Changes to How Developers and Builders Do Business in Cleveland Introduced

Mar 22, 2023

Council recently introduced two pieces of legislation that will change how developers and builders operate in Cleveland.

The Community Benefits Agreements ordinance would establish a floor for what benefits developers provide for Cleveland – apprenticeship, internship and mentor-protégé programs, community meetings, neighborhood improvements, minority business enterprise, female business enterprise, Cleveland area small business, and resident hiring goals - when they seek city financial assistance through:

• Loans or grants
• Land transfers at below market value
• Development-associated capital infrastructure improvements
• Residential multi-family tax abatements and tax increment financing (TIF)

Establishing a “legally enforceable agreement” is important for several reasons. First, providing financial support from the city for development projects should elicit tangible benefits to Cleveland residents’ and neighborhoods. Second, front-loading negotiations with developers on community benefits, and including neighborhood residents early in the process, builds community support and strengthens local partnerships.

CBA’s will start when the city’s assistance is at least $250,000. Starting at this level all projects will be required to establish a plan to meet minority business enterprise, female business enterprise and Cleveland area small business goals, as well as resident and low-income resident employment goals.

For large development projects over $20 million, developers will work from a “menu” of additional community benefits they can provide or establish, as well as provide other benefits based on community input. “What’s enough” will be determined by the department director in consultation with the developer by using a scorecard evaluation, and Cleveland Citywide Development Corporation recommendations informed by the community and departments.

This ordinance will improve workforce and community benefits data reporting and transparency by directing the Office of Equal Opportunity (OEO) to develop a public-facing data dashboard. OEO will also send quarterly reports to Council and copies of CBAs to include in the legislative file. Council will holding several committee hearings on the legislation, bringing in developers, corporate and business leaders, labor officials and others to discuss the ordinance. Ord. No. 297-2023

Construction Reform

Community Benefit Agreement legislation will be coupled with Council legislation asking voters to approve a Construction Reform Charter change to give developers more tools and project delivery method options when doing public improvement work in Cleveland.

Contracts are currently awarded to whoever submits the "best proposal", but future projects would go toward whoever offers the "best value proposal."

The proposed charter amendment also spells out what delivery methods the city could use on public projects, such as competitive bidding, or design-build. Design-build and other types of project delivery are already used by the city, but the charter amendment would clarify those methods and spell them out in more detail. And, if approved, council would no longer need to pass an ordinance saying which type of method the city must use on a particular project. The vote on the charter change is expected to be held this fall. Ord. No. 298-2023.

These two ordinances are packaged with $10 million in American Rescue Plan Act funding for workforce development, ARPA funding for bonding relief for minority and small contractors, and professional services to develop a scorecard evaluation process for determining community benefits. Council recently passed legislation regarding this funding support.

Together these initiatives and legislation will maximize benefits to Cleveland neighborhoods and residents, and also build capacity and meaningful opportunities for MBE,FBE, and CSB contractors in development projects.