Community Benefits Ordinance:
Putting People at the Center of
Sustainable Development
Great Lakes Bioneers Detroit: We are One, October 24, 2015
Peter J. Hammer, Professor of Law and
Director Damon J. Keith Center for Civil Rights
Wayne State University Law School
Economics & racial justice
Framing sustainability
 UN Sustainable Development Goals
 Sustainable communities (racial equity)
 Sustainable economies
 Sustainable environment
 New notions of justice
 Justice = Sustainability
 Sustainability = Justice
 Formula for transition to sustainability
 Racial Equity + Systems Transformation
Spatial Racism: Segregation of race
and wealth in Detroit
 Michigan Roundtable-Kirwan Institute Opportunity Mapping
 Defining Opportunity
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Housing
Employment
Schooling
Health
Transportation
Food security
Living environment
Segregation of wealth & opportunity
Spatial racism in Southeast Michigan
Current politics & policies in Detroit
are unsustainable
 Unraveling-downward spirals
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Municipal tax base – unsustainable
Auto insurance – unsustainable
Water rate spiral & shutoffs – unsustainable
Mortgage foreclosures – unsustainable
 What “beliefs” perpetuate unsustainability?
 What “institutions” perpetuate unsustainability?
 Racial equity + Systems transformation
Put people at center of sustainable
development
Community Benefits Agreements
 What is a CBA?
 A Community Benefits Agreement (CBA) is a binding
contact negotiated between the host community and
the project developer for the purposes of fulfilling the
specific needs of the community in exchange for the
community’s support of the project
 Equitable Detroit Coalition
(http://www.equitabledetroit.org/)
Community Benefits Ordinance
 What is a CBO?
 A Community Benefits Ordinance holds large scale developers
that receive public subsidies accountable to the communities
it most directly impacts
 A CBO defines standard provisions that must be included in
every CBA, while allowing such agreements to be tailored to
the needs of particular communities and development
projects
 Equitable Detroit Coalition
(http://www.equitabledetroit.org/)
Scope of CBAs
 What would a CBA include?
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Employment provisions
Environmental Program
Housing Relocation and Development Programs
Safety Program
Monitoring and Enforcement Mechanisms
 Sustainability = Racial Equity + Systems Transformation
 Equitable Detroit Coalition
(http://www.equitabledetroit.org/)
DEGC opposition to CBOs
 Head of Detroit Economic Growth Corporation
 “The quickest way to undo all we have done to create a
positive environment for investment and to abruptly stop the
economic momentum we have built . . . is to pass a
Community Benefits Ordinance in any form, or by any name.”
 “. . . a Community Benefits Ordinance will thwart inward
investment [and] signal to the market that Detroit is not a
city that truly desires new investment . . .?
 “This ordinance quietly passes the fiduciary responsibility of
elected leaders to community leaders who are not officially
accountable to anyone and who may or may not
appropriately represent the public.”
Governor's opposition to CBOs
 Governor Snyder’s Economic Development Advisor
 “[I]t would be more productive to look for ways to
generate economic development in the neighborhoods
rather than forcing developers to deliver
“entitlements.”
 “We need to be capitalists,” he said. “Entitlements hurt
us.”
Themes in opponents’ arguments
 Paternalism – we know better – you do not
 Implicit claim of superior “expert” knowledge
 Lack of respect for the ability and wisdom of
community
 Strong belief in power of traditional economic models
of development
 Strong belief in power of traditional politics to
protect the public interest
 “Dog whistle” racial politics – “entitlement” label
Flipping the economic script
 Classic economic script:
 Unrestrained economic markets guarantee growth and
prosperity
 Opponents of CBOs argue for more “business as usual”
 But where has “business as usual” gotten us?
 Flipping the economic script
 Detroit represents the biggest economic market failure in
American history
 Deindustrialization, disinvestment, subprime lending, record
levels of endemic poverty and spatial racism
 Economics as “belief system” not social science
Redevelopment and Race: Planning
a Finer City in Postwar Detroit
Diagnosing Detroit’s real economic ills
 100 years of structural racism
 plus
 50 years of deindustrialization
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 35 years of fiscal austerity
 equals
 Regional economic & racial segregation and
catastrophic economic distress
 Unsustainability
Flipping the political script
 Classic political script:
 Traditional representative democracy perfectly reflects the
public interest
 Mayor, City Council and DEGC will protect the public good
 Flipping the political script:
 Flawed political processes (political market failure)
 Concentrated private interests versus diffuse public interests
 Development subsidies are a likely area of political market
failure and dysfunction
Which of these is in the “public
interest?”
 Hantz farms?
 New Red Wings stadium?
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$650 million entertainment and hockey stadium
$284 million public tax break
Olympia refused to enter into a CBA
No legally binding agreement to hire local residents or
improve quality of life of host community
 Endemic failure of political processes
 Unsustainability
Rejoinder to CBO opponents’
arguments
 False paternalism –DEGC does not have superior
expert knowledge than community
 Ideological commitment to failed economic models of
development–trapped in traditional “belief systems”
 Failure to consider basic lessons of “public choice”
theory
 “Dog whistle” racial politics – reflection of the
entrenched spatial racism of Southeast Michigan
New international thinking about
economic development
Political and economic inclusion = Growth
Human development = Growth
Decrease income inequality = growth
Correcting political market failure
 Traditional political processes almost guarantee bad
development projects will be approved
 concentrated private interests trump diffuse public
interests
 CBOs shine a light on the development process and
help ensure that political decisions better reflect the
public interest
CBOs = More efficient bargaining
 All markets and bargaining processes need sufficient
structure to function (definition of property rights)
 Ad hoc negotiation of CBAs represent difficult
collective action and bargaining problems
 CBOs provide structure and regularity that should
increase the efficiency of negotiating CBAs
Put people at center of sustainable
development
Envisioning the Detroit we want
Thank you !!
 Sustainable development: “Let justice roll down like
water and righteousness like a mighty stream.”
 Racial equity + Systems transformation
 Questions?