Item 03 2023-00557 Ordinance Adding Chapter 3.156 to the Sacramento City Code, Relating to Community Benefits Agreements — Law and Legislation Committee, October 17, 2023

City of Sacramento
Law and Legislation Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00557 10/17/2023 Discussion Item 3.

Ordinance Adding Chapter 3.156 to the Sacramento City Code, Relating to Community Benefits Agreements
File ID: 2023-00557
Location: Citywide
Recommendation: 1) Review an Ordinance adding chapter 3.156 of the Sacramento City Code, relating to community benefits agreements; and 2) Pass a Motion forwarding the Ordinance to City Council for consideration.

Contact: Ellen Sullivan, Senior Development Project Manager, (916) 808-5758, [email protected]; Leslie Fritzsche, Economic Investment Manager, (916) 808-5450, [email protected], City Manager’s Office of Innovation and Economic Development Presenter: Ellen Sullivan, Senior Development Project Manager, (916) 808-5758, [email protected]; Leslie Fritzsche, Economic Investment Manager, (916) 808-5450, [email protected], City Manager’s Office of Innovation and Economic Development Attachments:
1-Description/Analysis
2-Community Benefits Agreement Ordinance
3-CBA Ordinance Redline
4-Draft Community Benefits Ordinance Framework
5-Sacramento Investment Without Displacement Comments on Draft Community Benefits Ordinance Framework
6-North State Building Industry Association Comments on Draft Community Benefit Ordinance Framework
7- Downtown Sacramento Partnership Comments on Draft Community Benefits Ordinance Framework
8-Aggie Square Settlement Agreement with the UC Regents and Sacramento Investment Without Displacement
9-Inclusive Economic Development Investment Guidelines
10-Sacramento Investment Without Displacement - Outstanding Issues Side-By-Side Comparison Community Benefits Agreement Ordinance

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File ID: 2023-00557 10/17/2023 Discussion Item 3.
11-Sacramento Investment Without Displacement Community Benefit Comparison 12-Greater Sacramento Economic Council, Barry Broome, Comments on Draft CBO 13-Greater Sacramento Economic Council, Michelle Williard, Comments on Draft CBO 14-Downtown Sacramento Partnership Letter of Concern - Community Benefits Agreement Ordinance
15-Sacramento Investment Without Displacement Community Benefits Agreement Ordinance 16-Greater Sacramento Economic Council CBA Opposition Letter 17-North State BIA Draft Community Benefits Agreement Ordinance 18-DSP R Street River District Letter of Concern
Description/Analysis
Issue Detail: On May 12, 2021, the City of Sacramento, the Regents of the University of California, and Sacramento Investment Without Displacement (“SacIWD”) entered into a settlement agreement regarding the Aggie Square Project (“Settlement Agreement”, included as Attachment 8). The Settlement Agreement included a provision requiring the City to endeavor to bring forward a community benefits agreements ordinance (“CBO”) for City Council consideration by January 1, 2022. The City and SacIWD have since agreed to extend that deadline multiple times, most recently to the end of May, 2023 and are working on a new extension to comport with the current schedule.

The City has drafted a proposed CBO that requires certain development projects receiving $10 million or more in economic development subsidies from the City to enter into a community benefits agreement (“CBA”) as a condition of receiving the subsidy. The proposed CBO is included as Attachment 2. The ordinance contains terms that each CBA must include such as: local hire, compliance with prevailing wage law, small and local business support, anti-displacement strategies, provisions for affordable housing, transportation projects, and other project specific benefits. It provides that the City Council may waive some of these terms if it finds that they are not warranted under the circumstances. The proposed ordinance also contains language ensuring community input in the process and provides for the City Manager to develop policies and procedures to implement and enforce the CBO.

Staff is asking Law and Legislation Committee to review the draft ordinance and, if acceptable, forward the proposed CBO to City Council for consideration as is required under the Settlement Agreement.

Policy Considerations: The addition of chapter 3.156 to the City Code is an extension of the City’s Inclusive Economic Development Investment Guidelines approved by Council in 2019 (included as Attachment 9) and would be the next step in the Inclusive Economic Development initiative by codifying the City’s commitment to promote inclusive economic and community development.

Additionally, a CBO is consistent with City Council’s adopted “Policy to Take Comprehensive, Intentional Actions to Increase and Diversify our Economic Growth in an Inclusive and Equitable Manner that Focuses on Neighborhoods and Their Unique Needs” approved by Council on July 31,

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File ID: 2023-00557 10/17/2023 Discussion Item 3.
2018.

Economic Impacts: Not applicable.

Environmental Considerations: The adoption of the ordinance would provide general guidelines related to the requirement of a CBA in connection with city subsidies, as defined in the ordinance, for large projects. This is intended to replace ad hoc consideration of such agreements. The ordinance is not a project as defined under the California Environmental Quality Act (CEQA) because it involves administrative and fiscal activities of the city without commitment to any project, and without any physical change in the environment. (CEQA Guidelines sections 15378(b)(4) and (b)(5).) Therefore, the action to adopt the ordinance is not subject to CEQA. (CEQA Guidelines Section 15060(c)(3)).

Sustainability: None.

Commission/Committee Action: This item was previously heard by Law and Legislation Committee on March 29, 2022, and April 18, 2023. Information regarding the discussions at the two meetings is included in the Background section below.

Rationale for Recommendation: The proposed CBO is an extension of the City’s Inclusive Economic Development Investment Guidelines and provides consistency and certainty for developers and community members when the City is providing an economic subsidy of $10 million or more to a significant development project. The CBO was drafted based on the terms of the Aggie Square Settlement Agreement, direction received from the Law and Legislation Committee and City Management, as well as input from the Investment Committee, Sacramento Investment Without Displacement, and from the business and development community.

Financial Considerations: None.

Local Business Enterprise (LBE): Not applicable.

Background: As a component of the Settlement Agreement, the City is required to work with SacIWD, to develop the CBO. Once the CBO is drafted, it is to be considered for adoption by City Council. The proposed CBO would require CBAs for certain projects receiving economic subsidies within the meaning of Government Code section 53083.

The Settlement Agreement included provisions regarding what the CBO should contain:
(A) Identification of criteria for determining which projects receiving economic subsidies from the City will require CBAs;

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File ID: 2023-00557 10/17/2023 Discussion Item 3.
(B) Provisions for community enforcement of the CBAs;
(C) A transparent accountability process that includes a Public Oversight Committee that is guided by an inclusive, comprehensive, community-driven process; and (D) Provisions in the CBAs for long term small/local business protection, anti-displacement strategies, and production of affordable housing to be developed with SaclWD, affected residents, and other relevant community partners.

On March 29, 2022, staff brought a draft concept to Law and Legislation Committee for consideration. The direction received at Law and Legislation Committee was to craft a CBO that is flexible and has a high-dollar threshold (for example, $10 million) to “kickstart” the requirement for a CBA. City management has also indicated support for this approach.

On August 9, 2022, the Investment Committee Financial Tools Working Group met to discuss the concept of a proposed CBO. The Working Group discussed the importance of flexibility in the ordinance. In addition, the Working Group expressed that the CBO should apply to large, transformative projects and to be sensitive in making sure such a requirement does not make development so difficult that it results in developers not wanting to do business in the City.

On October 3, 2022, the Inclusive Economic and Community Development Investment Committee discussed the potential CBO. The Committee also discussed what amount of subsidy would require a CBA and what types of benefits could be included in CBAs.

Community Benefits Ordinance Framework
As a next step, staff drafted a Community Benefits Ordinance Framework (Attachment 3). The CBO Framework was based on the direction received at Law and Legislation Committee and from City management. It is streamlined and flexible in nature and is in keeping with what the City agreed to in the Aggie Square Settlement Agreement.

Staff shared the draft CBO framework with SacIWD and the development community for input.

Sacramento Investment Without Displacement (SacIWD)
Since February 2022, City and representatives of SacIWD have been meeting to discuss elements of a potential CBO. SacIWD shared the results of their community outreach and provided ordinance language, as well as feedback on the City’s draft CBO Framework (Attachment 5).

SacIWD’s feedback on the CBO Framework is generally that the $10 Million in economic development subsidy is too high an amount to require a CBA and there should be additional

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File ID: 2023-00557 10/17/2023 Discussion Item 3.
considerations to require a CBA such as building square footage. Additionally, they expressed that the definition of economic development subsidy is too narrow. SacIWD also would like more minimum benefits listed in the CBO.

Development Community Outreach
On August 15, 2022, the City presented the concept of a CBO to members of the business and development community. Approximately 30 people attended and there were members of SacIWD present also. The group felt that they needed a draft CBO or CBO Framework to react to and recommended that the City reach out to a larger group of the development community.

On September 8, 2022, the City presented the concept of the CBO to the North State Building Industry Association Infill Council (BIA). The group provided comments of support for the affordable housing exemption and the dollar threshold. The Infill Council indicated they would provide written comments. On March 10, 2023, the BIA provided written comments on the proposed CBO Framework (Attachment 6). The BIA indicated concerns that Community Financing District bonds or their proceeds should not apply to the CBO $10 million threshold, exclude routine public financing of housing projects from the CBO, and include a provision that only the types of funds listed in the CBO may be used for the calculation of the subsidy for purposes of the CBO.

On October 25, 2022, the City met with a group of downtown developers at a round-table style meeting facilitated by the Downtown Sacramento Partnership (DSP) to discuss the draft CBO Framework. As a follow-up to the meeting, DSP provided written comments outlining concerns with the proposed CBO Framework (Attachment 7). DSP indicates a primary concern is that the $10 million threshold is too low and should have an inflation adjustment. Additionally, DSP would like the scope of projects qualifying for a CBA better defined. Staff has since met with DSP’s Policy Committee twice to provide the ordinance and continue to obtain feedback.

Community Benefits Agreement Ordinance
Utilizing the comments received from the development community and SacIWD on the draft CBO Framework and direction from City Management, staff outlined the CBA ordinance components and provided direction to the City Attorney’s Office to draft the CBO.

The City provided the draft CBO to SacIWD on March 8, 2023, for their review. Subsequently, it was posted to the City’s website. The City’s Community Engagement team sent out a notification email to the business and development community on March 23, 2023, to notify them that the draft CBO was available for review and the date of the Law and Legislation Committee meeting. The City received comments from SacIWD (Attachments 10 and 11), the Greater Sacramento Economic Council (Attachments 12 and 13), Downtown Sacramento Partnership (Attachment 14). SacIWD also included an alternate CBO language which is include as Attachment 15.

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File ID: 2023-00557 10/17/2023 Discussion Item 3.

On April 3, 2023, the Inclusive Economic and Community Development Investment Committee discussed the proposed CBO. Four members provided comments and they related to suggested inclusion of baseline metrics and targets for local hire; questions related to the dollar amount of the threshold, types of business support and technical assistance; and consideration for the inclusion of the arts.

On April 18, 2023, the proposed CBO was presented to the Law and Legislation Committee. After City staff and SacIWD made presentations to the Committee, a number of members of pubic spoke regarding concerns with the CBO, specifically citing the threshold and not enough time to for outreach with the City. The Committee’s discussion focused on a number of questions:
· What should threshold dollar amount be?
o $10 Million
o Less than $10 Million
· Should the threshold be a percentage of project cost? · Should flexibility be dependent on the City’s investment? · Should the benefits be scalable?
o Smaller investment, fewer required benefits
o Larger investment, more required benefits
· Should enforcement provisions be included in the CBO
· Should Council approve the Implementation Guidelines? · Should certain areas of the City such as the Central City be excluded? The Committee asked staff to investigate whether including rezonings as a development subsidy that could trigger the CBA requirement regardless of whether the City expends any public funds or loses any revenue to subsidize a project (“stand-alone rezone”) would legally be possible. Staff requested, and the Committee concurred, that since SIWD brought the stand-alone rezone concept forward, SIWD should provide the legal support for the City’s ability to impose the CBA requirement as a condition of a stand-alone rezone. The Committee directed staff to continue outreach to the business and development community regarding the CBO and solicit additional input on the proposed ordinance. Based on this continuing work, staff received an opposition letter to the CBO from the Greater Sacramento Economic Council (Attachment 16) and the North State BIA submitted alternate CBO language (Attachment 17). Additionally, the Downtown Sacramento Partnership, R Street PBID, and River District PBID wrote a joint letter of concern (Attachment 18) regarding concerns with the draft CBO.

Following the Committee meeting, staff has done additional outreach to SIWD and the business

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community. SIWD has provided their legal research on the ability of the City to include stand-alone rezonings as a development subsidy triggering the CBA requirement. Based on the research that SIWD provided and the scope of the Settlement Agreement, treating a stand-alone rezone as a development subsidy is not a viable option and staff does not recommend including it in the ordinance or discussing it further.

Based on the overall direction from the Law and Legislation Committee, the desire for a streamlined CBO, comments received at the Law and Legislation meeting and the input received from stakeholders, staff revised the CBO. The changes are summarized below:
· Section 3.156.010: Addition of a “Purpose” section outlining the goals and objectives of the ordinance;
· Section 3.156.030: Changes to the definition of “Affordable rent” - referencing a more widely accepted State standard;
· Section 3.156.030: Changes to the definition of “Development subsidy” - clarifying that certain types of bonds such as Mello-Roos/Community Facilities Bonds are not considered a development subsidy;
· Section 3.156.070: Additional language in the “Community input” section; · Section 3.156.080: Additional language in the “Policies and procedures” section to specify that the policies and procedures that the City Manager may adopt include address accessible and comprehensive community input processes.

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1 ORDINANCE NO.

Adopted by the Sacramento City Council
Date Adopted
AN ORDINANCE ADDING CHAPTER 3.156 TO THE SACRAMENTO

CITY CODE, RELATING TO COMMUNITY BENEFITS AGREEMENTS
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:

SECTION 1.

Chapter 3.156 is hereby added to the Sacramento City Code to read as follows:

Chapter 3.156 COMMUNITY BENEFITS AGREEMENTS

3.156.010 Title.

This chapter may be referred to as the Community Benefits Agreements Ordinance.

3.156.020 Purpose.

The purpose of this chapter is to establish a requirement that developers who receive significant development subsidies from the city provide community benefits as a condition of receiving those subsidies. This chapter requires developers to enter into community benefits agreements with the city as a condition of receiving significant development subsidies. In establishing this requirement, the city is seeking to achieve its goals of promoting inclusive economic development, securing community benefits, increasing the city’s overall tax base, increasing the housing stock, facilitating new employment opportunities, and promoting economic growth within the city. This chapter provides the city with flexibility in determining the benefits that will be required under each agreement so that the benefits can be tailored to the type and impact of the development project.

3.156.030 Definitions.

The following definitions apply in this chapter:
“Affordable dwelling unit” means a dwelling unit that (i) will be rented at an affordable rent or sold at an affordable housing price and (ii) will have a regulatory agreement recorded on title, requiring the unit to remain affordable for a period of no less than 30 years.
“Affordable housing price” means a sales price of a for-sale dwelling unit that requires a low-income household to expend no more than 35% of its income on housing expenses (mortgage principal and interest, taxes, insurance, and assessments). 2 “Affordable rent” means an annual rent that is at or below the annual rent established by the California Tax Credit Allocation Committee for Sacramento County for the bedroom size and income level of a dwelling unit as of the date the development project is expected to be placed into service.
“Community benefits agreement” means a written contract between the city and a subsidized party that includes the terms by which the city will provide a development subsidy and the public benefits that the subsidized party must provide in exchange. “Completed project” means a development project for which the city has issued a certificate of occupancy for all structures.
“Development project” means the construction, reconstruction, demolition, or alteration of the size of any structure.
“Development subsidy” means the city’s expenditure of public funds or loss of revenue to subsidize a development project in the city, in a cumulative amount equal to or greater than the threshold amount, in the form of grants, below-market-rate loans, loan guarantees, fee waivers, land price subsidies, tax abatements, tax exemptions, tax credits, and bonds (excluding bonds issued under the Mello-Roos Community Facilities Act of 1982 (Cal. Gov. Code § 53311 et seq.), single-family mortgage revenue bonds issued under California Health & Safety Code section 52000 et seq., and assessment bonds issued under the Improvement Bond Act of 1915 (Cal. Sts. & Hy. Code §§ 8500- 8887)), whether approved by the city in a single act or multiple acts. “Development subsidy” does not include an expenditure or loss in any amount as part of: (i) a public project, as defined in section 3.60.010; (ii) the disposal or acquisition of land under California Government Code section 37364; or (iii) the development of housing where at least 50% of the dwelling units are affordable dwelling units. “Dwelling unit” has the same meaning as in section 17.108.050. “Local area” means Sacramento, Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties.
“Low-income household” means a household whose income does not exceed 80% of median income, adjusted for family size.
“Median income” means the median income applicable to Sacramento County, as published and annually updated by the United States Department of Housing and Urban Development pursuant to section 8 of the United States Housing Act of 1937. “Priority neighborhood” means a qualified census tract as defined in 26 U.S.C. section 42(d)(5)(B)(ii).
“Priority order” means priority is given from highest to lowest to: residents of the city who reside within a ZIP code any part of which is within a two-mile radius of the development project; residents of a priority neighborhood within the city; other residents of the city; residents of Sacramento County, outside of the city; and residents 3 of Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties.
“Subsidized party” means a person who is or will be the direct beneficiary of a development subsidy.
“Threshold amount” means $10,000,000, as adjusted in section 3.156.060.

3.156.040 Community benefits agreement - required.

A. A subsidized party shall enter into a community benefits agreement as a condition of receiving a development subsidy.

B. The community benefits agreement must include the terms required under section 3.156.030 and any other terms required by the city or agreed upon by the city and the subsidized party.

C. The city council may only approve a development subsidy if it approves a community benefits agreement at the same time.

3.156.050 Community benefits agreement – terms.

A. Except as provided in subsection C, each community benefits agreement must include the following terms:

1. To the extent permitted by law, a term requiring the subsidized party and its contractors, subcontractors (not including suppliers), and tenants to employ residents of the local area in priority order to:
a. Perform work on the development project for which the city is providing the development subsidy;
b. Perform work to improve, maintain, and repair the completed project; and
c. Work in businesses located in the completed project.

2. A term requiring the subsidized party and its contractors and subcontractors to comply with California’s prevailing wage law (Cal. Labor Code §1770 et seq.) in connection with the development project.

3. A term specifying a clearly identifiable class of persons who will be third- party beneficiaries under the community benefits agreement.

4. A term requiring the following indemnity language: “The subsidized party shall defend, indemnify, and hold harmless the city, its officers, employees, and agents from and against all claims, actions, losses, damages, liability, costs and expenses of every type and description, including, but not limited to, attorney fees, to which any or all of them may be subjected by reason of, or resulting from, directly or indirectly, in whole or in part, the community benefits agreement.”

5. Terms requiring the subsidized party to:

4 a. Provide small and local businesses with support, such as technical assistance, increased access to capital, or resources for building improvements; b. Implement anti-displacement strategies, such as those intended to create stable tenancies, create paths to home ownership, provide secure employment opportunities, or enable small businesses to grow; c. Provide affordable dwelling units; and
d. Undertake transportation projects or initiatives, such as those that enhance community connectivity, improve transportation options, or promote motor-vehicle-traffic-reducing measures.

B. In addition to the terms in subsection A, the city may require a community benefits agreement to include terms that require project-specific community benefits that it finds are warranted under the circumstances.

C. The city council may approve a community benefits agreement that does not include any term under subsection A.5 that it expressly finds is not warranted under the circumstances.

3.156.060 Adjustment of threshold amount.

A. During the years 2023 through 2027, the threshold amount is $10,000,000.

B. Every 60 months beginning on January 1, 2028, the threshold amount shall be adjusted automatically to take into consideration inflation by a factor equal to the percentage increase, if any, in the construction cost index for San Francisco (based on 1913 U.S. average = 100) during the 60 months ending on the preceding September 1 as published by Engineer News Record/McGraw-Hill Construction Weekly, or any substitute index that the city council adopts by resolution. The city manager or the city manager’s designee shall calculate the adjustment, if any, to the threshold amount and shall advise the city clerk of the amended threshold amount.

3.156.070 Community input.

The city manager shall seek the input of the community that is or will be affected by the development project when developing the terms of, and evaluating the subsidized party’s performance under, the community benefits agreement. In seeking the community’s input, the city manager shall follow the policies and procedures, if any, that may be adopted under section 3.156.080.

3.156.080 Policies and procedures.

The city manager may adopt policies and procedures to implement and enforce the provisions of this chapter, including policies and procedures that address accessible and comprehensive community-input processes.

1 ORDINANCE NO.

Adopted by the Sacramento City Council

Date Adopted

AN ORDINANCE ADDING CHAPTER 3.156 TO THE SACRAMENTO

CITY CODE, RELATING TO COMMUNITY BENEFITS AGREEMENTS
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:

SECTION 1.

Chapter 3.156 is hereby added to the Sacramento City Code to read as follows:

Chapter 3.156 COMMUNITY BENEFITS AGREEMENTS

3.156.010 Title.

This chapter may be referred to as the Community Benefits Agreements Ordinance.

3.156.020 Purpose.

3.156.030 Definitions.

2 “Affordable rent” means an annual rent that is at or below the annual rent established by the California Tax Credit Allocation Committee for Sacramento County for the bedroom size and income level of a dwelling unit as of the date the development project is expected to be placed into service.
“Community benefits agreement” means a written contract between the city and a subsidized party that includes the terms by which the city will provide a development subsidy and the public benefits that the subsidized party must provide in exchange. “Completed project” means a development project for which the city has issued a certificate of occupancy for all structures.
“Development project” means the construction, reconstruction, demolition, or alteration of the size of any structure.
“Development subsidy” means the city’s expenditure of public funds or loss of revenue to subsidize a development project in the city, in a cumulative amount equal to or greater than the threshold amount, in the form of grants, below-market-rate loans, loan guarantees, fee waivers, land price subsidies, tax abatements, tax exemptions, tax credits, and bonds (excluding bonds issued under the Mello-Roos Community Facilities Act of 1982 (Cal. Gov. Code § 53311 et seq.), single-family mortgage revenue bonds issued under California Health & Safety Code section 52000 et seq., and assessment bonds issued under the Improvement Bond Act of 1915 (Cal. Sts. & Hy. Code §§ 8500- 8887)), whether approved by the city in a single act or multiple acts. “Development subsidy” does not include an expenditure or loss in any amount as part of: (i) a public project, as defined in section 3.60.010; (ii) the disposal or acquisition of land under California Government Code section 37364; or (iii) the development of housing where at least 50% of the dwelling units are affordable dwelling units. “Dwelling unit” has the same meaning as in section 17.108.050. “Local area” means Sacramento, Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties.
“Low-income household” means a household whose income does not exceed 80% of median income, adjusted for family size.
“Median income” means the median income applicable to Sacramento County, as published and annually updated by the United States Department of Housing and Urban Development pursuant to section 8 of the United States Housing Act of 1937. “Priority neighborhood” means a qualified census tract as defined in 26 U.S.C. section 42(d)(5)(B)(ii).
“Priority order” means priority is given from highest to lowest to: residents of the city who reside within a ZIP code any part of which is within a two-mile radius of the development project; residents of a priority neighborhood within the city; other residents of the city; residents of Sacramento County, outside of the city; and residents

3 of Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties.
“Subsidized party” means a person who is or will be the direct beneficiary of a development subsidy.
“Threshold amount” means $10,000,000, as adjusted in section 3.156.060.

3.156.040 Community benefits agreement - required.

A. A subsidized party shall enter into a community benefits agreement as a condition of receiving a development subsidy.

B. The community benefits agreement must include the terms required under section 3.156.030 and any other terms required by the city or agreed upon by the city and the subsidized party.

C. The city council may only approve a development subsidy if it approves a community benefits agreement at the same time.

3.156.050 Community benefits agreement – terms.

A. Except as provided in subsection C, each community benefits agreement must include the following terms:

3. A term specifying a clearly identifiable class of persons who will be third- party beneficiaries under the community benefits agreement.

5. Terms requiring the subsidized party to:

C. The city council may approve a community benefits agreement that does not include any term under subsection A.5 that it expressly finds is not warranted under the circumstances.

3.156.060 Adjustment of threshold amount.

A. During the years 2023 through 2027, the threshold amount is $10,000,000.

3.156.070 Community input.

3.156.080 Policies and procedures.

Draft Community Benefits Ordinance Framework

Definitions.
“Community benefits agreement” means a written contract between the city and a subsidized party that includes the terms by which the city will provide a development subsidy and the public benefits that the subsidized party must provide in exchange. “Development project” means the construction, reconstruction, demolition, or alteration of the size of any structure.
“Development subsidy” means an expenditure of public funds by, or loss of revenue to, the city in the amount of $10,000,000 or more in a single transaction, to subsidize a development project within the city limits of the city, including bonds, grants, below-market-rate loans, loan guarantees, fee waivers, land price subsidies, tax abatements, tax exemptions, and tax credits. “Development subsidy” does not include an expenditure by, or loss of revenue to, the city in connection with a public project, as defined in section 3.60.010; a development project being carried out by a nonprofit corporation formed under the Nonprofit Public Benefit Corporation Law (California Corporations Code section 5110 et seq.); the disposal or acquisition of land under California Government Code section 37364; the development of housing that meets the affordability requirements under subdivisions (c) and (f) of California Government Code section 37364; or the sale or lease of land under the Surplus Land Act (California Government Code section 54220 et seq.).
“Subsidized party” means a person who is or will be the direct beneficiary of a development subsidy.

Community benefits agreement - required.

A. As a condition of receiving a development subsidy, the subsidized party shall enter into community benefits agreement.

B. The community benefits agreement must include, at a minimum, the required terms below and any other terms agreed upon by the city and the subsidized party.

C. The city council shall approve the community benefits agreement at the same time that it approves the development subsidy.

Community benefits agreement – terms.

A. Each community benefits agreement must include the following terms:

1. A term requiring the subsidized party and its contractors and subcontractors to hire local residents to perform work on the development project for which the city is providing the development subsidy.

2. A term requiring the subsidized party and its contractors and subcontractors to comply with California’s prevailing wage law in connection with the development project (California Labor Code section 1770 et seq.).

3. A term that specifies a clearly identifiable class of people who will be third-party beneficiaries under the community benefits agreement.

B. On a case-by-case basis, the city manager may also require a community benefits agreement to include terms related to:

1. Long-term small and local business protection;

2. Anti-displacement strategies;

3. Affordable housing; and

4. Other project-specific community benefits.

Community input.

Policies and procedures.

The city manager may adopt policies and procedures for the implementation of the provisions of this chapter.

1536 Eureka Road o: 916 677 5717
Roseville, CA 95661 northstatebia.org

March 10, 2023

Mrs. Leslie Fritzsche
Economic Investment Manager
Office of Innovation and Economic Development
City Manager’s Office
City of Sacramento
915 I Street
Sacramento, CA 95814

Dear Mrs. Fritzsche,

On behalf of the North State Building Industry Association (BIA) and our more than 530 homebuilders, residential developers and related business members, I am writing to offer our suggestions for the Community Benefits Ordinance being crafted by the City of Sacramento.

We have no objection to this ordinance, but it is critical that it is clearly written so it does not inadvertently create an unintended barrier to the creation of much-needed housing in the City of Sacramento. As you know, the city has ambitious goals for housing, especially attainable housing, and as the leading advocates for new home development we want to be partners in meeting those objectives.

We would request that the next draft of the Community Benefits Ordinance (CBO) include the specific clarifications below as to what counts towards the $10 million threshold:

1) Clearly state that this ordinance is exclusively for projects that are transformative in nature and its use should be the exception, not the rule.

2) Preclude the use of fee credits or Community Financing District (CFD) bonds or proceeds in the calculation of the $10 million threshold. Most projects involve some form of fee credits that arise for a variety of reasons. It is also routine for most projects to work through the city to secure bond financing from state JPAs to cover CFD costs, including through the BOLD or SCIP programs. The current draft ordinance specifically states that it applies to “bonds” which would be problematic for most projects.

3) Public funds distributed through the city, SHRA, or otherwise, used to finance attainable housing projects should be counted. Many projects have affordable housing components that will incorporate some kind of city funding, so this routine funding arrangement should not trigger the Community Benefits Ordinance.

1536 Eureka Road o: 916 677 5717
Roseville, CA 95661 northstatebia.org

4) Aggregating of incentives does not trigger the CBO, even if, when combined, they total more than $10 million. Many housing projects may reach that dollar amount if the ordinance is interpreted too broadly.

5) Include a provision that only the types of funds listed in the ordinance, and nothing else, may be used in the calculation of the subsidy for purposes of the CBO.

We appreciate your attention to our concerns. The BIA looks forward to continuing our work together on addressing the housing crisis in Sacramento.

Sincerely,

Chris Norem
Government Affairs
North State Building Industry Association

From: Liz Lorand Williams
To: Leslie Fritzsche; Ellen E. Sullivan
Cc: Annie Keys
Subject: Comments | Community Benefits Agreement Ordinance Framework Date: Tuesday, November 8, 2022 1:49:21 PM
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Leslie and Ellen,

Thank you again for your continued wiliness to welcome feedback on the framework for the proposed CBAO. As a follow up to our stakeholder discussion, I am writing to convey concerns related to the framework for the Community Benefits Agreement Ordinance that we recommend be addressed in order to complement the desire for increased capital investment in the Central City.

One of our primary concerns with the current Community Benefits Agreement Ordinance framework is the funding threshold by which projects trigger an agreement. The threshold of 10 million dollars in city subsidies is a one-size-fits-all model that has the implication to apply to various projects in dramatically different ways. Instead, we recommend an increased threshold or consider a percentage of the entire project’s funding in subsidies as a potential trigger for a community benefit agreement. In addition, Downtown Sacramento Partnership harbors concerns regarding the lack of a mechanism within the ordinance to adjust for inflation. Understandably 10 million dollars today will not hold the same value as it will in ten years. Should the funding threshold remain a fixed dollar amount, we urge you to include an inflation adjustment in the ordinance.

We also request that the scope of projects that are eligible for a Community Benefits Agreement be defined clearly in the ordinance. Specifically, the ordinance should reiterate the role of infrastructure improvements as separate elements that would not on their own trigger a community benefits agreement.

Lastly, it is vital the Community Benefits Agreement does not evolve in silo but rather as part of the City’s holistic plan as it relates to economic development and the ability to nurture Sacramento as a good destination for capital. In particular, the ecosystem of the urban core has shifted dramatically following the height of the Covid pandemic, and now is the most crucial time to spur strategic economic investment to bolster the future of the city.

Downtown Sacramento Partnership and stakeholders are concerned additional ordinances related to building development could place undue burden on prospective investors, thereby stifling the potential for economic growth in the urban core.

Downtown Sacramento Partnership urges you to adjust the current funding threshold, provide a mechanism to adjust for inflation, and further define the scope of projects that would qualify for a community benefits agreement in the ordinance framework before it is presented to the Law & Legislation committee.

We appreciate your engagement with addressing concerns for CBAO framework and Downtown Partnership continues to stand ready to be a partner in these efforts.

In Partnership,
Liz

Liz Lorand Williams

POLICY MANAGER
[email protected]
OFFICE 916-287-9958
CELL 530-903-1718
980 9th Street, Suite 200, Sacramento, CA 95814
DowntownSac.org + GoDowntownSac.com

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Inclusive Economic Development Investment Funding Guidelines – September 2019

INCLUSIVE ECONOMIC DEVELOPMENT INVESTMENT FUNDING GUIDELINES

1. DEFINITIONS
Inclusive Economic Development Investments or Investments: Investments that expand economic opportunities that benefit underserved and underrepresented communities, thereby reducing social, racial, health, and economic disparities in these communities.

Through public and private actions that are responsive to community need and builds on resident assets, these investments foster small business growth, increase quality jobs, stabilizes people in safe and affordable homes, prepare resident of all ages to fill those jobs, improve neighborhoods, and increase household wealth.

Equity: Fair and just treatment, access, opportunities, and advancement for all people, while identifying and eliminating barriers that have prevented the full participation of some groups.

Racial and gender equity: The development of policies, practices, and strategic investments to reverse racial disparity trends, eliminate institutional racism, and ensure that outcomes and opportunities for all people are no longer predictable by race and gender.

Priority neighborhoods: Neighborhoods already having a federal, state, or local designation (could include city Priority Neighborhood, federal Promise Zone, federal Opportunity Zone, Health Need Assessment Focus Communities, etc.) or neighborhoods experiencing a cost of living that outpaces the incomes of the residents, lagging commercial and residential investment, increased poverty and gentrification pressures; limited access to services and amenities, substantial change due to major development and/or public infrastructure improvements and local business displacement.

2. PURPOSE
The purpose of Inclusive Economic Development Investments is to foster economic and community development and job growth within the City of Sacramento that create opportunities for all of Sacramento’s residents, while at the same time prioritizing strategic investments for people of color, low-income individuals, and underinvested communities. The Fund will use city dollars to make Inclusive Economic Development Investments in projects and programs that advance inclusive economic development and reduce inequities by improving the health, stability and economic security of residents and neighborhoods; fostering business and job growth; increasing household wealth; encouraging productivity; and supporting people, places, and actions that promote economic growth throughout the City’s diverse communities.

3. OBJECTIVES
Investments must seek to advance economic growth and development by achieving the following objectives:

Inclusive Economic Development Investment Funding Guidelines – September 2019

A. Catalyze Inclusive Economic Development: Investments must help to further develop and/or grow targeted industry clusters, tradeable sectors and university-industry innovation districts. Investments must catalyze economic development and community revitalization in targeted geographic areas that increase the economic security and mobility of vulnerable families and workers.

B. Stimulate Job Growth: Investments must help retain and grow job opportunities by cultivating the entrepreneurial ecosystem, attracting new businesses that create a range of quality jobs, and supporting the growth and advancement of existing businesses. Investments must also support hiring and retaining of low income and historically underserved and underrepresented residents.

C. Create Experiential and Educational Opportunities: Investments must expand access to experiential and educational opportunities that lead to career pathways that lead to the middle class. Investments must also cultivate homegrown talent through strong cradle-to-career pipelines that increase economic security and access to job opportunities for all residents, with a focus on those communities and residents that have been historically underserved and underrepresented.

D. Create Vibrant, healthy, opportunity-rich neighborhoods: With the goal of reducing racial, social, health, and economic disparities, Investments must increase the supply and access to safe and affordable housing, transit and transportation options, promote clean and safe neighborhoods, create positive youth development experiences, and remove barriers to future economic development, particularly in distressed and disadvantaged neighborhoods that have not benefited from previous economic growth.

Investments must ensure all communities have access to services and amenities that support healthy and vibrant neighborhoods.

E. Increase Revenue and other Social and Economic Benefits to the City:

Investments must directly or indirectly increase City revenue and/or generate other significant public benefits (as outlined in Section 5F - Public Benefit) that provide a return on investment to the City.

4. GUIDING PRINCIPLES
The guiding principles are based on equity-focused practices that guide all Investments.

A. Neighborhoods and Places – Make all neighborhoods healthy and safe communities of full opportunity. Unlock opportunities for residents to Inclusive Economic Development Investment Funding Guidelines – September 2019

access options that offer affordable, safe and stable housing, amenities, culture and services, and maximize quality of life. Proactively support: (1) communities of color and (2) underserved residents and businesses within “priority neighborhoods”.

B. Community Engagement – Build community ownership, voice and capacity.

Tap into community-rooted organizations and neighborhood groups to develop community driven solutions that advance equitable and inclusive development priorities, policies and practices over the long term. Projects and programs will be vetted through the impacted neighborhood, community, and/or stakeholder(s) to ensure that they meet the needs of the community.

C. People and Jobs – Expand employment opportunities. Concentrate workforce development programs, increase talent pipelines, address skills gaps, and expand employment opportunities at all levels and for all ages including youth and young adults.

D. Business and Innovation – Advance equity, diversity, and inclusion throughout Sacramento’s business community. Expand ownership opportunities at all stages and ensure new development and growth happens in a way that benefits the entire community.

E. Integrate a focus on people, place and the economy. Understand that the City of Sacramento—and the neighborhoods where low-income people of color live— need strategies that are embedded in a broader metropolitan economy, and act to create more connections and linkages between their underserved residents and the local and regional economy. These strategies:
• Are place-based and people-oriented;
• Leverage business and financing models that are equity driven; and • Identify resources and innovate new ways of working with markets and investors to achieve inclusive and equitable solutions.

F. Embrace equity as an economic imperative. Engage private sector businesses to identify long-term, bottom-line benefits of racial and economic equity in their business models.

5. MINIMUM ELIGIBILITY CRITERIA
The City may consider making an Investment in projects and programs that have a significant economic impact and meet the following criteria:

A. Equity and Inclusion: Demonstrate strategies that ensure all Sacramento’s residents, particularly for people of color, low-income individuals and underinvested communities have the ability to participate, prosper, and reach Inclusive Economic Development Investment Funding Guidelines – September 2019

their full potential. Investments will provide goals and measurable outcomes to reduce disparities and build equity in the City’s diverse communities. All applications and subsequent agreements must include a statement of how the project or program reduces inequities and creates opportunities for Sacramento’s underserved and underrepresented communities. As appropriate, agreements should support capacity - building by connecting existing community needs and activities to new resources and opportunities.

B. Mutual Benefits and Consistency with City policy and goals: All Investments must be consistent with City policies and goals for achieving an inclusive and equitable community . Both the City’s and prospective partners' goals and the mutual benefits should be openly and clearly stated in all agreements.

C. Employment: Create and/or retain jobs with defined salary ranges based on Sacramento area and industry income standards or within priority career pathways as identified in the City’s Inclusive Economic Development Strategy and Action Plan or policies. Priority should be placed on creating job opportunities for underserved residents and in underserved neighborhoods.

D. Tax Revenue Generation: Provide significant property and/or sales tax revenues to the City. This amount will take into consideration the relative size of the project or program and its contribution to the City and community.

E. Leverage: Investment should be leveraged by other private or public funds and innovative partnerships. Projects and programs must demonstrate long-term financial sustainability.

F. Public Benefit: Investment s must provide a public benefit for residents and businesses in Sacramento. All applications and subsequent agreements must include a statement of public benefits. Benefits should distinguish between one- time/upfront cost reductions and ongoing reduction to everyday expenses to the targeted groups. Programs and projects will address an array of social and economic benefits that improve quality of life, including , but not limited to :

• Mobility
• Housing supply, affordability , quality and integration • Workforce development
• Employment opportunities for disadvantaged populations • Business diversification
• High- wage industry growth
• Sustainability (including air, water, and environmental quality ; energy efficiency ; clean energy, etc.)
Inclusive Economic Development Investment Funding Guidelines – September 2019

• Public health and wellness
• Public safety and emergency response
• Arts and cultur al amenities
• Youth and education

6. APPROVAL PROCEDURES
A. City Staff and Investment Committee Vetting: Investment applications will be screened by City staff and vetted with the Investment Committee. Investments of Measure U funds will be forwarded to the Measure U Citizens Advisory Committee.

B. Measure U Advisory Committee Recommendation: Pursuant to City Resolution 2018-0393, the Measure U Advisory Committee will review, report, and make non- binding recommendations on how to allocate resouces to support inclusive community economic development. Such expenditures, not subject to City Council approval, shall be forwarded to the City Manager with a recommendation.

7. INVESTMENT MEASUREMENT AND EVALUATION
Evaluation of performance measures is critical to gauge the effectiveness of the Investments. Each investment agreement must contain a set of performance measures.

The City will require tracking and reporting of data during project/program implementation.

8. EVAULATION OF GUIDELINES AND INVESTMENTS
Staff will provide regular updates to the Investment Committee and Measure U Advisory Committee on the status of the City’s Investment portfolio. Each year the City will conduct an annual assessment of the guidelines to identify areas for updating, refinement, and/or adjustments.

9. PROGRAMS AND GUIDELINES
The Investments will support two programs:
a. Neighborhood and Community Investments
b. Economic Development Investments

Each program will have program guidelines to determine and identify eligible projects and programs. Program guidelines could include an overview of the program fund, additional eligibility requirements, identification of what can and cannot be funded, how much funding is available, how projects and programs are selected, and metric and reporting requirements.

SIWDandCitySide-By-SideComparisononOutstandingIssues
OutstandingIssue
CityPosition SIWDPosition
KickstarterAmount(ie, whatprojectswill aCBAbeappliedto) $10millionof publicinvestment asthekickstarterfor whenaprivateproject receivingpublicmoneywill berequiredtodoaCommunityBenefitsAgreement (CBA) Publicinvestment includestheCity’sexpenditureofpublicfundsor lossof revenuetosubsidizeadevelopment project inthecityintheformofbonds, grants, below-market-rateloans, loanguarantees, feewaivers, landpricesubsidies, taxabatements, taxexemptions, andtaxcredits.

Exemptsall nonprofitsregardlessof their size.

1. $10millionistoohighandtheCitydefinespublicinvestment toonarrowly. For example, it doesnotexpresslyincludeEIFDs(or other taxincrement financing)or upzoningor other regulatoryconcessionsbytheCityworthsignificant monetaryvaluetodevelopers. And, itimproperlyexcludesthesaleor leaseof publiclandevenwhennot for affordablehousing.

Veryfewprojectsreceivethislevel of Cityinvestmentwhichmeansthecommunitywill veryrarelyobtainthebenefitsof aCBA.

Thisamount isinconsistent withbothprior andcurrentcommunitysentiment andthesettlement agreement inAggieSquare. SIWDhasput forward$3millionasamorereasonablekickstarter.

2. It alsofailstoincludeanalternatekickstarter for largedevelopment projectslikelytohaveasignificantcommunityimpact wheresignificantlylesspublicinvestment isneeded. ThisleavesthecommunityvulnerableandtheCityinthelurch.

3. Giventhehighamount of publicsubsidyproposedbytheCityandthescaleof development projectsthat CBAswill beappliedto, excludingnonprofit corporations regardlessof their sizedoesnot makesensegiventhatverylargeentitieslikehospital systemsarealsosometimesnonprofits.

MinimumCommunityBenefitsRequiredFromProjects
Nominimumcommunitybenefitsor thresholdofbenefits. It requiresbroadtypesof benefitstobeincludedfor local business, anti-displacement,affordablehousing, andtransportationinitiatives,however therearenorequirementsfor howlittleorhowmuchisrequiredinexchangefor themillionsof dollarsof publicinvestment tohelpsubsidizeprojects.

Requiresprevailingwagefor contractorsandsubcontractorsof thedevelopment.

Requiresanunspecifiedamount of local hiringfortheproject.

Thecurrent ordinancealsocreatesanenormousexceptionthat permitstheCityCouncil tovotenottorequireanybenefitsat all for local business,anti-displacement, housing, or transportation.

1. TheCity’scurrent proposal failstoincludespecificminimumcommunitybenefitsincritical areassuchasanti-displacement, housing, transportation, workforcedevelopment, andsmall andlocal businessprotectiontooffset theimpactsof thesemajor development projects.

Instead, it hasbroadcategoriesof benefitsthat mustbecoveredbut without anythresholdsensuringthat thosebenefitsaremeaningful or at thescaleof theimpactsoftheproject. Theexceptionpermittinganyor all of thebenefitstobevotedawayisoverlybroadandlacksanystandardsprotectingthecommunityfromsuchawaiver ofbenefits.

Thiscreatesgreat uncertaintyof meaningful benefitstothecommunitytomitigateimpactsfromthesemajordevelopment projectswhileguaranteeingmaximumflexibilityfor thedevelopersof projects.

SIWDhasproposedrequiring:● 25%of residential unitsintheproject beaffordabletoverylowincomehouseholds● Onetoonereplacement of anyaffordableunitsdemolishedbytheproject● Fundingfor rentersandhomeownersindirectlydisplacedbytheproject that must haveameasurableimpact onkeepingrenters/ownersintheir homes ● Fundingtoaddressunmet transportationneedsidentifiedbythecommunity● Alivingwage, specificlocal hiringpercentages,andother specificworkforcebenefitslikelaborpeaceandlimitsontemporary/part-timepositions● Theinclusionof aChildcareandSupport Plantoaddressworkers’ childcareneeds

2. Additionally, thecurrent proposal usesadefinitionof“affordablerent” that isinconsistent withthestandardsusedbyaffordablehousingdeveloperswhichwill createneedlesscomplication.

CommunityNegotiation
TheCity'sproposedCBAOrdinanceonlyrequiresseekinginput fromthecommunitythat will beaffectedbytheproject. It doesnot requireor createameaningful roleinthenegotiationsonsubstantivebenefitsfor thecommunityandlocal residents.Onlytheproject sponsor andtheCitywouldnegotiatethetermsof theCBA.

TheCity’sdraft administrativeguidelinesincludeacommunityfocusgroupfor eachfutureCBAbutthat groupisnot anticipatedtobeat thenegotiatingtable.

TheCity'scurrent proposal lacksparticipationof thecommunityasdirect partnersat thenegotiatingtable. Thisexcludesnot onlycommunityleaders, CBOs, andadvocates, but crucially, thepeoplemost directlyaffectedbytheimpactsof theproject—residents.

Thecommunityneedstohaveadirect roleintheCBAnegotiationprocessalongwiththeCityandtheprojectsponsor, not just limitedtoaninput andfeedbackroleintheprocesswithout anyreal agencyinshapingthesubstantiveoutcomesfor theCBA. Thisisparticularlycritical giventhenebulousbenefitsprovisions.

SIWDhasproposedthat agroupof communitymembersincludingresidents, communitycoalitionmembers, CBOsandother nonprofitsthat servetheimpactedarea, youth,labor, andamember of theRaceEquityCouncil actuallynegotiatetheCBAwiththeCityandthefuturedeveloper.

Enforcementof CBATerms
Theordinanceonlyprovidesthat theCityManager“may” adopt policiesandprocedurestoimplementandenforcetheordinance.

RequireseachCBAtodefineaclassof peoplewhowill bethirdpartybeneficiaryandabletoenforcethepromisesintheCBA.

1. Theordinanceneedsstrongmandatorycommunityenforcement mechanismsandclear accountabilityprocesses.

Theordinancemust requiretheCitytoadopt policiesandprocedurestoimplement theCBAANDengagethecommunityinthedevelopment of thepoliciesandprocedures.

Theordinancedoesnot commit toadoptinganysuchprocesses. Aswritten, it doesnot complywiththesettlement agreement for “atransparent accountabilityprocess” “guidedbyaninclusive, comprehensive,community-drivenprocess.” SIWDhasproposedrobust communityoversight,developer supportedmonitoring, datacollectionandreporting, andenforcement inspiredbytheSt. PetersburgandDetroit CBAordinances.

2. Theordinanceshouldalsorequirethat residentsof theimpactedareaof theproject arealwaysamongthethirdpartybeneficiariestobeincludedineachCBA.

3. Thecurrent ordinancerequiresthedeveloper toindemnifytheCityverybroadly, whichmaybeoverlyburdensomeandimproper dependingonanybenefitsorprovisionstheCityitself hasadutytoprovideor fulfill.

COMMUNITY BENEFIT

COMPARISON
Provided by: Sacramento Investment Without Displacement , April 2023

What is a
Community
Benefits
Ordinance
or Policy
(CBO or
CBP)?
What is it?
◦ An adopted ordinance or policy to systematize and
routinize community benefits
◦ Adopted by a local government and requires community
benefits on projects undertaken by the government and a private developer
Why enact one?
◦ Mitigate negative impacts of significant development on existing residents
◦ Ensure community shares in benefits provided by new
development
◦ Provide continuity in the local planning and development process when leadership changes
◦ Avoid a project-by-project approach that can lead to
inconsistency of scope, concessions, community oversight and enforceability
Effective vs Ineffective Community Benefit
Agreements (CBAs)

INEFFECTIVE CBA EFFECTIVE CBA
Representation
• No community signatories
• Negotiating party or signatory selected by
politician or developer
• Signatory does not have previous CBA
negotiating experience
• Community signatories are independent,
diverse and represent those most
threatened by the impact of the project
• Negotiations led by a well-organized
coalition with strong capacity
• Community signatories have CBA
experience
Effective vs Ineffective CBAs

INEFFECTIVE CBA EFFECTIVE CBA
Transparency, Inclusivity
• Benefit negotiations are:
• Exclusive
• Marked by secrecy
• Rushed
• Robust engagement/outreach process
• Community gets to provide input
throughout the negotiation process
• There are effective mechanisms to ensure
transparency with community
• Benefit negotiations are:
• Transparent
• Inclusive
Effective vs Ineffective CBAs

INEFFECTIVE CBA EFFECTIVE CBA
Community Benefits
• Vague, aspirational terms with few details:
• “good-faith”
• “for consideration”
• “work with”
• Does not address real community needs
• Mobilizing funding with no requirements of
the developer
• Commitments are voluntary
• Detailed, concrete, and measurable terms
• Addresses real community needs
• Benefits include the “asks” of the most
vulnerable members of the impacted
community
• Specific, measurable commitments with
dollar amounts attached
Effective vs Ineffective CBAs

INEFFECTIVE CBA EFFECTIVE CBA
Enforcement
• Limited remedies and injunctive relief
unavailable
• Overly burdensome enforcement and
arbitration process
• Not enforceable against third parties –
contractors and tenants
• Monetary damages and injunctive relief
explicitly available
• Concrete, specific, clearly defined oversight
and reporting process with record keeping
requirements
• Enforceable against third parties and
successors of each party
KICKSTARTER: the conditions a project must meet to warrant a CBA

JURISDICTION KICKSTARTER
City of Detroit
Project value = $75M, and that receives:
- Tax abatements worth $1M, or
- Transfer of city owned land with $1M market value
Project value = $3M project value, and that receives:
- Tax abatements worth $300k+, or
- Transfer of city owned land with a $300K market value.

City of Richmond
Funding from the City = $100k
- Including public financing or contribution such as loan, loan guarantees, tax credits, or infrastructure construction, financial aid, assistance; or Transfer of ownership or lease of right to occupy any city-owned property, including right of way or street vacation, or
Subject to a development agreement.

KICKSTARTER

JURISDICTION KICKSTARTER
Los Angeles County
Public-private project with a projected $10M+ budget or 50,000 sq ft+ floor area.

Excludes affordable housing projects
City of St. Petersburg
Projects that receive public assistance (tax abatements, transfer of city- owned land, monetary contribution, parking fee waiver) greater than 20% of the overall construction cost for projects valued at more than $2 million, or $10 million in public assistance.

JURISDICTION BENEFIT CATEGORY MINIMUM BENEFITS
Los Angeles
County
Local and Target Worker
Hire
30% local hiring requirement for construction
jobs, 10% hiring for targeted workers facing
barriers to employment
Business Enterprise
Program Utilization goal of 25% for LSBEs and 3% goal
for DVBEs
Affordable Housing 20% of any residential units set aside as affordable housing
Monitoring Developer funds a portion of the monitoring
costs during the construction phase
BENEFITS: specific, measurable benefits to offset impacts

BENEFITS

JURISDICTION MINIMUM BENEFITS
City of St. Petersburg
Benefit to the community may include activities in the following areas:
• Affordable or workforce housing
• Environmental resiliency and sustainability
• Public infrastructure
• Equitable workforce development
• Neighborhood health and safety and
• Equitable economic opportunities
City of Richmond
• Make a financial contribution to Community Benefits Fund • Comply with living wage and ban the box ordinances
• Comply with local employment program
• Notify Richmond businesses, Richmond small and nonprofit businesses of construction and operation opportunities

COMMUNITY ENGAGEMENT

JURISDICTION MEETING REQUIREMENT
Los Angeles County 4 public meetings
- Two during pre-development phase, two during development City of St. Petersburg 2 public meetings
- Prior to drafting term sheet, prior to approval of the development agreement City of Detroit 1 public meeting
- Prior to land transfer or tax abatement
CBA NEGOTIATION: Neighborhood Resident Advisory Bodies

JURISDICTION WHO NEGOTIATES CBA BENEFITS
City of Detroit 9-member Neighborhood Advisory Council (NAC) who negotiate project-specific CBAs
City of St. Petersburg
4 members who live within 1 mile of the project (impact area), join the Community Benefit Advisory Council to
negotiate benefits package

OVERSIGHT & ENFORCEMENT

JURISDICTION WHO MONITORS AND ENFORCES CBA
City of St. Petersburg
4 member, standing Community Benefit Advisory Council (CBAC) consults on implementation of the program, and serve 2-to3-year terms.

County of Los Angeles
The County CEO monitors to ensure compliance and releases a scorecard quarterly to track progress of development and benefits.

Health Innovation Community Partnership (HICP) meets monthly to discuss implementation and monitoring.

City of Detroit Enforcement Committee monitors the agreements and provides bi- annual reports on the progress of each benefit. (see following slide) CBO
Biannual
Report
Example
Case Study:

City of
Detroit
Detroit Implementation Outcomes (2020)
10 projects
completed the
negotiation process
Neighborhood
Advisory Councils
(NACs) have secured
168 distinct benefits
for their communities
References
◦ Benjamin S. Beach (2007): Strategies and Lessons from the Los Angeles Community Benefits Experience, Journal of Affordable Housing.
◦ Lisa Berglund (2020): Early Lessons From Detroit’s Community Benefits Ordinance, Journal of American Planning Association. ◦ Lisa Berglund (2021): Democratizing design: possibilities for Detroit’s community benefits ordinance, Journal of Urban Design. ◦ Lisa Berglund & Sam Butler (2021): Detroit’s community benefits ordinance: setbacks and opportunities to giving residents voice in development, Journal of Community Practice.
◦ Susana Bonis, M. Ed., PhD Candidate (2020): Eastside LEADS Building a Movement for Equitable and Accountable Development. ◦ Daniel Kravetz (2017): Fighting for Equity in Development. The Story of Detroit’s Community Benefits Ordinance. ◦ Nicholas J. Marantz (2015): What Do Community Benefits Agreements Deliver? Evidence from Los Angeles. ◦ Julian Gross (2008): Community Benefits Agreements: Definitions, Values, and Legal Enforceability. Journal of Affordable Housing. ◦ Julian Gross, Greg LeRoy, Madeline Janis-Aparicio (2005): Community Benefits Agreements Making Development Projects Accountable.
◦ Partnership for Working Families, Community Benefits Law Center (2016): Common Challenges in Negotiating Community Benefits Agreements and How to Avoid Them.

References
◦ Lee Romney. (2001). Community, Developers Agree on Staples Plan. Los Angeles Times. ◦ Los Angeles Sports and Entertainment District Community Benefits Program. LA_DOCS682924.9{W97} ◦ https://www.forworkingfamilies.org/campaigns/CBA
◦ Partnership for Working Families. (2016). Common Challenges in Negotiating Community Benefits Agreements and How to Avoid Them.
◦ Community Benefits Policy for County Economic Development Projects. County of Los Angeles Chief Executive Office.

Adopted June 11, 2019.
◦ Manuel Pastor, Vanessa Carter, Alejandro Sanchez-Lopez, and Robert Chlala. (No Date). Planning, Power, and Possibilities:

How Unidad is Shaping Equitable Development in South Central L.A.

From: Ellen E. Sullivan
To: Ellen E. Sullivan
Subject: FW: Action Required!
Date: Thursday, April 13, 2023 8:40:20 AM
Attachments: image001.png
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From: Michelle Willard <[email protected]> Sent: Wednesday, April 12, 2023 4:57 PM
To: Ellen E. Sullivan <[email protected]> Cc: Matthew Miller <[email protected]>; Barry Broome <[email protected]>
Subject: RE: Action Required!

Hi Ellen,

Please see below our President & CEO Barry Broome’s comments for Tuesday. Please let me know if you have any questions.

As President & CEO of the Greater Sacramento Economic Council (GSEC), I strongly oppose the draft Community Benefits Agreement. GSEC is a public-private partnership comprised of 40+ CEOs and 21 communities with the mission of driving economic growth throughout the six-county Greater Sacramento region. While jobs are essential to economic growth, our goal is to increase prosperity and equity – this agreement would work against these goals by reducing investment and job creation in the community, ultimately hurting low income and underserved communities the most.

A Community Benefits Agreement for all large development projects moving forward is detrimental to economic growth. Our community already relies too heavily on government jobs – Greater Sacramento is 79% more dependent on government jobs than its peers and has more government jobs than Washington DC. Industry diversity is critical to building an inclusive economy, especially for our underserved communities. To build a diverse economy, we must foster growth.

The creation of this Community Benefits Agreement lacked transparency and will hinder inclusive economic growth. We are increasingly concerned with the lack of transparency and consistency on such critical economic decisions. I strongly urge the Law and Legislation Committee to amend the Community Benefits Agreement and prioritize inclusive growth in Greater Sacramento.

Thank you for your time and consideration.

Barry Broome
President & CEO
Greater Sacramento Economic Council

Greater Sacramento is undergoing unprecedented growth. See what’s driving our momentum.

From: Ellen E. Sullivan
To: Ellen E. Sullivan
Subject: FW: Action Required!
Date: Thursday, April 13, 2023 8:49:21 AM
Attachments: image001.png
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From: Michelle Willard <[email protected]> Sent: Wednesday, April 12, 2023 3:29 PM
To: Ellen E. Sullivan <[email protected]> Cc: Matthew Miller <[email protected]>
Subject: RE: Action Required!

Hi Ellen,

Public comments below. Let me know if you have any questions. Our President & CEO, Barry Broome will be speaking as well. I’ll send his comments shortly.

My name is Michelle Willard. I’m the Chief Public Affairs Officer for the Greater Sacramento Economic Council. We are the leading economic development organization for the Sacramento, six-county region, and a public/private nonprofit organization with more than 40 CEOs and 21 communities focusing on growth, prosperity, equity, and inclusion as it relates to economic development. We do not support the draft Community Benefits Agreement that is currently being proposed. When we prevent development and reduce investment in the community it ultimately hurts job creation for low income and underserved communities. We need a vibrant downtown; additional housing and this policy will make it uneconomical to do that. There is already a significant lack of developers willing to even develop in our community. The urban core is in decline as more people have moved away to the suburbs from COVID-19. We should amend the CBA in our urban core, specifically for the Railyards and Riverfront development.

We are a community already heavily reliant on government jobs. Greater Sacramento is 79% more dependent on government jobs than its peers and has more government jobs than Washington DC.

This does not provide an inclusive economy for our community, especially for our underserved communities. We are asking the law and legislative committee to amend the agreement. Thank you for your time and consideration.

Please let me know if you have any questions.

Thank you.

Best,
Michelle

Greater Sacramento is undergoing unprecedented growth. See what’s driving our momentum.

April 17, 2023

Members of Law & Legislation Committee
Attn: Chairwoman Valenzuela
915 I Street, 5th Floor
Sacramento, CA 95814

RE: Draft Community Benefits Agreement Ordinance

Dear Chairwoman Valenzuela:

On behalf of Downtown Sacramento Partnership, I am writing to express concerns regarding the draft Community Benefits Agreement Ordinance (CBAO) as written. While we appreciate staff’s outreach and communication throughout the formation of this ordinance, would like to recommend amendments related to the funding threshold and definition of development subsidies in order to better position Sacramento as a city of choice for economic development.

While we recognize intentional and inclusive economic development is key to a thriving downtown and Sacramento region, there must be a balanced approach to local legislation that does not constrain the ability to bring forward future opportunities for growth. One of the primary concerns with the current draft CBAO is the funding threshold by which projects trigger an agreement. The threshold of 10 million dollars in city subsidies is a one-size-fits-all model that has the implication to apply to various projects in dramatically different ways. Recommend consideration of an increased amount or adjust definition to a percentage model as an alternative for the funding threshold.

While appreciating staff’s proposal for automatic adjustment to take into consideration inflation by a factor equal to the percentage increase in the construction cost index, recommend annual analysis begin in 2025 to accommodate for the volatility of the current and future market.

Additionally, request that the scope of development subsidies outlined in the draft ordinance be refined to exclude below-market-rate loans and loan guarantees, and reiterate the role of

infrastructure improvements as separate elements that would not on their own trigger a community benefit agreement.

Lastly, it is vital the CBAO does not evolve in silo but rather as part of the city’s holistic plan as it relates to economic development and the ability to nurture Sacramento as a destination of choice for capital investment. With a growing urgency for additional tools at the city and state level to streamline and incentivize economic growth, there are concerns around additional obligations related to building development that could place undue burden on prospective investors, hindering potential for future prosperity.

Downtown Sacramento Partnership continues to request that the public funding threshold be increased, the list of development subsidies be more narrowly defined, and that the ordinance clearly defines the scope of projects eligible for a CBAO. We have appreciated the engagement from city staff to address concerns with the Community Benefits Agreement Ordinance and stand ready to work in concert with the city as a continued partner.

Sincerely,

Michael T. Ault Amanda Blackwood
Executive Director President & CEO
Downtown Sacramento Partnership Sacramento Metro Chamber

Rachael Brown Michelle Smira
Executive Director Administrator
Power Inn Alliance R Street Partnership

1 SIWD PROPOSED EDITS
ORDINANCE NO.

Adopted by the Sacramento City Council
Date Adopted
AN ORDINANCE ADDING CHAPTER 3.156 TO THE SACRAMENTO

CITY CODE, RELATING TO COMMUNITY BENEFITS AGREEMENTS
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:

SECTION 1.

Chapter 3.156 is hereby added to the Sacramento City Code to read as follows:

Chapter 3.156 COMMUNITY BENEFITS AGREEMENTS

3.156.000 Purpose.

The city is committed to ensuring economic development projects in the City of Sacramento benefit and promote prosperity for all residents without sacrificing the wellbeing of residents within or near the project area.

This ordinance is to establish criteria and procedures for economic development projects that promote transparency and community accountability, mitigate gentrification, prevent displacement, protect residents and small/local businesses, promote inclusion and equitable access to opportunity, and facilitate the production of housing affordable to all income levels.

This chapter shall be known as the “Community Benefits Agreements Ordinance.”

3.156.010 Definitions.

The following definitions apply in this chapter:
“Affordable dwelling unit” means a dwelling unit that (i) will be rented at an affordable rent or sold at an affordable housing price and (ii) will have a regulatory agreement recorded on title, requiring the unit to remain affordable for a period of no less than 5530 years.
“Affordable housing price” means a sales price of a for-sale dwelling unit that requires a low-income household to expend no more than 35% of its income on housing expenses (mortgage principal and interest, taxes, insurance, and assessments). “Affordable rent” means a monthly rent that is set at or below the annual rents established by the California Tax Credit Allocation Committee (CTCAC) for Sacramento Commented [1]: 55 years is the current affordable
housing standard and this should reflect that.
2 County based on the date the project was placed into service and the bedroom size and income level of the regulated unit. does not exceed 2% of median income, adjusted for household size appropriate to the unit, less a reasonable allowance for utilities. “Community benefits agreement” means a written contract between the city and a subsidized party that includes the terms by which the city will provide a development subsidy and the public benefits that the subsidized party must provide in exchange. “Completed project” means a development project for which the city has issued a certificate of occupancy for all structures.
“Development project” means the construction, reconstruction, demolition, or alteration of the size of any structure.
“Development subsidy” means the city’s expenditure of public funds or loss of revenue to subsidize a development project in the city, in a cumulative amount equal to or greater than the threshold amount, in the form of bonds, grants, below-market-rate loans, loan guarantees, fee waivers, land price subsidies, tax abatements, tax exemptions, land transfers for less than market-rate value, tax increment financing, or any other economic assistance, and tax credits, whether approved by the city in a single act or multiple acts. It also includes assistance that financially improves the development project from the City of Sacramento including but not limited to: property transferred to or encumbered by the project or developer at less than market value; rezoning; favorable terms arising out of General Plan Area Specific Plans, or updates thereto; and creation of any Enhanced Infrastructure Financing Districts or Joint Powers Authority. “Development subsidy” does not include: (i) an expenditure or loss in any amount as part of a public project, as defined in section 3.60.010; (ii) a development project being carried out by a nonprofit corporation formed under the Nonprofit Public Benefit Corporation Law (Cal. Corp. Code §5110 et seq.); (iii) the disposal or acquisition of land under California Government Code section 37364; (iv) an expenditure or loss for the development of housing where at least 2550% of the dwelling units are affordable dwelling units; or for the development of mixed-use projects where at least 25% of the dwelling units are affordable dwelling units and where the total square footage of the commercial space does not exceed 200,000k square feet after subtracting the square footage of the residential space from the total square footage of the project;(v) the sale or lease of land under the Surplus Land Act, unless the sale or lease of land is for non affordable housing purposes (Cal. Gov. Code §54220 et seq.). “Dwelling unit” has the same meaning as in section 17.108.050. “Low-income household” means a household whose income does not exceed 80% of median income, adjusted for family size.
“Local area” means Sacramento, Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties.

Commented [2]: This is not a standard of affordability
that is recognized or used by affordable housing
developers. Based on SIWD’s research and
discussions with statewide housing experts, the low
income housing tax credit standards are the most
common standards used for affordable housing
development. Using an unknown standard is likely to
get in the way of the creating of affordable housing
because it is likely such housing will need multiple
sources to be built and developers will need to be able to meet the normal industry standards of those
sources.

Commented [3]: The settlement agreement refers to
economic subsidies defined in Cal. Gov Code section
53083. The definition used for a development subsidy
here must, at a minimum, capture all of the investments listed in that section.

Commented [4]: The City's proposed standard is too
narrow and leaves out important City investments. It
should expressly include tax increment financing and
EIFDs. It also should include assistance/incentives that confer a measurable value to developers. City provided
incentives like rezoning have a measurable value as
evidenced by other communities who calculate land
value capture from government actions. SIWD's
proposed changes provide that.

Commented [5]: The threshold amount is the
kickstarter for applicability of the Ordinance as a proxy to prospective impact. The corporate structure of the
entity is not relevant and this would potentially mean
excluding very large entities e.g. hospital systems who are sometimes organized as nonprofits receiving a very
large public investment.

Commented [6]: In order to ensure the ordinance does
not inadvertently create barriers to the production of
affordable housing, SIWD proposes that projects with
at least 25% rather than 50% affordable units be
exempted and also proposes a method to address
mixed-use projects.

Commented [7]: This exemption is too broad. The City
should not exclude the sale or lease of public land for non affordable housing purposes.
3 “Median income” means the median income applicable to Sacramento County, as published and annually updated by the United States Department of Housing and Urban Development pursuant to section 8 of the United States Housing Act of 1937. “Oversight committee” means a public oversight committee guided by an inclusive, comprehensive, community driven process charged with overseeing the development, negotiation, implementation, and oversight of community benefit agreements under this chapter and comprised of the following: i) one or more low-income City residents; ii) a coalition of residents and community groups; iii) community benefit organizations and/or nonprofits with expertise in housing, transportation, and workforce development; iv) a youth or local school representative; v) a labor or union representative; and v) a representative of the Race Equity Council and/or Racial Equity Alliance or their successor entities.
“Priority order” means priority is given from highest to lowest to: residents of the city living within a three-mile radius of the project or displaced from that radius within the last 5 years; economically disadvantaged residents of the city; residents of the City, residents of Sacramento County, outside of the city; and residents of Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties.

“Subsidized party” means a person or entity who is or will be the direct beneficiary of a development subsidy and its successors in interest.
“Threshold amount” means $103,000,000 in aggregate development subsidy, as adjusted in section 3.156.040 or $100,000 in aggregate development subsidy if the usable square footage of the development project is more than 200,000 square feet. “Very low-income household” means a household whose income does not exceed 50% area-median income, adjusted for family size.

3.156.020 Community benefits agreement - required.

A. A subsidized party shall enter into a community benefits agreement as a condition of receiving a development subsidy.

B. The community benefits agreement must include the terms required under section 3.156.030 and any other terms required by the city or agreed upon by the city and the subsidized party.

C. The city council may only approve a development subsidy if it approves a community benefits agreement at the same time.

3.156.030 Community benefits agreement – terms.

Commented [8]: This threshold is too high. It does not
comply with the settlement agreement and SIWD has
not agreed to this amount. It is exceedingly uncommon
for the City to invest this much. And setting it this high leaves both the community and the City in the lurch for large projects that will have a significant impact on the neighborhood/surrounding area. SIWD proposes
reducing it to $3 million and including the proposed
alternate kickstarter for a lower public investment
threshold when the size of the project is large.
4 A. Except as provided in subsection C, each community benefits agreement must include the following terms:

The community benefits agreement must include a target that at least 35% of the new employment be filled by local residents within a 3 mile radius of the completed project with priority given to low-income households.

3. A term requiring new employment positions by tenants and owners of the project that are not included in a collective bargaining agreement with any employer will be subject to labor peace.

4. A term requiring a childcare support plan to address the childcare needs of the impact area as defined in the community benefits agreement and those employed by owners and tenants in the completed project.

5. A term specifying a clearly identifiable class of persons who will be third- party beneficiaries under the community benefits agreement. At a minimum, residents of the impact area of the project shall be included as one of the third-party beneficiaries. The impact area for the development project must be identified in the community benefits agreement in consultation with the community and the Oversight Committee.

6. A term requiring the subsidized party to pay a portion of the cost to monitor implementation of the community benefits agreement.

7. A term specifying what data the subsidized party must collect, retain, and report to the city and the community to permit monitoring of the implementation of the community benefits agreement.

3.8. A term specifying the remedies for breach of the community benefits including but not limited to damages, specific performance, injunctive relief, clawback Commented [9]: There should be at least certain
classes of people that are always third party
beneficiaries if the City is not permitting a community signatory. It should, at a minimum, include residents of the impact area. It could also include CBOs serving
residents of the impact area, local businesses in the
impact area, etc.
5 of any or all city-provided benefits, revocation of land transfers or land sales, debarment provisions and proportionate penalties and fees.

5.9. Terms requiring the subsidized party to:

a. Provide small and local businesses with support, such as technical assistance, increased access to capital, or resources for building improvements; b. Provide anti-displacement funding. Commercial and mixed use projects shall provide a fee, in addition to the standard linkage fee, equal to no less than 1% of the project’s budget, to a City administered anti-displacement fund. The funding must be used to implement anti-displacement strategies as determined by the community, such as those intended to create stable tenancies, create paths to home ownership, provide secure employment opportunities, enable small businesses to grow, or to finance development of new affordable housing in the impact area of the project as defined by the community benefits agreement. Anti-displacement strategies must demonstrate they will have a measurable impact on keeping renters and owners in their homes Implement anti-displacement strategies, such as those intended to create stable tenancies, create paths to home ownership, provide secure employment opportunities, or enable small businesses to grow; c. Provide affordable dwelling units; and. At least 25 percent of any residential units in a residential project or mixed use project shall be reserved for and affordable to very-low income households including households of various sizes, ages and abilities.
d. If the development project will result in the demolition of existing affordable dwelling units or units occupied by low-income households, those units shall be replaced by like units on a one for one basis on site or within one half mile of the completed project within 5 years.
e. Undertake transportation projects or initiatives, such as those that enhance community connectivity, improve transportation options, or promote motor-vehicle-traffic-reducing measures. Provided transportation funding commensurate with the size, budget, and scale of the project and its anticipated impact to a City administered active transportation fund. The funding must be used to address unmet community-identified transportation needs within the impact area of the project as defined by the community benefits agreement, along the Commented [10]: This indemnification clause is too
broad and would indemnify the City from liability for its own duties and obligations under a CBA. A tailored
indemnification clause can be negotiated at the time of the specific CBA.

Commented [11]: SIWD has encouraged the City over
the last year to provide specific minimum benefits to
create certainty for both developers and the community
and to ensure that the community gets meaningful
benefits for its large $10 million investment of public funds. The City has been disinclined to create such
specifics. SIWD proposes here some more protective
guidelines that adjust with the scale of the project for the benefits to be included.
6 High Injury Network (HIN), or in an area meeting the criteria of “equitable investment” as defined by the city’s Transportation Priorities Plan. The funding must be used for projects that provide: equitable access to multi-modal mobility options to jobs, essential services, and opportunity; address existing safety concerns, and barriers to mobility; reduction of vehicle miles traveled, criteria pollutant, and greenhouse gasses. The fees shall not be used for roadway capacity expansion, interchange expansion, or parking facilities.

C. The city council may approve a community benefits agreement that does not include any term under subsection A.5 that it expressly finds is not warranted under the circumstances.

3.156.040 Adjustment of threshold amount.

A. During the years 2023 through 2027, the threshold amount is $103,000,000 or $100,000 if the usable square footage of the development project is more than 200,000 square feet.

B. Every 60 months beginning on January 1, 2028, the threshold amount shall be adjusted automatically to take into consideration inflation by a factor equal to the percentage increase, if any, in the construction cost index for San Francisco (based on 201913 U.S. average = 100) during the 60 months ending on the preceding September 1 as published by Engineer News Record/McGraw-Hill Construction Weekly, or any substitute index that the city council adopts by resolution. The city manager or the city manager’s designee shall calculate the adjustment, if any, to the threshold amount and shall advise the city clerk of the amended threshold amount.

3.156.050 Community input.

The city manager shall seek the input of the community that is or will be affected by the development project when developing the terms of, and evaluating the subsidized party’s performance under, the community benefits agreement as provided by this chapter and the policies and procedures to be adopted pursuant to and consistent with section 3.156.060.

Residents of the impact area, neighborhood associations in the impact area, representatives of a coalition of residents and community groups that are working together in the impact area such as Sacramento Investment Without Displacement, community benefit organizations or nonprofits with expertise in housing, Commented [12]: This exception will swallow the rule.

A wide open exemption clause is not necessary. In the
event a future specific project truly requires an
exemption, the Council can use its legislative power at that time.
7 transportation, and workforce development, community benefit organizations serving the impact area, labor representatives, small business representatives, youth representatives, members of the Racial Equity Council and/or Racial Equity Alliance, and other relevant community partners must be directly involved in negotiating community benefits agreements with the subsidized party.

3.156.060 Policies and procedures.

A. The city manager shall may adopt policies and procedures to implement and enforce the provisions of this chapter, including, but not limited to, policies and procedures on accessible and comprehensive community engagement processes, direct community involvement in negotiation of community benefits agreements, stipends for residents participating in the negotiations of community benefits agreements, community benefits and protections, the identification and selection of members of the Oversight Committee as well as its role and procedures, metrics and monitoring, annual data collection and reporting, and enforcement.

B. The policies and procedures must incorporate a robust, inclusive, culturally relevant community engagement process and ensure that community members living within the impact area, community benefit organizations serving the impact area, labor representatives, small business representatives, youth representatives, and other relevant community partners are parties to the development and negotiation of community benefits agreements.

C. The policies and procedures must include a transparent accountability process that includes the Oversight Committee that is guided by an inclusive, community-driven process.

D. The policies and procedures must be developed in consultation with residents, neighborhood associations, representatives of a coalition of residents and community groups that are working together such as Sacramento Investment Without Displacement, community benefit organizations or nonprofits with expertise in housing, transportation, and workforce development, the Racial Equity Council and/or Racial Equity Alliance, and other relevant community partners.

3.156.070 Enforcement.

An Enforcement Committee shall be established to monitor development projects subject to a community benefits agreement under this chapter.

A. The Enforcement Committee shall be comprised of, at minimum, the following individuals:

Commented [13]: Community oversight is required
and essential. The current draft is not enough to
comply with the settlement agreement. SIWD
recognizes some details are appropriate for guidelines, but the ordinance should both mandate that policies
and procedures be adopted and provide strong
requirements and guidance to ensure community
engagement is strong AND that the community is a
party to the negotiations to ensure meaningful benefits are included.

Commented [14]: The model below is based on the
Detroit model and to a lesser extent, the St. Petersburg model. The intent is to create mandatory community
enforcement mechanisms and transparent
accountability processes. Both are necessary to protect the community and comply with the settlement
agreement.
8 i. City Attorney for the City of Sacramento or their designee; ii. A representative from the Planning and Development Department; iii. A representative from the Office of Diversity & Equity;

In addition to the members of the Enforcement Committee as identified in this section, the Planning Director may require that other departments participate in the Enforcement Committee as needed.

B. The Enforcement Committee shall provide an annual compliance report to the City Council and the Oversight Committee for the time period identified in the community benefits agreement.

C. The Planning Director shall facilitate at least 2 meetings per calendar year between the Oversight Committee and the Developer to discuss the status of the completed projects for the time period identified in the community benefits agreement. The meetings must be at least 14 days after the compliance data is provided to the Oversight Committee.

D. The Oversight Committee shall review any allegations of violations of the community benefits agreement provided to it by the community, and may report violations to the Enforcement Committee in writing.

E. Upon receipt of written notification of allegations of violation from the Oversight Committee, the Enforcement Committee shall investigate such allegations and shall present their written findings to the Oversight Committee based upon the following:
a. Whether the Developer is in compliance with the community benefits provision; and

b. How the community benefits agreement will be enforced or how violations will be mitigated.

F. The findings of the Enforcement Committee shall be presented to the Oversight Committee no later than 21 days from the date the violations were reported to the Enforcement Committee, unless there is a documented and exceptional need for additional time that is reported to City Council and the Oversight Committee within the original 21-day time frame.

9 G. If the Oversight Committee disagrees with the findings of the Enforcement Committee or determines that the Enforcement Committee is not diligently pursuing the enforcement or mitigation steps outlined in its findings, the Oversight Committee may send notice to the Enforcement Committee, and the Enforcement Committee shall have 14 days from receipt of notice to respond to the concerns outlined.

H. If the Oversight Committee is not satisfied with the Enforcement Committee’s response, the Oversight Committee may petition the City Clerk and request that City Council schedule a hearing with opportunity for both the Enforcement Committee and the Oversight Committee to present information related to the alleged violations of the community benefits agreement and any enforcement or mitigation efforts that have occurred.

I. If City Council elects to hold a hearing, or based upon the written information submitted, City Council shall determine whether the Enforcement Committee has made reasonable efforts to ensure that the Developer has complied with the community benefits agreement.

J. If the City Council determines that the Enforcement Committee has made reasonable efforts, City Council shall notify the Oversight Committee and the Enforcement Committee of their findings.

K. If City Council finds that the Enforcement Committee has not made reasonable efforts or findings, City Council shall make a specific finding to the Enforcement Committee on the steps that need to be taken to comply with the Community Benefits Provision.

L. The Enforcement Committee shall provide City Council and the Oversight Committee monthly updates on compliance actions until City Council adopts a resolution declaring that the Developer is in compliance with the community benefits agreement or has taken adequate steps to mitigate violations.

M. City Council may hold additional hearings related to enforcement of the community benefits agreement as needed.

Barry Broome
Greater Sacramento Economic Council
400 Capitol Mall, Suite 2520
Sacramento, CA 95814

Date: 6/15/23

To:

Howard Chan & Michael Jasso
Cc: Law & Legislative Committee
Councilmember, Lisa Kaplan
Councilmember, Katie Valenzuela
Councilmember, Rick Jennings
Councilmember, Eric Guerra

Subject: Opposition to the City of Sacramento CBA Ordinance

Dear City of Sacramento Law & Legislative Committee,

I am writing to declare GSEC’s opposition to a Community Benefits Ordinance as currently envisioned in the City of Sacramento. After careful consideration, we have determined that there is no feasible way to avoid serious damage to the city’s economy and reputation, should this ordinance move ahead.

We share the goal of increasing prosperity and equity in the community through the creation of high- quality, sustainable jobs. This ordinance would work against these goals by reducing investment and job growth, ultimately hurting low-income and underserved communities the most. Competition for investment is global and urban cores throughout the country have been negatively affected by the post- pandemic economy. The City of Sacramento can ill afford to impose uncertainty, cost and onerous regulations on prospective investors at this crucial juncture.

The Athletics' departure from Oakland is an illustrative example of what can happen when an ill- considered community benefits agreement results in enormous missed opportunities for a city:

regrettably, Oakland’s overreach in demanding an unsustainable CBA opened the door for Las Vegas to woo the team through an aggressive and creative campaign. As a result, the City of Oakland is losing out on $12 billion in private investment including $1 billion for a state-of-the-art stadium and overall economic impact of $3 billion – resources that could have paid for schools, social services and upskilling opportunities for underserved communities throughout Oakland. We cannot allow a similar mistake to occur here.

When we sought counsel from partners on this ordinance, GSEC also reached out to its proponents to ascertain the possibility of leveraging this conversation to build a broader coalition for neighborhood economic development in the city. After having a positive meeting with Sacramento Investment Without Displacement (SIWD), we recommended that we work together on an inclusive jobs strategy and anti- displacement policy in high-risk neighborhoods. Unfortunately, this conversation has yet to yield a commitment from SIWD to engage in further dialogue, but we remain hopeful that we may still embark together on the important work to build an equitable economy in the city through means that encourage investment and job growth.

In summary, a Community Benefits Ordinance in any form will offer few actual benefits to our most underserved neighborhoods while establishing an unclear and costly process for prospective investors considering the city. I strongly urge the Law and Legislation Committee to not move forward with this counterproductive initiative.

Sincerely,

Barry Broome
President & CEO, Greater Sacramento Economic Council

1 ORDINANCE NO.

Adopted by the Sacramento City Council
Date Adopted
AN ORDINANCE ADDING CHAPTER 3.156 TO THE SACRAMENTO

CITY CODE, RELATING TO COMMUNITY BENEFITS AGREEMENTS
THE CITY COUNCIL OF THE CITY OF SACRAMENTO DOES ORDAIN AS FOLLOWS:

SECTION 1.

Chapter 3.156 is hereby added to the Sacramento City Code to read as follows:

Chapter 3.156 COMMUNITY BENEFITS AGREEMENTS

3.156.010 Definitions.

Department of Housing and Urban Development, less a reasonable allowance for utilities as posted by the governing housing agency.

“Community benefits agreement” means a written contract between the city and a subsidized party that includes the terms by which the city will provide a development subsidy and the public benefits that the subsidized party must provide in exchange. “Completed project” means a development project for which the city has issued a certificate of occupancy for all structures.
“Development project” means the construction, reconstruction, demolition, or alteration of the size of any structure.
“Development subsidy” means the city’s expenditure of public funds, loss of revenue, or issuance of bonds to subsidize a development project in the city in amount equal to or

2 greater than the threshold amount in a single transaction. “Development subsidy” does not include: (i) an expenditure or loss in any amount as part of a public project, as defined in section 3.60.010; (ii) a development project being carried out by a nonprofit corporation formed under the Nonprofit Public Benefit Corporation Law (Cal. Corp. Code § 5110 et seq.); (iii) the disposal or acquisition of land under California Government Code section 37364; (iv) the development of housing where at least 20% of the dwelling units are affordable dwelling units; (v) the sale or lease of land under the Surplus Land Act (Cal. Gov. Code § 54220 et seq.); (vi) grants, below-market-rate loans, loan guarantees, fee waivers, land price subsidies, tax abatements, tax exemptions, and tax credits, whether approved by the city in a single act or multiple acts; (vii) bonds issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, to finance public facilities or services necessary or incidental to new development, including but not limited to bonds issued through the Statewide Community Infrastructure Program (SCIP) or Bond Opportunities for Land Development (BOLD) program; or (viii) affordable housing funding, collected either from the development project or received from the federal, state, or local governments or agencies, including but not limited to the Sacramento Housing and Redevelopment Agency (SHRA). “Dwelling unit” has the same meaning as in section 17.108.050. “Low-income household” means a household whose income does not exceed 120% of median income, adjusted for family size.
“Local area” means Sacramento, Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties.
“Median income” means the median income applicable to Sacramento County, as published and annually updated by the United States Department of Housing and Urban Development pursuant to section 8 of the United States Housing Act of 1937. “Priority order” means priority is given from highest to lowest to: residents of the city; residents of Sacramento County, outside of the city; and residents of Yolo, Placer, El Dorado, Amador, San Joaquin, Sutter, Yuba, Nevada, and Sierra counties. “Subsidized party” means a person who is or will be the direct beneficiary of a development subsidy.
“Threshold amount” means $50,000,000, as adjusted in section 3.156.040.

3.156.020 Community benefits agreement - required.

A. A subsidized party shall enter into a community benefits agreement as a condition of receiving a development subsidy.

B. The community benefits agreement must include the terms required under section 3.156.030 and any other terms required by the city or agreed upon by the city and the subsidized party.

3 C. The city council may only approve a development subsidy if it approves a community benefits agreement at the same time.

D. A community benefits agreement shall be adopted only after a hearing by the city council. Notice of intent to adopt the community benefits agreement shall be given as provided for in California Government Code sections 65090 and 65091.

3.156.030 Community benefits agreement – terms.

A. Except as provided in subsection C, each community benefits agreement must include the following terms:

3. A term specifying a clearly identifiable class of persons who will be third- party beneficiaries under the community benefits agreement.

5. Terms requiring the subsidized party to:
a. Provide small and local businesses with support, such as technical assistance, increased access to capital, or resources for building improvements; b. Implement anti-displacement strategies, such as those intended to create stable tenancies, create paths to home ownership, provide secure employment opportunities, or enable small businesses to grow; and

4 c. Undertake transportation projects or initiatives, such as those that enhance community connectivity, improve transportation options, or promote motor-vehicle-traffic-reducing measures.

6. A finding that the development project for which the city is providing the development subsidy will provide a unique transformational project of citywide significance that will create or spur at least 1,000 long term jobs.

C. The city council may approve a community benefits agreement that does not include any term under subsection A.5 that it expressly finds is not warranted under the circumstances.

3.156.040 Adjustment of threshold amount.

A. During the years 2023 through 2027, the threshold amount is $50,000,000.

3.156.050 Excluded projects.

A community benefits agreement may not be adopted for development projects that include:

1. Single-unit, duplex, or multi-family dwellings”

2. Mixed-use development projects with commercial or institutional uses on the lower floors; or

3.156.060 Feasibility analysis.

5 Prior to considering approval of a community benefits agreement, the city shall have an independent third party conduct a feasibility analysis. The city council shall consider the feasibility analysis and shall not adopt a community benefits agreement if the feasibility analysis concludes that adoption of the community benefits agreement would make it more likely than not that the project would be infeasible.

3.156.070 Community input.

3.156.080 Policies and procedures.

The city manager may adopt written policies and procedures to implement and enforce the provisions of this chapter.

July 19, 2023

Members of Law and Legislation Committee
Attn: Chair Valenzuela
915 I Street, 5th Floor
Sacramento, CA 95814

RE: Draft Community Benefits Agreement Ordinance

Dear Chair Valenzuela:

On behalf of Central City PBIDs, we would like to thank the Law and Legislation committee and city staff for the continued communication and willingness to welcome feedback regarding the draft Community Benefits Agreement Ordinance (CBAO). As consideration of the draft ordinance continues, we are providing further recommendations to complement the desire for increased capital investment in the central city.

We continue to advocate for increasing the funding threshold, narrowing the definition of public subsidies, and clearly defining the scope of projects that are eligible for a CBA. The recommendations submitted previously via a letter sent to the Law and Legislation committee on April 17 remain unchanged.

However, following conversations with our shared stakeholders, would like to provide additional recommendations for review that we feel are the most successful means to create intentional and inclusive economic development in the city, while also ensuring Sacramento remains a destination of choice for capital investment.

As champions for a thriving central city, we see the effects of market realities and perceptions that influence decisions of whether or not to invest in Sacramento’s urban core. As we continue to feel the disproportional impacts of remote work, increases in building and labor costs, and public realm challenges, our intention is to ensure that every possible tool is available to spur economic development that delivers vibrancy and opportunity to the heart of the city. Many sites within the central city yield the highest potential to host residents, visitors, and employment centers that can potentially transform our region and create a healthier, more sustainable general fund.

As such, recommend that the Central City Community Plan Area is exempt from being subject to this ordinance. We are supportive of intentional, community-based engagement in areas in which well- established communities experience impacts of incoming developments – however, as we continue to strive to establish a well-balanced, central neighborhood in Sacramento, we urge consideration that policy efforts do not constrain the opportunity to do so.

The coalition of Central City PBIDs stands ready to assist in creating thoughtful policy solutions. We have appreciated the engagement from the Law and Legislation committee and city staff to address concerns with the CBAO and welcome the opportunity to continue our dialogue.

Sincerely,

Michael Ault Michelle Smira
Executive Director Administrator
Downtown Sacramento Partnership R Street Partnership

Devin Strecker
Executive Director
River District

Law and Legislation CommitteeOctober 17, 2023

Law and Legislation Committee
October 17, 2023