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Jan
2015
20

MI Rep Seeks to Ban Community Benefits Agreements, Kill Wage Standards and Local Hiring

Earl Poleski

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Republicans in the Michigan legislature are considering a bill that would ban Community Benefits Agreements (CBAs) on a statewide basis.  The bill was first introduced in the December “lame duck session” where it passed its House committee but never came up for a vote.  Rep. Earl Poleski, who proposed last year’s bill, plans to reintroduce the measure

CBAs are contracts that require businesses to meet agreed upon community improvement goals in exchange for public subsidies or tax breaks.  Supporters believe that CBAs help ensure taxpayer money has the maximum positive impact on a region. Wages standards, for instance, mean local workers are able to spend money locally, within the community. Importantly, CBAs give the community a say in the development process, promote positive corporate behavior, and create a layer of transparency for each project.  

The current version of Poleski’s CBA ban comes from American Legislative Exchange Council (ALEC) model legislation, meaning the directive to force the hand of local government had its genesis in a non-elected, national conservative organization. Al Jazeera America writes that, “The measure would have a drastic effect on Detroit, a city whose redevelopment program largely hinges on the disbursement of tax credits to attract businesses to the area.”

The dangers of a CBA ban are many, but perhaps most important is the setting of bad precedent for the state and the new legislature.  The move would buck an encouraging national trend. Cities which have successfully implemented CBAs include Atlanta, Los Angeles, Denver, Austin, Oakland, and New Haven.

In an interview with the New York Times last year, Madeline Janis, Director of the Los Angeles Alliance for a New Economy, said holding companies that receive public support accountable is not a radical idea:

“We were pursuing a very capitalistic notion.  Public money is an investment on behalf of the community and taxpayers. We’re saying that the developers who receive the benefit of public investment should give a return on that investment to the community.”

The Los Angeles Alliance for a New Economy has been successful in assisting other groups craft CBAs. One example is Oakland’s East Bay Alliance for a Sustainable Economy, whose CBA on a shipping facility conversion guaranteed a tremendous number of local jobs:

In exchange for $242 million in subsidies, the developers and future operators of the port agreed to create 2,800 construction jobs and 2,000 permanent positions at living wages, to limit the number of part-time jobs and to establish a community oversight board. The community group also won measures that will help promote local hiring.

The matter is particularly dire in Michigan, which has wrestled mightily with the concept of local control (remember Emergency Financial Managers?). In October the Detroit City Council passed an ordinance requiring CBAs on future development projects.  The move was made following a disastrous $175 million tax break was given to Marathon Oil in exchange for a non-binding commitment to hire local Detroit workers.  Eight years after that deal the public investment has resulted in a mind-blowingly embarrassing 15 jobs.  

Emboldening a culture which discounts accountability, as the CBA ban would, is something only exploitative owners desire. It is the worst kind of big government: the meddlesome, unilateral, ideological kind. State Rep. Rashida Tlaib sees it simply as overreach:

The bill would “[set] up the state as a dictatorship telling local units of government that they cannot do what is best for their … community.”

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