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How Detroit enforces its developer agreements and regulations, explained

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Many items through the city’s Community Benefits Ordinance and workforce requirement need to be regularly checked. Here’s how it works.

A red brick building stands behind a site with construction equipment in winter. A rainbow colored flyer around a fence that says “Hudson’s Groundbreaking December 2017.”
Groundbreaking for the new Hudson’s tower in December 2017.
Photo by Michelle Gerard

The city of Detroit has gotten plenty of criticism for its accommodating approach to developers, whether it’s providing them with cheap land and tax breaks or by easing the regulatory path.

After our recent article about how the Community Benefits Ordinance isn’t living up to its promise to provide meaningful benefits to Detroiters, the city reached out to us. In particular, it argued that its enforcement methods exert real oversight over developments.

So we wanted to learn more about this process. How exactly does the city oversee and enforce its developer agreements and regulations?

To recap: Around the same time in late 2016, two major pieces of municipal legislation went into effect intended to increase the equity of major developments in the city. The first was the Community Benefits Ordinance (CBO), approved by voters, which requires developers of projects that cost over $75 million or receive over $1 million in city land or abatements to negotiate with residents on a package of benefits.

The other was an executive order by Mayor Mike Duggan requiring city construction contracts worth more than $3 million or projects that receive more than $3 million in city funds (through land, funds, or tax abatements) to have its workforce be at least 51 percent Detroit residents. If the contractor does not meet this target, a percentage of wages an hourly worker would have made goes into a “Workforce Training Fund.” That percentage increases the fewer Detroiters used by a contractor.

Compliance with these two laws is handled by the Civil Rights, Inclusion and Opportunity Department (CRIO). We spoke with department director Charity Dean to get specifics on the enforcement process.

For the CBO, the office has one dedicated staff member, plus more when support is needed, looking into whether or not developers are complying with agreements. It then submits bi-annual reports on each project to Detroit City Council and the respective Neighborhood Advisory Councils (NAC) that negotiated the agreements. If the NAC isn’t satisfied that the agreement is on track, an Enforcement Committee comprised of city officials does a more thorough investigation and reports back.

City Council would then make a final determination if the developer isn’t in compliance. The city could then sue the developer if it feels it’s in breach of contract.

But that’s all hypothetical at the moment since developers have by and large been complying with their agreements. Dean says there’s only been a handful of benefits that developers weren’t on target to meet, but got back in compliance after a notice from the department.

Anyone can see how far along each project is and report potential problems through the city’s website. So far, the CRIO Department has submitted one report tracking total progress with each project. Another, more comprehensive report is set to be released soon.

In contrast to some residents, Dean feels the CBO is working as it should. She notes that developers are complying with the agreements and that Neighborhood Advisory Councils are getting better at negotiating. “If you just look at the pure yields from projects, I have a hard time with the notion that it’s not doing anything,” she says.

For the 51 percent workforce requirement, contractors send monthly certified payrolls with proof of residency to the CRIO. If they’re short, a contractor can challenge a finding. But if they fail to pay the fine, the city can withhold payment for the work, decline future bids, or even debar them from working in the city for up to a year.

A complete list of all projects that fall under the workforce requirement, and the number of Detroiters working on each, can also be found on the city’s website. For example, on the Book Tower redevelopment, only 10.8 percent of the work has been done by Detroit residents, which means that developer Bedrock Detroit has contributed $171,241 to the workforce training fund.

Dean says that so far her department has collected $7.7 million for the fund.

But she’s also quick to note that developers use general contractors, who subcontract out skilled trades work, often through unions which are not terribly diverse. Another provision in Duggan’s executive order stipulates that if a union participates in the Detroit Skilled Trades Employment Program (STEP) and meets certain goals, it will count towards a contractor’s compliance with the workforce requirement. But according to Dean, only three unions have agreed to work with Detroit STEP.

Despite criticisms, Dean feels that these laws are a huge boost for Detroiters and will likely only improve in the future. “Detroit is doing development more equitably than any other city in the country,” she says.