Backroom Benefits

Some Oakland nonprofits have been meeting behind closed doors with developers and councilmembers to negotiate multimillion-dollar “community benefits packages.”


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The community benefits package for 1314 Franklin St. remains secret.

Carmel Partners

During the past year, Oakland labor organizations have stirred controversy over their use of the state’s main environmental law to coerce housing developers into employing union construction workers. Unions have threatened to file lawsuits under the California Environmental Quality Act, or CEQA, and then have dropped their threats once developers agree to labor pacts.

Pro-housing advocates have called this tactic “CEQA abuse,” noting that the threatened lawsuits have nothing to do with protecting the environment (see “Unintended Consequences,” December 2016). They point out that the labor deals reached by developers and unions typically have no provisions for making the projects more environmentally friendly. Pro-housing advocates have repeatedly called on the state Legislature to eliminate CEQA abuse, but organized labor has stymied these efforts.

Now, some Oakland nonprofits are using similar tactics to negotiate multimillion-dollar “community benefits packages” from developers of downtown housing projects. Coalitions of nonprofit, community, and arts and cultural groups have joined with unions or have threatened on their own to sue developers unless they agree to large financial payouts.

In several instances, Oakland City Council members and their staffs have helped negotiate these closed-door deals. The pacts, which have been increasing in number during the city’s housing construction boom, raise questions about transparency and conflicts of interest. At least one nonprofit appears to be benefitting financially from the packages it helped negotiate for the local community, and in at least one instance, the parties involved refused to reveal which groups received money.

“These are backroom deals,” said Victoria Fierce, a member of the pro-housing group East Bay Forward. “The process is really flawed.”

Members of the nonprofit coalitions involved in these deals say they have no other choice. They argue that the city of Oakland has no effective process for helping struggling nonprofits and arts and cultural organizations that may be priced out of neighborhoods by new housing and development. “Communities are being impacted by development,” said Eric Arnold of the Community Rejuvenation Project. “Right now, the entire system is set up to favor the developer.”

However, coalition members agree with pro-housing advocates that lawsuit threats and closed-door dealings are not ideal. They acknowledge it would be better if the city established a more structured, transparent system for handling community benefits. Under such a system, developers would know upfront how much they would be required to pay, and then the city would establish an equitable process for distributing funds to the most deserving groups.

Wood Partners

Nonprofits negotiated a $2 million pact from the developers of 226 13th St.

“Ideally, the city would create actual policies that ensure that developers do their fair share to help neighborhoods,” said Lailan Huen, a leader of the Chinatown Coalition for Equitable Development. Huen added, however, that the city would need to involve nonprofits and arts and cultural groups from the immediate neighborhood in deciding who receives community benefits funding. “The neighborhood members are the ones who know what neighborhoods need,” said Huen, who is ex-Mayor Jean Quan’s daughter.

But some Oakland councilmembers who have helped negotiate recent community benefits deals don’t see an immediate need for reform. Councilmember Lynette Gibson McElhaney, West Oakland-Downtown, argues that the deals have generated much-needed funds for neighborhoods. She also contends that councilmembers need to be involved to ensure their constituents are well served. “We are the people’s representatives,” said Gibson McElhaney. “The bureaucracy doesn’t hear the community’s voice. We’re the branch of government that’s closest to the people. There’s a silencing of the community if you don’t allow the people’s representatives to be involved.”

North Oakland Councilmember Dan Kalb, who recently led negotiations on a $1.4 million community benefits package involving a 25-story housing tower at MacArthur BART, said he’s open to the idea of reform but noted that community benefits deals have long been common in Oakland. “I’m willing to consider all options,” he said. “But there’s really nothing new or unique here in terms of what has been happening.”

Kalb, however, agrees that CEQA needs to be reformed to eliminate lawsuits that have no bearing on the environment. The MacArthur tower project benefits deal did not involve a threat of a lawsuit; rather, the developer agreed to fund community benefits in exchange for the city greenlighting a taller building than neighborhood zoning normally allows.

Councilmember Abel Guillen, who represents the Chinatown, Adams Point, and Eastlake areas and has been involved in several recent closed-door community benefits negotiations, did not respond to multiple requests for comment for this report. It should be noted that councilmembers stand to benefit politically from helping negotiate these deals, because the pacts tend to be popular with key constituencies that receive funding. 

Developers involved in recent community benefits deals also declined to comment or did not respond to requests to be interviewed. One developer, who spoke on condition of anonymity, expressed reluctance to reform the system, because of the CEQA abuse. Developers favor a more structured process in which they know how much they would have to pay in community benefits, but it won’t work if they can still be sued or threatened with a suit by some other group. It’s also in their interest to strike community deals as quickly as possible before the housing market cools, because a lawsuit, no matter how frivolous, could create an untenable delay.  

Huen said they’ve only used CEQA when teaming up with unions. In cases in which they’ve acted on their own, they’ve sought to challenge whether the city has abided by its planning and zoning laws, she said. She and Arnold also said developers demand their negotiations take place out of the public eye. They said they would prefer that such deals were more transparent, but developers are afraid that if they receive too much publicity, then other groups will demand money. “They don’t want other people to come and ask for the same thing,” Huen said.

In recent months, one of the largest community benefits package deals involved developer Wood Partners’ plan to build a 262-unit project at 226 13th St. Huen’s coalition negotiated that $2 million pact with Guillen and Wood Partners, and it was finalized in November. It included $675,000 for affordable housing, $725,000 in discounted rents for small businesses and artists in Oakland’s Black Arts Movement Business District, $100,000 for the Cypress Mandela Training Center, and $250,000 for local residents facing eviction.

In April 2016, Gibson McElhaney negotiated a $540,000 community benefits deal with Bay Development, concerning its 126-unit housing tower at 250 14th St. The deal included $160,000 for renovations at the neighboring Malonga Casquelourd Center for the Arts, which hosts numerous dance, music, and arts troupes.

And a year later, a coalition led by Huen negotiated a community benefits package with developer Carmel Partners, which plans to build 40-story, 634-unit apartment high-rise at 1314 Franklin St. Huen and Arnold said they signed a nondisclosure agreement with Carmel Partners that prohibited them from revealing the contents of the pact, although Huen said they’ve been working to get the details released.

Huen also said their coalition is creating an open process for distributing community benefits funds and that they try to prevent conflicts of interest or the appearance of them. “We have actively asked for people who have asked money for themselves to get off the coalition,” she said.

 

But there’s been at least one exception: the Black Arts Movement Business District. The organization’s executive director, Ayodele Nzinga, has been involved in negotiations that have financially benefitted the district.

In an interview, Nzinga defended her involvement in negotiating developer payouts. “I’d like to be involved in this era of prosperity,” she said. “If no one is going to advocate for us, then we need to advocate for ourselves.”

In April, the Black Arts Movement Business District’s monthly newspaper, for which Nzinga is a senior writer, featured a full-page ad, thanking developer Carmel Partners “for your continued support.”

 

Published online on June 5, 2017 at 8:00 a.m.

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