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Analysis: How community benefits agreement between FCC, West End compares to other MLS teams

Critics: FC Cincinnati contract not enforceable
Posted: 5:00 AM, Jul 29, 2019
Updated: 2019-07-29 21:33:55-04
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Earl Brown isn’t worried about FC Cincinnati’s stadium project displacing him.

Brown owns a two-family home on Bauer Avenue, less than 500 feet from the soccer club’s construction site in the West End. He rents out the first floor and lives on the second, where he flies a Pan-African Liberation Flag from a street-facing window.

“I’m not listening to any offers,” he said.

Only Realtors and land speculators have approached Brown so far. His response would be different if FC Cincinnati owner Carl Lindner approached him directly.

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Earl Brown stands in front of his home, a few blocks north of FC Cincinnati's stadium site.

“I would be interested,” Brown said, smiling. “What do they say? Money talks.”

Talking or not, money is at the heart of a 14-month-old community benefits agreement between FC Cincinnati and the West End Community Council.

Community benefits agreements are contracts that require developers of large real estate projects to deliver economic concessions to community organizations in exchange for public support of their project. The concept originated in Los Angeles in the early 2000s but has since spread to New York, Chicago, Atlanta and more than a dozen other U.S. cities.

You’ve probably heard something about FC Cincinnati’s deal, which calls for the team to spend $100,000 a year on youth soccer programs and offer jobs and contract opportunities to West End residents.

What you may not know is how the deal compares to similar agreements in other Major League Soccer cities, how the team is living up to its terms or how the deal substantially changed in the weeks leading up to the city’s approval of stadium funding.

Those changes restricted the West End’s ability to enforce the contract, said Julian Gross, a PolicyLink attorney in Oakland, California. He’s worked on more than 20 community benefits agreements in other cities and called Cincinnati’s deal “a dereliction of duty” by Cincinnati City Council.

“It reads like an agreement that is not meant to be enforced,” Gross said. “Key enforcement roles are essentially thrown to a city-appointed body that is not a party to the agreement rather than the purported community advocates that have a right to enforce in valid CBAs.”

The team says the agreement is enforceable.

"If any party believes that FCC is in default of the agreement, there will be a meeting in good faith to resolve the issue," said spokeswoman Anne Sesler. "If the issue is not resolved arbitration can be initiated."

The I-Team has been studying FC Cincinnati’s stadium contracts to better understand how the project could impact taxpayers and the neighborhoods that surround it. In June, our analysis showed the team’s stadium and practice facility could end up costing taxpayers more than $200 million over 20 years, including $80 million in borrowing costs and $100 million in property tax exemptions.

RELATED: Taxpayer tab on FC Cincinnati's real estate needs

In round two of this analysis, the I-Team spent two months reviewing the community benefits promises made by MLS teams with active stadium projects in Cincinnati, Nashville, Austin, Miami and Columbus.

Based on contracts and public statements issued by MLS teams, FC Cincinnati will contribute less to its new neighbors than its counterparts in other cities:

  • Nashville SC claims it will spend $75 million to comply with the terms of its CBA, announced in September. The contract does not clearly specify the cost of its terms.
  • Inter Miami CF promised $25 million in public contributions in a proposed CBA it submitted to the city June 5.
  • Austin FC details more than $70 million in spending over 30 years in a Community Benefits exhibit that’s part of the team’s lease for city-owned land. Its deal includes $36 million for a player development academy.
  • The new owners of the Columbus Crew haven’t announced a CBA. But the team has promised to spend more than $50 million over 30 years on charitable contributions, soccer fields and other community benefits as part of its deal for a $280 million stadium near that city’s Arena District.
  • FC Cincinnati will spend about $16.1 million for the costs clearly identified in its CBA. The team says it will actually spend more than $50 million on community benefits, including costs not quantified by the contract.

"It is completely misleading to cherry pick specific aspects of the final or proposed community benefits agreements for those stadium projects and compare them to FCC’s CBA," wrote Brock Denton, general counsel for FC Cincinnati. "There are significant differences between the West End Stadium and the MLS stadium projects in other markets, specifically as it relates to the other cities’ direct public support for stadiums and related mixed-use development, use of public land for stadiums, and differences in how those markets obtained an MLS team."

Denton declined to be interviewed for this story. His full statement can be found here .

“What is in the agreement is really just a pittance compared to what it will take to mitigate the impact of what the FC stadium will have on that neighborhood,” said Michelle Dillingham, a coordinator for the Cincinnati Educational Justice Coalition.

Dillingham opposed the West End stadium project partly because the team did not include a broad coalition of community groups in its community benefits agreement. She also agrees with Gross that the Cincinnati agreement is not enforceable.

“That’s a huge problem,” she said. “What we know from other agreements, the biggest part of it is, ‘Is it legally enforceable?’ if you don’t have that, you really just have a lot of promises made and promises that won’t get kept.”

Is Cincinnati’s agreement enforceable?

Nashville has the deal that most closely resembles Cincinnati’s CBA in that both have detailed construction-contracting and workforce-development goals. Both have lengthy clauses about affordable housing. They both established a panel of community volunteers to oversee contract compliance. And they both came after extensive lobbying of local politicians.

But there are also major differences in how the deals are enforced.

FC Cincinnati has a "legally binding agreement with binding arbitration," Sesler said.

Gross said the team’s obligations are more clearly written in Nashville’s deal with no restrictions on legal action either party can take in the event of default. Cincinnati’s deal allows the team and the Port of Greater Cincinnati Development Authority to seek binding arbitration if there is a contract default. But the West End Community Council needs a 75 percent yes vote from a 17-member advisory board to do the same thing.

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Julian Gross, an attorney for PolicyLink, has worked on more than 20 community benefits agreements.

“They need permission from other parties essentially appointed by the city to take any action under the document,” he said. “I’ve never seen language like that in any CBA and really in any contract.”

The community council agreed to the restriction in exchange for being named a party to the agreement, said Tia Brown, one of six people who negotiated the contract on the community’s behalf.

An early version of the contract described the community council as a third-party beneficiary with a direct right to enforce its provisions. But members of the negotiating team worried those rights could be terminated if the agreement was amended. The community council would be powerless to stop such an amendment if it wasn’t a party to the contract.

Gross said the compromise resulted in language too cumbersome to hold the parties accountable.

“The community coalition actually has no legal rights under this contract because they’re not a party to this contract and it’s controlled by the city,” Gross said. “Every appointee can be removed by the city if they’re too aggressive.”

Brown said it would be difficult to win a 75 percent vote on the community coalition. She’s one of four community council members who joined the 17-member panel last summer. The group has been meeting every other month since then. Brown said the meetings are led by team consultants and involve little discussion on whether the contract’s goals are being met.

“A lot of the parties on the coalition are invested in the development being done and being done on time,” Brown said. “So, it’s not that it wouldn’t be possible (to get a 75 percent vote). But I don’t think it would be as easy as one would hope.”

The team declined to release meeting minutes or let the I-Team attend a meeting of the community coalition, saying the panel is not a public entity.

Nashville also has a community advisory panel. But two of its six members are appointed by Stand Up Nashville, a nonprofit coalition of eight community groups that negotiated the contract. The team appoints two others. The team and the nonprofit jointly select two more. Negotiators said the goal was to keep the group small enough that both parties could influence the ongoing development.

“We really tried to make our CBA have a continued presence by the community as the project develops and as folks are being placed in housing,” said Anne Barnett, co-chair of Stand Up Nashville. “So, we think that makes it a really strong agreement because we’re going to be there watching and monitoring every step of the way to make sure it gets enforced.”

Nashville vs Cincinnati: Whose deal is better?

If Nashville’s deal is easier to enforce, it also took longer to negotiate.

Local governments in both cities both approved the basic financial terms for new MLS stadiums in November 2017. Cincinnati’s CBA was completed by the following May and its stadium is on pace to open in 2021. Nashville’s CBA wasn’t finished until September 2018. It’s planning to debut its new stadium at the start of its 2022 season.

Barnett claims the delay helped Stand Up Nashville forge a better relationship with the team.

“We were on opposing sides before,” Barnett said. “Now, we’re both on the same side and we have the same objective. We want this CBA to be completed. We want it to run smoothly. We want nothing but positive press from this. That breathing room has given us some space to try to build that trust.”

While Nashville’s CBA requires a bigger financial commitment from the team, Cincinnati’s stadium project requires a smaller public investment. Nashville’s Stadium Authority agreed to issue $225 million in revenue bonds for the project, along with $25 million in general obligation debt from the Metro Government of Nashville and Davidson County. The team agreed to pay $25 million for upfront costs and cover all cost overruns. It’s also expected to pay about $9 million in annual rent for 30 years to pay off more than 70 percent of the Stadium Authority’s debt service. Revenue from ticket taxes will cover the rest.

Compare that to Cincinnati, where the team agreed to pay all of the debt service on up to $250 million in bonds that the Port authorized, which could lead to annual payments of up to $19 million, according to this bond calculator . The city contributed about $34 million in infrastructure costs and Hamilton County agreed to contribute 1,000 parking spaces, expected to cost at least $15 million. Both teams expect to pay no taxes because their stadiums will be owned by public entities.

FC Cincy stadium deal is a go, Jeff Berding says

Although he declined to be interviewed for this story, FC Cincinnati President Jeff Berding told reporters at the unveiling of a new stadium design that the team's commitment to the West End will not waver.

“We will be proud and respectful neighbors,” Berding said. “We will employ citizens of this storied community. We will give back to the community in an even greater fashion than we’re doing now (with) community service, physical education classes, after school programming and direct donation grants to neighborhood nonprofits. We want to see the community rise to its highest heights and we’ll be there to support it and its residents the entire way.”

‘A big old fight’

Beyond the issue of enforcement, the I-Team found big differences in how MLS teams approach the hot-button issue of affordable housing.

CBA expert Julian Gross said “affordable housing and anti-displacement commitments are the number one priority” for most communities seeking community benefits agreements.

“It’s a dereliction of duty for a city not to consider those things if it’s approving a project in a neighborhood facing gentrification pressures,” said Gross, who informally consulted with members of city council when Cincinnati’s deal was developed.

Here’s how four MLS teams have addressed this issue in contracts and public statements:

  • FC Cincinnati agreed to fund a housing study to “recommend specific measures to encourage investment” and “protect long-term, low-income residents from displacement.” The team also agreed to contribute $100,000 toward “immediate housing needs” of West End residents. Finally, the agreement callled for FC Cincinnati to hand over its purchase option for dozens of West End residential parcels to the Port, which agreed to establish a housing improvement fund “to assist with the creation of affordable housing units.”
  • The Columbus Crew’s new ownership group pledged in a December press release to include at least 20 percent affordable housing in an 885-unit apartment complex it plans to build at Confluence Village. That’s a 33-acre development that will include a 20,000-seat stadium and 15 acres of commercial development.
  • Austin FC agreed to donate $3.7 million over 30 years to Foundation Communities, an affordable housing nonprofit. In April, the team made its first donation: A $500,000 gift to Waterloo Terrace, a 132-unit apartment building for homeless veterans.
  • Nashville SC agreed to set aside 12 percent of the apartments planned on a 10-acre development near its stadium, with another 8 percent reserved as workforce housing. The agreement sets income guidelines for the units and requires that 20 percent of them are built as three-bedroom apartments, which are in short supply in Nashville.

Miami's team doesn't address affordable housing in any of its proposed contracts with the city. Columbus offers merely a promise at this point, with no underlying contract to make it binding on the team. Austin’s affordable-housing pledge is enforceable as any other obligation in its lease with the city. Nashville’s affordable housing clause took months to negotiate, with the team arguing it wouldn’t be able to finance apartments if subsidized units were included and the nonprofit threatening to walk away if the issue wasn’t addressed.

“That was a big old fight,” Barnett said.

“I don’t know about Cincinnati, but here in Nashville (affordable housing) is a hot-button item,” said Odessa Kelly, Barnett’s co-chair at Stand Up Nashville. “Gentrification is real. It’s rampant and we have to actually put tangible solutions in place to try to curb some of this.”

The West End Community Council tried to get bigger commitments from FC Cincinnati on affordable housing.

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Tia Brown, community engagement director, Seven Hills Neighborhood Houses

“They weren’t budging,” said Brown, who participated in a 10-hour bargaining session that led to the final agreement. “We did not have a lot of time to negotiate and they weren’t budging on a lot of things.”

The 2018 city council motion that demanded a CBA said one of its goals should be “minimizing displacement.” Mann said the intent of the motion was to establish a process so the neighborhood could negotiate its own satisfactory solution. He did not “review the product of that process” to determine how well it achieved the goals outlined by city council.

“I don’t perceive it as my job or city council’s job to say, ‘This community benefits agreement is OK. This one is not,” Mann said. “If the community council and the developer are in agreement, that’s good enough for me.”

How Cincinnati’s deal got done

Several of the people we interviewed said the process established by Cincinnati’s council left the West End with too little leverage to negotiate an effective deal.

“Public entities need to recognize that they are actually in control of these situations and they generally have a lot more leverage than they think they do,” Gross said. “And they shouldn’t be approving large subsidies without good conditions or protections for the public in a rush and under duress.”

Mann said that’s what council was trying to achieve but didn’t want to “second guess” negotiators who put the deal together. Dillingham said the city missed an opportunity to craft a model agreement.

“The worst outcome I would say is if Cincinnatians were left with the idea of that’s what a community benefits agreement process really is because nothing could be farther from the truth,” said Dillingham. “It was done very quickly, under duress, you know, essentially lawyers in the room, over a weekend.”

Dillingham is referring to day-long session at City Hall where a contract amendment was negotiated by Brown and five other members of the community council. But the contract actually developed in phases, starting with conversations in late 2017 between Berding and Keith Blake, former president of the West End Community Council.

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Keith Blake, former president, West End Community Council

“The CBA agreement didn’t come from inside the community,” Blake said. “There were outside activists, spearheaded by others, who basically went to city council and said, ‘Hey, demand a CBA. You know, the school board got it. Demand a CBA.’ At the time, we’re all sitting there going, ‘Look guys, given the timeline, CBAs take time that we don’t have.’ We muddled through it. That’s the best I can say.”

Blake signed the first version of the agreement on April 14, 2018. It was promptly rejected in a stormy community council meeting that led to a failed attempt to impeach Blake. When his term as president expired this month, much of Blake’s initial deal remained intact.

But a six-member negotiating team made several changes to the agreement in a May 16 bargaining session that took place at City Hall as council prepared to vote on a stadium development contract. Attorney Kristen Myers represented the community council. The team paid Myers’ bill.

“At first they picked the lawyer,” Brown said. “The community council pushed back and we were able to select our own lawyer.”

Gross said it’s fairly common for developers to pay the legal bills of community groups in CBA negotiations. Brown said the community council was happy with Myers’ work on the contract amendment, which resulted in some gains for the neighborhood. Among them:

  • The team agreed to contribute at least $100,000 per year toward a youth soccer program that was created in the original document.
  • The team agreed to fund $100,000 in “immediate housing needs” for West End residents with the first of 30 annual contributions it previously pledged to the FC Cincinnati Community Fund.
  • The team agreed to hold at least two job fairs in the West End and pay its stadium employees at least $15 an hour.
  • The community council became a party to the agreement, subject to the 75 percent restriction on enforcement matters.

Brown said the neighborhood might have gotten more from the team if city council had been more involved. But Mann said council was trying to respect the team’s timeline. It needed a development contract to finalize its bid for an MLS franchise agreement, which was announced May 26, days after the CBA amendments were signed.

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Cincinnati Councilman David Mann

“There’s a limit to what we can impose on private development,” Mann said. “The agreement between the city and FCC … imposes a lot of obligations on FCC, prevailing wages, economic inclusion in contracting, engagement with the community. That’s where city council had its role.”

Cincinnati CBA: Is it working?
Fourteen months after the CBA was announced, the team and the Port can point to tangible progress on some of the goals outlined in the document:

  • The stadium project is ahead of its inclusion goals on construction contracts, according to figures submitted to the Port. With $16.5 million in contracts awarded through June 30, minority-business enterprises hold 29.84 percent of all contracts. The goal is 25 percent. Small-business participation is 30.95 percent, above the project’s 30 percent goal. Women-owned companies have 2.65 percent of all contracts, compared to a goal of 7 percent.
  • The neighborhood’s housing strategy is taking shape through a contract signed last October between the Port and Seven Hills Neighborhood Houses, which is trying to raise $2 million for affordable housing in the West End. The Port is close to finalizing a housing study that will help it determine what mix of market-rate and subsidized housing the neighborhood needs in the future.
  • On the job front, 10 people have completed a 20-day training program for construction jobs at CityLink, a program that was required by the CBA. All 10 received job offers, according to the team’s press release. Turner Construction Vice President Bob Grace said at least four were hired by stadium subcontractors. A second class is expected to begin training in September.

Along with the progress, there is evidence of the deal’s limitations. For example, Brown said the community coalition was powerless to resolve a displacement controversy involving apartment buildings purchased by the team on Wade Street last fall. Brown attended the coalition meeting where the issue was first raised.

“They said, ‘We do not make comments on property acquisition,’” she recalled.

Ultimately, the dispute was settled through the intervention of the Cincinnati Planning Commission, which balked at one of the team’s zoning requests because of public pressure about displacement. To keep the project on schedule, the team reached a private settlement with displaced tenants. Brown said the coalition has yet to discuss how to prevent future displacement.

“At the beginning they were saying no one would be displaced,” Brown said. “And we of course felt otherwise. And then it happened. So, it just goes to show you how much more investment is needed.”

It’s not the only brouhaha to bypass the coalition. It took the intervention of city council in February to force action on the parking concerns of the Cincinnati Ballet, crowd-noise worries by tenants at Music Hall and the displacement of a West End catering business.

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Michelle Dillingham, CEO of Community Shares of Greater Cincinnati.

Team officials have been frustrated by the recurring controversies but Dillingham said they all could have been avoided if the city had insisted on an “authentic” community benefits agreement process.

“Part of the CBA also protects the developer because the community agrees not to slow down the project, not to oppose it,” Dillingham said. “What you get is total buy in.”

Some members of the community council are playing active roles in implementing the agreement. Brown works for Seven Hills Neighborhood Houses, which partnered with the Port to implement a new housing strategy for the West End. Blake, the former community council president, coaches in the youth soccer program funded by FC Cincinnati and services on the board of the team’s community foundation.

“They have done a lot for the community and I think they will do more,” Blake said.

Councilman Mann also thinks the deal is having a positive impact.

“There’s a lot of support in the West End and that support was improved and strengthened by the process by which the CBA was developed, negotiated and agreed to,” he said. “Because of the CBA there is more attention to housing, there is more attention to community interests than there otherwise would have been.”

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Todd Ingram, associate minister, Revelation Missionary Baptist Church

Todd Ingram said the impact of the community benefits agreement “hinges greatly” on the team’s future commitments to the community. Ingram is an associate pastor for Revelation Missionary Baptist Church, which sold its John Street property to the team in May.

A West End anchor since 1933, the church is looking at sites in the College Hill area to move its congregation of about 125 people. Ingram said the soccer stadium has the potential to improve the lives of West End residents, but he thinks the team will have more to say about that than the community benefits agreement it negotiated with the West End Community Council.

“How much money are you making and how much are you giving back? That’s going to be the question to FC,” Ingram said. “How much are you giving back?”

Like Earl Brown said at the start of this story: Money talks.

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