Morgan Ford Community Benefit Agreement

Setting a New Standard for Development in St. Louis

On September 13th, 2017 Tower Grove South has the opportunity to set a precedent for how development is done for the rest of the City by voting for a first-of-its kind Community Benefit Agreement that was negotiated by the community in which the project is occurring.

What are Community Benefit Agreements?

I first learned about Community Benefit Agreements (CBA) nearly three years ago at the Local Progress national convening while attending a session on equitable development by the Partnership for Working Families. Community Benefit Agreements are legally binding contracts signed by community groups and a real estate developer that requires the developer to provide specific amenities and/or mitigations to the local community or neighborhood in exchange for tax-incentives or the development being able to locate in that community.

Right away, this seemed like a process that St. Louis needed to adopt. We know that in St. Louis, we have seen $700 million in foregone tax revenue from TIFs and tax-abatements. The majority of these investment have gone into the wealthiest wards in the City and have resulted in the significant displacement of low-income American Americans from these areas. Essentially, the progress that is being seen in many areas is not being felt by the people who have long resided in those areas. Community Benefit Agreements give us a chance to do development in a way that is responsive to the needs of the community where the development is occurring, while ensuring that incentives are only going toward projects that would not happen without them.

Using Community Benefit Agreements in Tower Grove South

Tower Grove South is one of those quickly gentrifying neighborhoods of St. Louis City. We have lost nearly 350 rental units in the last five years because of conversions from two-family flats to single family homes and four-family flats to two townhomes. With these conversions have come increasing rental prices, increasing home values and increasing property taxes. For a community that prides itself on its inclusiveness and diversity, balancing a booming real estate market with a decrease in rental housing and desire to keep the diversity that makes our community great can be a daunting task. This makes Tower Grove South the opportune neighborhood in which to pilot a Community Benefit Agreement process.

Tower Grove South first started to try to get in front of these complex issues nearly four years ago. Over a year-long process of resident engagement and feedback, a neighborhood framework and visioning plan was created as a blueprint for what community members want development to look like in our community. Some of these attributes include, greater investment into the Morgan Ford business district, urban/mixed-use designed buildings that are built up to the curb, and housing that promoted pedestrian and cyclist activity.

When a developer approached me about a year ago with a mixed-use project idea that met many of the attributes of our neighborhood plan to be built at the car wash cite, I told them to move along with developing a plan, with one caveat. While the car wash has been a problem property for both nearby residents and business owners for years, having 13 calls for service to the property to address everything from illegal dumping, to property code violations, to drug dealing, to graffiti, and illegal open storage, in just the last year, I am also very conscious of the negative impact that tax incentives can have on City and school district revenues. For this reason, I would require a Community Benefits Agreement with neighborhood groups if he wished to seek, and qualified for, any tax-incentives.

The developer agreed without hesitation. Three months later he would have the property under contract, and in January of 2017 the first meetings with neighborhood and business representatives started as the developer began design of the project. In April of 2017, the 26 unit market-rate apartment were brought to neighborhood leaders and it became apparent that the development did indeed qualify for a tax-incentive. Neighborhood organizations then started to meet with their memberships and the developer to determine how they would approach the Community Benefits Agreement process.

Change to Business As Usual

Most development projects in St. Louis are done with little public engagement or any benefits that the community wants to see. Rather they are completed through closed door meetings while Aldermen push through tax-incentives deals that communities a) don’t know about, b) don’t understand, and c) don’t possess any requirements for the developer to give back to the community in exchange for the tax break. Bringing community members to the table with the developer to negotiate what they want in exchange for a tax incentive is unheard of in how development is typically done in St. Louis. The negotiation committee would have the opportunity to set a new standard for development in St. Louis.

Over a two- month period, three Board Members from the Tower Grove South Neighborhood Association, three at-large members from the Tower Grove South Neighborhood Association, and three members of the Tower Grove Business Association (many of whom were also residents) met for a total of 20 hours to negotiate with the developer based upon the needs demonstrated by the community, as found through a survey completed by about 110 residents, a community forum, and door-to-door canvassing to create a Community Benefit Agreement. Results from neighborhood engagement overwhelmingly demonstrated need for affordable housing, followed by infrastructure improvements, environmentally sustainable construction and parking. Given that infrastructure improvements are already planed for Morgan Ford for the summer of 2018, a parking audit is already underway by the City of St. Louis for Morgan Ford, and the project already contains a number of environmentally sustainable elements, the committee focused their efforts on affordable housing.

What Residents Want to See in a CBA

To guide their efforts, the committee asked that experts in affordable housing and a liaison from SLDC provide technical assistance on affordable housing options and on tax incentives so that they committee could be best educated on 1) how the project fit the need for abatement, 2) what was an appropriate request to make of the developer given their financial position, and 3) what affordable housing options exist in addition to inclusionary zoning.

The Community Benefit Agreement

After all negotiations were said and done, the agreement reached was:

• 1) $60,000 in cash contributed to a non-profit organization, dedicated to affordable housing. This is roughly equivalent to one year’s worth of tax abatement. Funding could also be used to support rent, keep people in their homes or create new affordable units. If used to create new affordable housing, 90% of the units would serve those earning 50% of the area median income or lower. Up to 25 units could be created by leveraging this money and those units would be permanently affordable. (Note: this method creates more permanently affordable units in the Tower Grove South neighborhood than could be done with an inclusionary zoning model. Over a 10 year period, this will result in $1.3 million in rental payment savings for low-income people in our community.) An RFP will be initiated to determine the best organization to manage this process.
• 2) An additional 10% of any cost savings resulting from the St. Louis Development Corporation purchasing materials to avoid MO sales tax.

Note: This is not another City subsidy. By using SLDC to purchase materials tax that would be paid to the state of Missouri will be saved. 10% of this savings will come to the community (Approximately $5–10k)

• All investments will be made in the Tower Grove South neighborhood.
• 3) Retail leases will require that all employees be paid a minimum of $10/hour (starting the second year of the lease if a startup business).
• 4) Retail leases will require priority hiring of St. Louis City residents.
• 5) The project shall adhere to minority business enterprise (MBE) and woman business enterprise (WBE) requirements as defined and required by St. Louis City.

The entire MorganFord CBA can be viewed here. More information regarding the Morgan Ford proposal, and the process that was taken, can be found on the TGSNA website.

A New Process Doesn’t Come Without Challenges

To say that this process was seamless or without stress would be an understatement. There were times at which the developer was ready to walk away from the table and times when the community was ready to walk away from the table. Different community partners at the table had different ideas of how to engage in the negotiation process, and each person at the table came with a different level of knowledge and understanding of tax-incentives, development, and what it means to negotiate. Additionally, while some negotiation committee members thought the process was too fast, others were frustrated with the “paralysis by analysis” that overtook some of the meetings.

On top of this, committee members had the challenge of balancing the loud voices of both community members who will never support the project and ones that will be angered if the project does not go through. It was a definitely a messy process, but no pilot process ever is without strife.

At the end of the day, the committee is committed to continue to refine the process to make this the standard for how development is done in St. Louis. Even after the CBA is voted upon, the committee will continue to work with me to refine this process into something that can work and be replicated across the City. Through this process, we can change how development is done in St. Louis.

The meeting to vote in the CBA will be at 6:30 pm on Wednesday September 13th at the Oak Hill Presbyterian Church at 4111 Connecticut Avenue.