Category Archives: community benefits agreements

Cavs subsidy foes scrap petitions, say “never mind, if we get crisis centers it’s all good”

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In an unfathomable series of plot twists yesterday in the Cleveland Cavaliers $70 million glass-wall subsidy saga, this happened:

  • Cleveland city council president Kevin Kelley called for an investigation into primary subsidy foes Greater Cleveland Congregations, on the grounds that GCC … got funding from outside the city, I guess? Which wouldn’t be illegal or anything, but would be bad, because damn meddling out-of-towners?
  • Cavs owner Dan Gilbert tweeted that contrary to what a county lawyer had threatened, “I will never move the Cleveland Cavaliers out of Cleveland. Period. And that’s unconditional.”
  • Four of the five GCC members who’d filed the petitions for a public referendum on the Cavs subsidy deal — which is what had led Gilbert to pull out of the plan — wrote to Cleveland City Council Clerk Pat Britt that they were withdrawing the petitions. In exchange, Cuyahoga County — not Gilbert — had promised to build two mental health and substance abuse crisis centers that the GCC had been seeking.
  • Cavs CEO Len Komoroski declared that the arena renovation deal was back on the table, and that “we are very encouraged by this new development related to the private-public partnership plan to transform The Q for the long term.”

As the Cleveland Scene makes clear in its analysis of the crazy day, what happened here is that the county responded to Gilbert calling an end to the arena renovation plan by contacting GCC and asking if there was anything they could do to get the referendum campaign withdrawn. GCC’s price, it turned out, was the two crisis centers, which will cost the county an estimated $10 million to build, and $2.8 million a year combined to run. Once the county agreed to that — though it doesn’t appear that there’s actually anything more than a handshake agreement — GCC agreed to scrap the entire petition drive.

Of course, GCC was actually part of a broader coalition that had put together the referendum campaign — though GCC had been the ones to file it, so they could withdraw it unilaterally. And as the Scene makes clear, those coalition partners are now pissed:

GCC had been vilified as scheming extortionists by the pro-deal side and will now be vilified as sell-outs by their opposition allies. Members of other opposition groups, like the SEIU and the Cuyahoga County Progressive Caucus, are dismayed, if not furious. Some feel betrayed, sold out.

One activist told Scene that they spent hours collecting signatures for the referendum in order to “kill the deal, not help GCC make a deal.” The county’s commitment to investigating the costs of crisis centers — itself a tiny fraction of what GCC initially hoped to attain — is in any event considered to be vastly less important than the victory for democracy that has been short-circuited.

(Cutting a deal with your opponents without even telling your coalition partners, incidentally, is what really should be known in the community-benefits game as a “Bertha Lewis move.”)

If this is how the Cleveland arena battle ends, and it could well be, it’s a truly incredible result — and one that drives home my longstanding worry about “community benefits agreements”: It makes it relatively easy for a team owner (or, in this case, a local government) to neutralize public concern over a subsidy deal by buying off whatever community groups are spearheading opposition. (For the Brooklyn Nets, it was even simpler: Fund the creation of your own friendly community groups, then cut a deal with them.) It’s nice that GCC extracted something from the county that will actually benefit Cleveland citizens more than arena renovations, I suppose, which wouldn’t have happened without the referendum drive. On the other hand, yeah, democracy sounded like a nice idea for a minute there.

Yankees’ terrible “community benefits fund” is even more terrible than you imagined

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After the New York Yankees and Bronx elected officials set up a charitable organization in 2006 to assuage fears that the team’s new taxpayer-subsidized stadium would be bad for the local community, the charity came under fire for being used as a slush fund by its Yankees-appointed administrator and for handing out lots of money to dubious nonprofit groups that may not actually have been nonprofit. The New York Times completed an in-depth investigation into the New Yankee Stadium Community Benefits Fund yesterday, and it turns out everything is on the up and up — ha ha, no, of course not, it’s an even worse train wreck than was suspected previously:

An examination of the fund’s public financial records and interviews with community members and a former administrator of the fund show that it has operated with little oversight or public accountability, neglecting those who live near the stadium and instead sending money to other, often wealthier parts of the Bronx that were not affected by the construction.

The fund also regularly donates to organizations with which it shares common board members. And although the Yankees provide $35,000 a year to cover operating expenses, the fund in 2011 began to allocate 10 percent of the grants it awards to cover its own “additional administrative costs.” Those costs have never been publicly explained…

Of the $6.8 million distributed by the fund between 2008 and 2015, the last year for which records are available, only 30 percent — $2 million — went to charities occupying the same ZIP code as Yankee Stadium or four bordering ZIP codes.

The best way to get money from the Yankees’ community fund, it appears, was not to be in the Yankee Stadium neighborhood that had just lost its central park space for multiple years to make way for construction of the team’s new stadium, but rather to have friends on the charity’s board: the New York Botanical Garden, which has fund chair Serafin Mariel (the same guy who was sued in 2009 over misappropriation of funds) on its board, got $20,000, and the Bronx CUNY Scholarship Fund which Mariel co-founded, got $60,000. And the organization’s annual reports have never been publicly released, going only to the Yankees, who won’t share them. Oh, and the Yankees claim 15,000 tickets a year as an “in-kind donation,” but don’t say who they’re given to.

All this leads up to the best quote in the whole article, and really one of the best quotes in any article:

[Former city councilmember Maria del Carmen] Arroyo [who helped set up the fund with then-borough president Adolfo Carrion] said she did not remember how the board was selected. When asked about some of the board members’ political ties, she said: “This is a small city. You can’t go very far without knowing anyone.”

So who’s to blame for this? The Yankees owners, for setting up a Potemkin charity just so that the city council could claim that the stadium would be good for the South Bronx before voting for it almost unanimously? Or the Bronx pols who turn every policy decision into a way to funnel money to their political donors? That’d both, I’d say, since one hand nicely washed the other here. It’s yet another reminder of the dangers of community benefits agreements — and that if you must do a CBA, for god’s sake, at least have the city government be a signatory to it, so that there’s some opportunity for oversight. Because letting a sports team owner claim credit for doing good works on the grounds of “don’t worry, I’m good for it” is a recipe for disaster.

No, community benefits agreements aren’t the solution to stadium subsidies

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Here’s British journalist Ian Betteridge explaining his eponymous law of headlines:

Any headline which ends in a question mark can be answered by the word “no.” The reason why journalists use that style of headline is that they know the story is probably bullshit, and don’t actually have the sources and facts to back it up, but still want to run it.

So when Deadspin runs an article asking, “Has Detroit Found An Answer To The Publicly Financed Stadium Scam?” you should probably approach it with a grain of salt. But for the record, allow me to answer Deadspin’s question:

No.

What the Detroit city council is considering is a law to require community benefits agreements for all development projects. CBAs, as they’re known, are agreements that developers negotiate with local residents, community groups, and other stakeholders committing to jobs and other local benefits as part of a project; as state assemblyperson Rashida Tlaib told Deadspin, “We are allowing these large corporations—companies that could build a hockey arena without our money—to get in the corporate welfare line and take resources away from us. In exchange for what?”

In theory, CBAs sound great: If developers want public money, they have to give the public something in return! In practice, they’re more problematic. While everyone loves to point to the CBA for development around the Staples Center in L.A., which got parks and job training for local residents impacted by the new construction, there are far more CBAs that haven’t worked out as well: The one the New York Yankees set up, for example, which arranged for a “charity” that handed out benefits to several groups that barely existed, and which didn’t bother to keep track of how many Bronx residents were hired at the new stadium. There’s also the problem of how the “community” is defined: then-New Jersey Nets owner Bruce Ratner famously paid to set up community groups that he could then negotiate a CBA with, over the objections of much of the rest of the community.

And even when CBAs are legit, more or less, there’s still the problem that they’re less a referendum on whether pumping public money into a development project is good for a city as a whole, and more a way for community members to demand a cut of the boodle. Which isn’t necessarily a bad thing — as Tlaib implies, at least if you’re shelling out all that money, you might as well demand something in return — but it can end up being just an easily applied fig leaf for developers, and an incentive for community groups to trade their support for what amounts to a cash payoff, rather than keeping the broader public interest in mind.

So, points to Deadspin for covering this, but more points off for a misleading clickbaity headline. Developers may hate the mandatory-CBA plan — developers hate mandatory-anything plans — but that doesn’t necessarily make it a good thing.