Optimizing Benefits from Retail Development Projects

Optimizing Benefits from Retail Development Projects

By Bill Shelton, CcED

Today in many cities, retail development is seen as a public responsibility that requires the local government’s participation. As cities become more active in planning retail development, providing infrastructure and granting finance tools to achieve retail goals, community groups are taking notice. Citizens in the community want to make sure that public money is spent wisely and is used for the long-term benefit of residents and businesses affected by the development.

One tool used by community groups to ensure their concerns are addressed is a Community Benefit Agreement (CBA). A CBA is a project-specific contract that is negotiated between representatives of various community organizations and the developer prior to governmental approval of the project. This agreement details specific benefits to the community that will result from a development or redevelopment project. For instance, the developer may agree to construct and operate the project in a certain way and to provide specific improvements. In exchange, the developer gains the community group and in turn the public’s support of the proposed project.

CBAs give communities – particularly those neighborhoods affected by the development – a voice in shaping the project to fit their needs. Concerns such as historical preservation, traffic and environmental issues can be addressed by the agreement. CBAs are a win-win because they provide a meaningful up-front opportunity for the developer and a broad representation of local citizens to discuss issues and minimize the negative impact of the development project, particularly if the project has controversial elements such as traffic, noise or night lights

Here are some of the more frequently negotiated issues in a CBA:

  • Hiring/Job Training. Developers may agree to hire applicants from certain employment programs, or they may agree to provide job training.
  • Traffic. Developers may address community concerns by creating traffic management plans.
  • Space. The project may be required to provide open space, green spaces or parks in either the development or nearby neighborhoods.
  • Compensation. The agreement may require that certain jobs pay specific “living” wage rates and provide certain benefits.
  • Community Service Projects. Moneys may be set aside for neighborhood improvements including childcare facilities, youth centers, roads and street lighting.
  • Drainage. Storm drainage projects can be part of an agreement.
  • Relocation Benefits. The agreement may specify the amount of money to be paid to residents or businesses displaced by the project.
  • Job Opportunities. For select groups such as veterans.

CBAs are beneficial to retail developers because the community coalition formally supports the development. The signed CBA often reduces or eliminates costly delays a developer can incur when getting municipal approvals and permits. In addition, by working with the community to create the agreement, the developer often gains local supporters who are ideally positioned to help resolve unforeseen conflicts.

CBAs demonstrate that collaboration between developers and neighborhoods is not only possible, but also preferable.

Local governments can also apply lessons learned from a CBA process to future development projects to maximize the benefits of new projects.

Ideally, Community Benefit Agreements are incorporated into the development agreement between the city and the developer. As part of the official development agreement, the CBA is legally enforceable. A successful CBA process can make future retail development projects easier and the process could become routine, particularly for those communities that desire to match the needs of the public with retail projects.