Given today’s economic environment we see governments relying on private actors to demonstrate their competitiveness at the city, state and even global level. However, in cities like New York, grassroots and community-based organizations (CBOs) can also take part in these multinational transactions by leveraging their political and bargaining power in the city’s land use and approval process.
The standardized procedure for land use approval in New York City is called the Uniform Land Use Review Procedure (ULURP). The alternative way for developers to get project approvals is to enter into a Community Benefits Agreement (CBA) with local CBOs. A CBA is a private contract between the developer and local CBOs. In particular, a CBA document is an agreement, where the developer gains the community’s support for the project in exchange for a promise to provide certain concessions to the local community such as access to more jobs, affordable housing and small business support (For more information on the types of benefits see the role of CBA’s in NYC’s land use process).
Entering a CBA enables developers to receive the approvals needed to start construction sooner, while the local community is promised to benefit by receiving access to a project’s affordable apartments, union jobs, open space and other concessions.
This paper endeavors to and will form part of my MSc thesis research to assess the effect of Community Benefits Agreements (CBAs) as an alternative process to ULURP in New York City through analysis of the Atlantic Yards megaproject. I argue that analysis of this mega-project holds potential for worldwide implications not only becauseit is a product of foreign capital investment, but also because it is located in what urban theorists call a “global city” (For more information on what constitutes a global city and its level of influence see: Sassen, 2006).
New York City, Amsterdam, London, and Singapore, are just some of the few major influential cities which have seen some of the largest accruals and benefits from investments made abroad. These cities play an important economic role in the global capital market, and form an integral part of this trend of increasing foreign capital investment into major cities. Thus, analysis of the outcomes of megaprojects located in these global cities that attract foreign capital investment, hold important implications for the future of urban areas in the world today.
This article concerns itself with the impact of a local regulatory mechanism and how the use of an alternative to the ULURP process in New York City enables local community residents to have a voice in the making of New York City. In part I of this article I will explore the traditional actors that have historically shaped regulatory policies in New York, and how these policies “make” the city. In part II, I will analyze the first New York CBA and its effects on the level of participation and representation by local interest groups in the case of Atlantic Yards in Brooklyn. In particular, I will examine the criticism surrounding the project and argue that although CBAs have the capability to be representative of local community interests, they were an unreliable tool in this particular case in New York. Finally, in part III, I will argue that the case study of the Atlantic Yards megaproject in Brooklyn holds important implications for the future of grassroot efforts in cities across the globe. Given the trend of increasing foreign investment among cities worldwide, a case study of Atlantic Yards can help us better understand and develop a policy framework that can adequately measure and mediate the interests of local and international interest groups that both play a role in creating cities today.
The Blueprint of Urban Renewal
In the United States, federal and state law has traditionally enabled states to empower municipalities to actively seek ways to facilitate economic growth and prosperity. This is especially clear during times of crises. For example, following the Great Depression, which hit in 1929 and lasted for about 10 years, cities were eager to get back on their feet and combat the issues of poverty, unemployment and disinvestment which had resulted from cities borrowing money to finance large-scale, public development projects (Sutton 2008). With unemployment rates rising up to 30% in New York City, and hitting the construction industry the hardest (Teaford, 1986), it was clear that the United States’ policy was well overdue in terms of making necessary changes.
According to historians Chudacoff and Smith (2005), the physical “local decay” visible during the Great Depression substantiated the link between crisis and the costs of physical decay for policymakers. Thus, in the aftermath of the Great Depression, policymakers sought to remedy the “problems” of blight and slums that were manifesting across high-density and crime-ridden neighborhoods. These came to serve as a negative economic markers of declining property values, underutilization, and “an economic liability to the community” (Weiss, 1980). It was during this time that urban renewal came to be regarded as a public issue.
The Traditional Actors in City Policy-making
During President Herbert Hoover’s Conference on Home Building and Home Ownership in 1932, a solution to the social problem of “city slums” and “blighted” areas’ economic unprofitability was proposed and called “district replanning.” According to Weiss (1980), the role of the government in the proposed solution was to use its power of eminent domain to demolish existing structures and large-scale rebuilding projects, and to support the subsidiary infrastructure improvements. Government involvement was necessary because most developers could not afford to finance the cost of these operations. Afterwards, the land was turned over to private developers for rebuilding and redevelopment.
The interests of downtown businesses, property owners and real estate developers were of primary importance for government planning, in a sense, because they were a source of monetary capital needed to revitalize neighborhoods. Thus, the process of “urban renewal” came to be regarded as a regulatory bargain sponsoring development projects as a tool against the economic devastations of the Great Depression. By turning to governments to sponsor profitable commercial uses, high-income residential developments, or large-scale development projects, private actors were enabled and incentivized to invest in cities. In exchange for the legal tools to make development projects possible, municipal leaders were able to gain the much-needed capital investment into their cities.
Providing jobs was stated as the major concern among all policymakers and likely felt as such among the growing number of unemployed Americans in the workforce during this time. However, municipal leaders wanted capital investment into their municipalities for their political interests. And businessmen and real estate industries wanted to commit national policy to the real estate industry. Thus, they seized the opportunity to commit national policy to “improving the environment.” In a sense, this agenda, heralded as the solution to the Great Depression by both businesses and housing advocates (albeit for very different reasons; see Weiss, 1980), paved the way for urban renewal programs that would not be hindered by legal, political, and constitutional roadblocks.
Sutton (2008) explains that the extent to which the federal government became involved in local urban affairs during the Roosevelt Administration’s New Deal initiatives was a first in national urban policy, though it would not be the last. Between 1956 and 1972, a number of urban renewal policies emerged, which policymakers used to remedy the urban, fiscal and any other crises experienced by cities. Urban decay was remedied by slum clearance, which disproportionately affected black neighborhoods.
In 1961 “incentive zoning” was one of the policy tools offered to developers to attract investment. By providing tax cuts and other provisions for building towers, amusement parks, et cetera, policymakers appealed to the business and landowners who had the financial base to invest in these projects that would create public housing. This process would allow policymakers to address housing decisions more easily. Local leaders were pressured to seek investment due to the eroding city tax base caused by families moving to the suburbs, as well as a reduction of federal funds— all of which contributed to many cities finding themselves in a fiscal crisis. Thus, in exchange for regulatory facilitation, developers’ investment tangentially provided municipal leaders with political support due to the successful procurement of funds for the city during their term.
Atlantic Yards Land Use and Civic Improvement Project
In 1968, New York’s Urban Development Corporation Act was created to assist the State and policymakers to attract investment to the urban city center. The Act established the intermediary agency responsible for undertaking urban renewal projects in New York: The Empire State Development Corporation. Article 15-A §554 of the New York General Municipal Law (NYGML) gave the lead agency the powers it needed to assemble land as well as whatever power it needed to complete the process of generating an environmental impact statement, in the effort to approve a project’s General Project Plan, even giving the power to bypass some of these regulations (the Article 15 empowering the designated party: “to plan and undertake one or more urban renewal projects” and to have the powers “necessary or convenient to carry out and effectuate such Project”). The government, on the other hand, was able to use its leverage in providing developers a way to bypass the lengthy process (§970-d, e, t.) to start work on the development project vis-a-vis eminent domain laws. By requiring an intermediary agency to enter a legally binding plan or contract, the power of eminent domain transfers from the hands of the government, to that of a special intermediary agency (§970-g), thereby empowering it to clear, demolish and obtain the land for economic redevelopment, and other profitable public purposes.
New York’s first Community Benefit Agreement (CBA) was completed in 2005 in relation to the multi-billion dollar Atlantic Yards arena project, future home to the New Jersey Nets. In addition to the basketball arena, the proposal includes an attached residential and office complex to be made up of several high-rise buildings that will radically alter Brooklyn’s skyline. The Atlantic Yards Land Use and Civic Improvement project, adjacent to the arena site, set out to create affordable apartments in light of New York’s affordable housing crisis.
Changing skyline of New York. Photo by author (2015)
CBAs are a unique tool in that they can enable local CBOs to participate in the decision making process for projects proposed in their neighborhood. The CBA is a private contract, made between a developer and a coalition of CBOs that sets out what the benefits to the community will be in exchange for community support for the development. In a sense, a CBA, as a political tool, encourages local residents of communities to participate in negotiations because of their political and bargaining power in the land use approval process. Yet, the CBA’s implementation and success is largely dependent on the amount of oversight and enforcement behind it.
The Atlantic Yards Land Use and Civic Improvement project has received a lot of criticism and contention since it was first proposed in 2003, primarily because its approvals were not obtained through the standardized process for New York City’s project proposals, known as Uniform Land Use Review Procedure (ULURP). The traditional ULURP process calls for a public hearing and a number of transparency measures and otherwise time-consuming assessments prior to approval. Without the traditional steps involved to obtain project approvals, the public called into question the assurances of the “positive” impact that the project would have on the local community.
Furthermore, questions arose as to whether the CBA that was entered was actually representative of the community since the Project and Arena developers (Forest City Ratner Companies, collectively) negotiated a CBA with a coalition of only eight community organizations, excluding a number of local signatories from the negotiations. Yet, research shows that the power and success of CBAs comes largely from the strong political backing aggregated by the local community organizations. In other words, what is critical to CBA success, is not only affording enough power to the local community organizations so they can realize its benefits, but also ensuring that the breadth of community interests are represented by including as large a scale of community groups in the negotiation, oversight and implementation process as possible.
A community meeting for the Atlantic Yards project. Photo by author (2015)
In the case of Atlantic Yards, part of the criticism regarding the CBA’s representativeness was due to the eight organizations designated as party to the agreement, some of which critics claim received significant financial support from Forest City. According to Markey (2010), a single entity attempted to negotiate a CBA without taking the time required to create a representative coalition. In a phone interview, the President of BUILD stated that “other community groups were invited to the negotiations by the President of Brooklyn’s Office prior to the beginning of the negotiations who turned down the invitations, but neither Mr. Caldwell nor the President’s Office were able to name any of the parties invited nor provide documentation of the invitations to the other groups.” Instead, an alternative coalition was formed which had a very different set of goals than the actual CBA signatories who negotiated the beneficial provisions.
Where the fundamental purpose of the CBA is to amass public support, this purpose was defeated by excluding others from negotiation, and including only a few groups who were already publicly supporting the project in the coalition (For more information on the groups supporting the coalition, see Bettina Damiani, Comments at the Public Hearing of the New York City Council Committee on Economic Development on the Proposed Atlantic Yards Project, 2005).
Lessons learned and moving forward
In the context of ensuring that a proportion of the affordable housing stock being built remains affordable and is allocated for the local community residents, research by Parks and Warren (2009) argues that CBAs effectiveness in ensuring equality is dependent on the scope of the population it is able to reach. Although to this end we are unable to actually measure or determine the successful provision or equitable distribution of affordable housing to the local community yet, which is beyond the scope of this paper, the CBA does include penalties for not adhering to the agreed timeline. The Atlantic Yards case can serve as a model in terms of the beneficial provisions of its CBA, but should also serve as a cautionary tale for future CBA coalitions. According to Parks and Warren (2009), CBAs are at great risk of being wielded as tools of cooptation by developers and elected officials if they are coalition- or developer-led CBAs, such as the CBA utilized in Atlantic Yards. The process did not include the measures of transparency that are necessary for garnering public support, nor did it form a coalition that took the time to ensure the equivalent bargaining power of each participant of the coalition as a whole. This lack of transparency called into question the coalition’s ability to assure the public that concerns about the development project and the needs of the community were being addressed.
Bridging Atlantic with the Pacific: Atlantic Yards and Foreign Capital
As Greenland Holding Group Overseas Investment Companies Limited, a Chinese company, purchased 70% of the project’s shares, the Atlantic Yards megaproject was “rebranded” as Pacific Park in August 2014. An important trend seems to be emerging worldwide for urban areas as sites for foreign capital investment. With Chinese buyers making up the “largest group of foreign buyers for US real estate,” and the U.S. leading investment in Amsterdam, we start to see a global investment phenomenon emerging across global cities. Indeed, cities such as Amsterdam, Singapore, London, New York and Paris have seen some of the largest increases in foreign control, with more projects majority owned by foreign investors, and more wholly foreign-owned projects. Privatization has brought foreign investors into many previously local enterprises. This is reflected in the changing country composition of the portfolio, the changing sectoral composition, and the improved performance of the more recent portfolio.
In particular, according to Sarah Mulholland for Bloomberg News, “demand for property from warehouses to skyscrapers is booming, helped by more than six years of Federal Reserve efforts to stimulate economic growth by keeping interest rates low, and stockpiles of cash from overseas investors seeking a haven. About $24 billion in foreign capital flowed to U.S. properties in the first quarter, more than half the total for all of 2014.” With foreign capital flows concentrating in cities around the world, and the increasing number of mega-projects developing in the Netherlands, the U.K. and New York, the importance and influence of “local” development projects in cities are emphasized on the global scale.
The Atlantic Yards CBA has demonstrated the relevance of global actors and the need for regulatory policies that mediate the interests of foreign investors abroad and community residents at home. Although there is debate as to whether the CBA negotiated in Brooklyn was a success, the outcome has demonstrated the importance of transparency, inclusion and oversight, and should be highlighted on the agendas of local leaders, community groups and investors alike. With more oversight over the process in which negotiations take place, perhaps more profitable outcomes for both local and international players can be made.
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