Community Benefits Agreements: Understanding the New Requirement and How to Create a Win-Win

June 25th, 2021 by Kimberley Irby

Given that Community Benefits Agreements (CBAs) are built into the structure of the New Jersey Economic Recovery Act, which was signed into law in January 2021, it is no longer a question of if they will happen, but when they will happen. This is what Kelvin Boddy, Director of Healthy Homes and Communities at the Housing and Community Development Network of New Jersey, explained during the Community Benefits Agreements: Understanding the New Requirement and How to Create a Win-Win session at the 2021 New Jersey Planning and Redevelopment Conference. The session featured explanations of what CBAs are, how they are incorporated in the new law, and best practices for ensuring successful ones.

What are CBAs and what types of benefits can they include?

CBAs are “legally binding agreements that relate to a single development and apply to all parties that deliver on it, including developers, contractors, and future tenants,” according to Ben Beach, Legal Director at the Partnership for Working Families, which hosts the Community Benefits Law Center. Ebony Griffin, Staff Attorney at The Public Interest Law Center, added that CBAs are enforceable contractual agreements between a community group and a developer or corporation that describe the project’s contributions to the community and generate community support for the project. Potential benefits include living wages and benefits, targeted and fair-chance hiring, affordable housing, environmental mitigation, small business support, and community services (e.g., grocery stores, public art, meeting spaces, health clinics, and/or workforce development).

What is important to know about the requirement in the Economic Recovery Act?

“New Jersey is the first state in the country to require CBAs in a statewide tax incentive program,” said Brian Sabina, Chief Economic Growth Officer at the New Jersey Economic Development Authority (NJEDA). Dr. Robert Silverman, a professor within the Department of Urban and Regional Planning at the University of Buffalo, emphasized that this institutionalization of CBAs at a state level represents a “sea change in terms of how CBAs fit into the development process.” Having such a framework will increase predictability in the development process for developers, community groups, and local governments.

Mr. Sabina explained that, for two flagship programs established by the Economic Recovery Act (Emerge and Aspire), CBAs are required for projects with total upfront project costs of $10 million or more and will constitute a tri-party agreement between a business, a municipality or county (the negotiator), and NJEDA (the reviewer). Additionally, the governing body of the municipality or county must set up at least one community engagement session prior to finalizing the CBA. Then, after entering into a CBA, the municipality/county executive must appoint a Community Advisory Committee, which will have at least three community members to monitor implementation and report progress to NJEDA annually.

What are best practices for CBAs?

Ben Beach provided three core principles that are necessary for an effective CBA: accountability, meaningful benefit, and democratic participation. Other panelists agreed that for a CBA to be successful, the terms should be specific and measurable, easily implemented, and effectively monitored and enforced. They also agreed that the benefits must meet real community needs, especially for communities that are not only directly impacted, but are generally excluded from economic development opportunities, as well. Ebony Griffin emphasized the importance of this, demonstrating through a case study that if this is not achieved, the developer may not receive the public support needed for a profitable project. In terms of democratic participation, Beach indicated the need for broad representative community involvement and the application of a racial equity lens to the entire process, both in terms of participation and outcomes. Griffin supported this, maintaining that an inclusive and transparent process is a guiding principle. Ultimately, effective CBAs require substantial community organizing and engagement to provide communities with a legitimate opportunity to bring their needs forward.

What’s next?

For community development groups, Boddy claims that there is no reason to wait for projects to pop up to start preparing communities for them. The Housing and Community Development Network of New Jersey is already in the process of integrating CBAs into its programs. It will host trainings, as well as a workshop, at its October conference to educate its member groups about the legal requirements, navigating the process, and preparing residents to advocate and negotiate for sustainable changes.

CBAs, when done well, can serve as a powerful tool for equitable development and redevelopment, simultaneously addressing community needs and providing broad support for the developer’s project. The Economic Recovery Act provides a new framework that may lead the way to making successful CBAs more common in New Jersey.