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Case Study

What Works: How an L.A. Coalition is Re-Writing the Script for Downtown’s Future

Objective: This What Works for Cities case study describes how a coalition of more than 30 stakeholders helped to re-write the script for downtown Los Angeles – changing the storyline from one about violence, crime and civil unrest to one of a vibrant, prosperous neighborhood – through the use of a Community Benefits Agreement.

Main Topic: Community Benefits Agreement

Major Participants: City of Los Angeles, Figueroa Corridor Coalition for Economic Justice, Strategic Action for a Just Economy, the Los Angeles Alliance for a New Economy (LAANE), private development groups, and 30+ additional stakeholder and community groups

Background: Hollywood today is best known for its glitz and glamour, but just a few decades ago, it was in the spotlight for a much different reason.

Like many U.S. cities, downtown L.A. fell victim to suburban sprawl. In short time, headquarters and jobs followed residents out of the city, leading to the hollowing out of the once-vibrant commercial core. As private developers stopped investing downtown, so did the City. The eastern part of downtown, despite its beautiful historic buildings, was left behind.

Urban renewal in the 1950s and 1960s presented a new opportunity. But instead of connecting neighborhoods and bringing life back downtown, state and federal policies around urban renewal led to an even more disconnected Los Angeles. Some commercial activity returned downtown, but few actually stuck around to enjoy city living. When the clock struck five, most workers returned to homes in the suburbs.

These patterns continued until the early 1990s, when widespread inequality, racial tensions and police brutality led to the 1992 Los Angeles riots. Widespread looting, arson and violence occurred during the six-day period, with property damage estimated at over $1 billion. The Army National Guard and Marines were called in to stop the rioting, but not before 55 people were killed and another 2,000 injured. Compounding matters, the recession of the 1990s followed shortly thereafter.

How it Happened: The City knew that this downward slide needed to stop. So in 1999, the City Council passed an adaptive reuse ordinance that made it much easier for developers to invest in and rehabilitate buildings, like the beautiful, historic buildings on the east side of downtown that had fallen into a state of disrepair. Private investment catapulted. Yet with each block that was transformed, there became growing concern that many inner city residents – those who had no choice but to stay during the city’s tumultuous years – would be displaced. Despite downtown’s lack of public and private investment in the latter half of the 20th century, many low-income residents and immigrant groups built cohesive communities that were at risk of destabilization.

A number of stakeholder groups and activists began to ask the question: How do we ensure that downtown’s growth and development is equitable? “To build an inclusive economy, there are a couple of things we need to do. Part of it is delivering affordable housing, and we need to have policies and resources that support that,” explained Jeff Schaffer, Vice President of Southern California Enterprise Community Partners. “But we also want to look at the demand side of the equation. So, what are the wages that people have to actually earn to afford housing?”

There had already been an uptick in new development downtown, and then a proposal was submitted for the Los Angeles Sports and Entertainment District development – a $4.2 billion mixed-use project that would bring a hotel, 7000-seat theater, convention center expansion, and new housing, restaurants and retail to the downtown. Stakeholder groups sprang into action to ensure local residents would reap the benefit of the private investment, especially given that the development hinged on as much as $150 million in public subsidies and use of eminent domain.

The Figueroa Corridor Coalition for Economic Justice represented 30+ community organizations ranging from labor, housing, environmental and religious groups to health organizations and immigrants’ and tenants’ rights supporters. After five months of negotiation, the coalition and developer agreed to one of the nation’s most comprehensive community benefits agreements (CBA). Known as the “Staples Center CBA,” the groundbreaking agreement established specific equitable development requirements (e.g. affordable housing, green space, job training and living wages) that had to be fulfilled in order for the developers to receive public subsidies for the project. Benchmarks included: $1 million for parks and recreational facilities; living wages for 70 percent of the jobs created; job training and participation in a local hiring program; and 20 percent of new housing units to be designated affordable. In exchange, the coalition would give its support for the public subsidies the developers requested.

Results for Local Economy: The transformation of the Sports and Entertainment District has sparked downtown’s revival. Between 1999 and 2014, more than 700 businesses moved downtown. The number of apartments increased from 11,626 to 33,776 during that same period, and the downtown population has increased from an estimated 19,000 to 58,000. Thriving restaurants and retail establishments bolster a vibrant street life.

Local residents have reaped tremendous benefits, too. The developer has met the majority of the terms outlined in the CBA, including the provision that required 70 percent of initial employees be hired from the local community. In many cases, the developer has gone beyond what the CBA required. For instance, the term of the local hire provision was only for five years but the developer continues to work with the local jobs coalition to ensure residents have access to workforce training, apprenticeships and job opportunities.

What’s more, the success of the Staples Center CBA has ushered in a new cooperative spirit among the City, developers and community groups. A subsequent CBA for the Los Angeles International Airport’s $11 billion modernization was also approved, and there is potential for a CBA of similar scale related to the $1 billion-plus redevelopment of the Los Angeles River. On smaller projects, many developers are beginning to work directly with and negotiate with community groups. Meanwhile, community groups are building capacity and learning the nuances of the development process in order to better achieve their stakeholders’ needs.

Remaining Challenges: The Staples Center CBA has been a tremendous lift for downtown L.A., but many are quick to point out that income inequality remains persistently high. Others, like Jan Perry, General Manager of the L.A. Economic & Workforce Development Department, note that “things have gotten better, but they haven’t gotten better fast enough.” Some neighborhoods remain disconnected from the rest of the city, which local officials hope to improve through the redevelopment of the L.A. River. Other areas have essentially been developed around and are now boxed in by new buildings.

Expanding public transit remains another challenge. While the light rail system is growing in popularity, it does not service many of the inner city neighborhoods who would benefit the most from access. The transportation system is improving, but the network remains far from what is needed to broadly connect low-income residents to various employment, healthcare and educational centers. What’s more, as transit infrastructure expands and becomes more popular, there will be additional development pressure around those transit nodes.

Lessons Learned: Many communities are now considering the use of CBAs as new development proceeds. One important lesson from the Staples Center CBA, though, is the need for an enforcement mechanism. In this case, the City of Los Angeles and the Los Angeles Community Redevelopment Agency both approved of the CBA, and the language of the CBA was entered into the development agreement between the developer and the Redevelopment Agency, making it enforceable by both the city and the community groups. Moreover, SAJE was designated to monitor and track compliance.

Also, all parties must be realistic. Development can provide the upside needed to achieve stakeholders’ needs, but the upside isn’t indefinite. In order for a CBA to be successful, developers and community groups must work closely to narrow the scope of the CBA enough that all parties can meet their obligations. “Collaboration” has to be the key word.

Finally, it is okay to start small: few projects will be the size and scale of the Sports and Entertainment District redevelopment. CBAs can start on a project-by-project level versus district-wide. Smaller agreements are easier to achieve and can be a useful strategy for shifting conversations between the development community and stakeholder organizations at the local level.

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