doesn't believe they would undermine the will of city voters.

 "If we believe there's a better course of action and stronger policy, that is our role," said Sheffield, noting council is empowered to make amendments under Detroit's voter-approved city charter.

The ordinance went into effect Jan. 1, 2017, and had to remain in place for at least one year before any modifications could be made. 

Sheffield said the selection process for advisory members has been "really messy" and that "people are uncertain how it works." She also agrees the project cost threshold should be lowered. 

"There's an entire category of projects not captured under the current ordinance," said Sheffield.

Under the law, the city's planning director accepts nominations to a nine-member neighborhood advisory council from any person residing in the impacted area. A council consists of nine members — two of which are selected by residents of the impacted area. Four others are chosen by the city's planning director, two by at-large council members and another by the district council person whose district covers the largest portion of the impacted area. 

Not all council members see flaws with the regulations. Councilman Scott Benson, who helped draft the ordinance, said he's been pleased with the spirit of the law.

Benson said the Flex-N-Gate project in his east side district came into play prior to the legislation but was forged with the ordinance in mind. The end result, he said, included hiring commitments, a street-widening project and efforts to minimize truck traffic.

The councilman said he's open to suggestions but attracting and retaining investment is his top priority.

"I hope everybody keeps in mind as we talk about proposed changes that we are not hindering our ability to do development in the city of Detroit and grow our tax base," he said. 

The $143 million Herman Kiefer Hospital redevelopment — the first to fall under the new law — carved out plans for an on-site job training resource center, a restored ball field and skate park and a commitment to host quarterly community information meetings.

The developer began working with residents well before the ordinance was approved, noted Hazel Balaban, a representative for developer Ron Castellano's Herman Kiefer Development. 

"Because our project is so neighborhood focused, ensuring that it benefited the community was a natural outcome and was built into our agreement with the City," she said. 

Dan Gilbert's Bedrock has participated in benefits talks for multiple projects in the city's downtown, including the former Detroit Free Press building on Lafayette Boulevard, the Book Tower/Monroe block, Hudson's site as well as the expansion of its One Campus Martius building.

In May, properties owned by an entity linked to Gilbert's Quicken Loans gained approval for a $618 million tax incentive plan. The largest tax subsidy ever awarded in the state will go toward Gilbert's $2.2 billion plan for Detroit's tallest building on the Hudson's block along Woodward, development of the Monroe Block, Book Tower renovations and an 11-story addition to One Campus Martius.

Resident discussions for the Hudson's site resulted in a communications plan to keep the public informed of traffic and street closures, workforce training investments and post-construction hiring commitments. The Book Tower/Monroe project will preserve the National Theater facade and work out green infrastructure plans, the city noted. 

“It is imperative to design Detroit’s major projects with neighboring communities in mind,” said Jim Ketai, CEO of Bedrock, in a statement. “The series of meetings offered us the opportunity to hear feedback, concerns and ideas from the residents surrounding our developments on an individual basis in a collaborative environment.”

Corktown resident Debra Walker participated in negotiations for the Free Press building rehabilitation. The group worked with Bedrock, she said, to ensure street closures were communicated to residents on noise concerns and job opportunities. Talks went well, she said, but the process is largely unclear and lacks guarantees.

"The vagueness needs to go away," said Walker. "The current ordinance doesn't have enough teeth in it. That's where it needs to start."

Separately, a $2.5 million investment for 60 outdoor basketball courts and workforce training were among the benefits worked out for the $50 million Detroit Pistons Practice Facility in the city's New Center.

Ken Harris, president and CEO of the National Business League, Inc., was among those who served on the advisory group for that development. The process worked for that project but he still supports stronger language.

"We have to really focus on economic inclusion and participation being at the forefront of every single project that comes into this city and we need to advocate," he said. "Sometimes people don't move unless it's in writing."

In Midtown, advisory group discussions for a $77 million redevelopment of the Wigle Recreation Center are nearly complete. In that neighborhood, the development team has worked out plans for a redesigned park, community organization funding and more affordable rents.

PDH Development Group is leading the project and agreed to involve Detroit-based and minority-owned businesses, said Roderick Hardamon, a Detroit developer and partner in the project.

Hardamon said the law could be more efficient but worries about the impact of any substantial changes on smaller developers.

"There are a lot of projects that are challenging enough to get done," he said.