09/29/2010 05:00 pm ET | Updated May 25, 2011

Fixing Community Benefit Agreements

Six months ago, Comptroller John Liu convened a task force to review best practices and draft a framework on a more effective and equitable process for publicly-subsidized economic development based on the principles of greater accountability, transparency, inclusiveness, consistency and fiscal responsibility. The recommendations we propose today create clear expectations, encourage broad-based participation, and would result in enforceable public benefits that comply with legal standards.

Agreements similar to Community Benefit Agreements (CBAs) have been a feature of New York City real estate development since the 1919 Zoning Resolution was adopted and, as long as the Zoning Resolution remains in effect, are likely to continue. CBAs can seem like a "win-win" by both community groups that have negotiated local benefits and by developers whose project approval and subsidy packages are facilitated by community support. Yet, negotiations over a CBA can add unpredictability and delay, increase project costs, and even kill a project. Some see CBAs as illegal exactions. Others have condemned CBAs in New York City as sham agreements that lack transparency, accountability and enforceability.

After recognizing that the City planning process needs long-term modifications in order to eliminate the need for these agreements, we sought best practices that would immediately introduce credibility and predictability to a 'wild-west' process that has thus far proceeded without guidelines. We believe doing so will go a long way toward avoiding future delays, deadlocked negotiations and derailed projects, while both encouraging more developers to enter the marketplace and protecting communities' interests.

In order to add no delay to the land use process, we propose that negotiations begin with the onset of environmental review and end with certification of zoning applications by the Department of City Planning. The Council Member (or state legislator if the project requires state approval) and Borough President would then jointly convene a series of public community forums to discuss the proposed project and begin the formation of a negotiation team.

As a primary purpose of benefit agreements should be to mitigate project-related impacts, we recommend that third-party technical assistance, selected from a pre-approved City list, be available to the elected officials convening the forums. This third-party would help develop terms geared toward tangible benefits for the community and help target investment in communities that need it.

Negotiators, including the elected officials leading the process, should avoid potential conflicts of interest by agreeing to neither solicit nor accept direct funds from developers and be barred from future contracts implementing the benefit agreement. All CBA terms must be clear, concrete and have a schedule for delivery or implementation, and final agreements must be made readily available to the public.

Although CBAs in their current form appear to be unenforceable in New York, those incorporated into regulatory agreements in other parts of the country appear to have better track records of implementation. Therefore, it makes sense to follow the model adopted by other municipalities for benefit agreements that meet the standards as recommended by our task force.

In order to ensure enforceability, terms of the agreement concerning physical benefits can be addressed through a restrictive declaration executed and recorded by the developer that places conditions on the future use and development of the property. Terms concerning social or economic benefits that cannot be addressed by the restrictive declaration should be integrated into New York City Economic Development Corporation's regulatory agreement with the developer.

We believe the recommendations submitted today to the Comptroller would effectively limit uncertainties in the process, and steer New York City in the direction of becoming a model for effective and equitable economic development.

John Ahern, President NYC Central Labor Council
Priscilla Almodovar, Chief Operating Officer Community Development JP Morgan Chase
Barry Gosin, Chief Operating Officer Newmark Knight Frank
Joyce Moy, Executive Director Asian American/Asian Research Institute (CUNY)