Under Armour’s Slam-Dunk Deal

Originally published in Slate on June 20th, 2016.
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It’s been a lucrative couple of years for Kevin Plank, CEO of Under Armour, the country’s second-largest maker of sports apparel. His company’s revenue has grown by more than 20 percent for 24 consecutive quarters, and its savvy sponsorship deals—with NBA MVP Steph Curry, pro golfer Jordan Spieth, and ballet dancer Misty Copeland—have turned the brand into a powerhouse that now can plausibly be mentioned in the same breath as Nike and Adidas. Under Armour’s expansion into health and fitness technology has even placed it in competition with the likes of Apple and Google.

Just as ambitious are Plank’s efforts in Baltimore, where Under Armour’s headquarters have been stationed since 1998. As part of an effort to grow the company’s HQ staff—from its current headcount of about 2,000 employees to 10,000—Plank is seeking to redevelop some 260 acres of mostly empty industrial land on the south Baltimore peninsula. In addition to a new Under Armour headquarters, Plank hopes to create what would amount to an entire new waterfront neighborhood, complete with shopping, dining, office space, parks, and nearly 14,000 residential units. It’s a real estate development project that could transform the city.

The area Plank has his eyes on, known as Port Covington, has been an underused eyesore for decades. But while many in Baltimore’s political class are cheering the project’s potential to create new jobs and stimulate the local economy, there’s good reason to worry that if the plan goes forward, it could end up leaving the city’s most vulnerable residents worse off than they already are, all while saddling the city with risk it can’t afford.

The problem is that Plank, despite being a self-made billionaire, wants a lot of help to make his vision for Port Covington a reality. To that end, his real estate firm, Sagamore, has asked the city of Baltimore for a record-breaking $535 million in so-called tax increment financing. TIFs, as these types of loans are known, are used to fund infrastructure by selling municipal bonds to private investors, and then property taxes generated by the new development are used to pay them back. Though beloved by titans of commercial real estate, TIFs tend to draw scrutiny because they divert so much money away from a city’s general fund. MuniCap, a consulting firm that Sagamore hired to analyze its TIF application, projects that Plank’s development would not yield property tax revenue for Baltimore’s coffers until about 2040, even as the site would require substantial city resources in the interim.

The size of the TIF that Plank has requested is unprecedented for Baltimore. At more than half a billion dollars, it would be the third-largest TIF deal for a private company in U.S. history. And though the money it would raise would go toward funding improvements like parks, roadways, and bike paths, rather than Under Armour’s new headquarters, Sagamore’s project in Baltimore must also be understood as a tool that would help fuel Under Armour’s continued growth.

At a time when Baltimore is still reeling from the mass unrest that followed the death of Freddie Gray in police custody last year, the deal—as it’s currently structured—strikes many locals as a handout to the well-heeled. They have a point.

“[We are] outraged that, one year after the world bore witness to the decades of disinvestment in poor neighborhoods and communities of color, city leaders would respond by bending over backwards to back a $535 million playground for the rich,” Charly Carter, the executive director of Maryland Working Families, a progressive political advocacy group, says. “This is the new Jim Crow—black and brown families subsidizing wealthy developers while our own neighborhoods crumble.”

Baltimore has a long record of inequitable public investment, with political leaders financing flashy projects in mostly white areas and profits rarely trickling back into the poor, black communities that need funding most. The fear now being expressed by local progressive organizations, housing activists, and labor unions is that, for all the prosperity it will bring Kevin Plank and Under Armour, Sagamore’s TIF plan may turn out to be just another chapter in Baltimore’s history of bad development deals.

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The campaign to remake Port Covington has been aggressive and well-funded. Sagamore has already spent hundreds of thousands of dollars on marketing the development to the public, and its forceful slogan—“#WeWill build it”—suggests that the project is a fait accompli.

Which isn’t far off the mark. The Baltimore Development Corp., a public-private agency, approved Plank’s $535 million TIF request in March, and the city’s Board of Finance backed it in April. Now all it needs is the Baltimore City Council’s final approval, which could come as early as August. Activists have urged the council to postpone its vote to give the public more time to comb through the 545-page proposal. But according to Councilman Carl Stokes, who heads the body’s economic development committee, Sagamore wants the deal approved by the end of the summer.

Tom Geddes, the CEO of Plank Industries, which serves as Plank’s private-investment vehicle, denies that Sagamore’s TIF request is anything more than a loan from outside investors to fund public infrastructure. “Some have mischaracterized the TIF as a ‘subsidy’ or a tax break. It is anything but,” he tells me. “There are no tax breaks for developers involved. There are no subsidies. There are no handouts.”

That’s semantics. There’s little question that Sagamore would benefit from the deal—MuniCap reported that Plank and his investors would earn $400 million more on the development with TIF financing than they would without. On top of the TIF money, the Port Covington project would be eligible for more than $760 million in additional tax breaks. As Barbara Samuels, a fair housing lawyer with the Maryland American Civil Liberties Union, has said, the idea that Sagamore is asking for anything but a subsidy is an insult to the public’s intelligence. “They claim it’s not a tax break, but it most assuredly is a tax break,” says Stokes.

Subsidies are meant to generate benefits for cities and are usually reserved for projects that would be too difficult to fund absent government financing. But right now, it’s not at all clear that Baltimore would benefit enough from the Port Covington deal to warrant such a massive public investment.

There’s no doubt the city needs more jobs. Nearly 7 percent of Baltimoreans are unemployed, and for young black men, that figure is 37 percent. The city certainly feels indebted to Kevin Plank and Under Armour, too—few other esteemed companies offer comparable employment opportunities for locals. Yet according to Sagamore’s own TIF application, after it’s built, Baltimore residents are expected to fill just a third of the nearly 35,000 permanent full- and part-time jobs projected for Port Covington; the rest of the new employees would live outside the city. And there’s no guarantee, under Plank’s current terms, that they would even earn a living wage. Baltimore’s minimum wage is currently $8.25 per hour and is supposed to hit $10.10 by 2018. A living wage in the city for a childless adult is $12.42 per hour.

Community activists also worry that the proposed Port Covington plan would exacerbate racial segregation and do nothing to address Baltimore’s affordable-housing crisis. While Sagamore has touted its (nonbinding) goal of making 10 percent of its residential units affordable, the company defines its market for affordable housing as families earning 80 percent of the area median income of $86,700 per year. Baltimore City’s median income, though, is $42,000. Carol Ott, the director of the Baltimore-based Housing Policy Watch, says if Sagamore is serious about making its units affordable, it needs to use numbers that actually reflect the city’s population.

There’s also the matter of how the TIF deal could impact state funding for city schools. The Baltimore Sun reported that the city’s rapid economic growth spurred by local tax breaks and smaller-scale TIFs led to an automatic $24 million cut in state aid to public schools over the past year. This happened because the state assumes Baltimore’s wealth has gone up—based on property values and resident income—but because many of these valuable buildings pay no property tax, little new revenue actually goes into the city’s coffers. Since the Port Covington TIF is far larger than any other project Baltimore has undertaken before, the risk of severe fiscal drain looms large. For now, the state has agreed to not reduce education funding for three years as the Maryland State Department of Education reviews its school funding formula.

“The problem is, in three years the state could very well say, ‘Hey local jurisdictions, this is on you. You get no break.’ Or, ‘You get only a partial break, since you decided this TIF project was in your interest,’ ” says Melissa Schober, whose daughter attends an elementary school in the city. “As a parent, I don’t know what we would do except move, the cut would be so severe and substantial.”

There’s another reason to be skeptical. Port Covington would be Sagamore’s first major undertaking in the world of commercial real estate. Besides the ongoing construction of a new hotel and the transformation of an old garage into office space, Plank’s real estate firm lacks a track record in development. “This is a brand new developer, we don’t know what they’re capable of,” says Lawrence Brown, an assistant professor at Morgan State University. “I don’t know why the city would feel comfortable giving so much of its development future to one entity like this.”

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If Sagamore gets its way, its nearly 600-page TIF application would be approved in just a few weeks—well before the next round of political leadership takes office in January. But local activists and labor unions want to see the plan slowed down, to ensure their concerns about quality jobs, affordable housing, and public education are properly addressed.

If local officials insist on moving forward, says Maryland Working Families director Charly Carter, advocates will demand a transparent process; a plan to help struggling neighborhoods near the development; and a “good jobs guarantee” with local hiring, full benefits, and living wages. “Most importantly,” she adds, advocates want a “clawback provision”—a contractual agreement with Sagamore—ensuring that “if the development falls through, our poorest residents aren’t left holding the bag.” (For example, if the expected jobs don’t pan out, or the property tax generated is lower than anticipated, or the developer walks away—local governments would still have to ensure that they don’t default on their bond payments and that Sagamore retains some responsibility.)

City leaders are discussing clawback provisions and other safeguards to protect Baltimore taxpayers if Port Covington goes belly up or underperforms, but at this point it’s not really clear what teeth these protections would have. In other municipalities, TIFs have left taxpayers with unanticipated shortfalls or have been used fraudulently by politicians with little oversight. In Chicago, nearly half of the $1.3 billion in TIF funds spent by the Rahm Emanuel administration between 2011 and 2014 went toward downtown gentrifying neighborhoods while blighted communities received little to no investment and saw decreased tax revenue for schools and public services. While those specific TIF funds may never have gone toward needy neighborhoods, these acts of financial engineering, which can place extra burdens on cities and on strained budgets, tend to only benefit the kinds of projects that make developers very rich.

“I think it’s being fast-tracked, it’s unfair to the taxpayer, and proper due diligence cannot be made so quickly on such a complex piece of legislation,” says Councilman Stokes. “It’s quite frankly unethical and doesn’t allow us to do any independent market analysis. We’re not facing a legal deadline, but we’re under a lot of pressure from the developer.”

Sagamore, which recently started a Change.org petition in support of its project, obviously doesn’t see it that way. “We have received tremendous and enthusiastic support from stakeholders across the city,” says Geddes, the Plank Industries CEO.“We’re excited to be a part of building something great in this city and proud that Baltimore is home to one of the largest urban renewal projects in America right now, a redevelopment that will bring tens of thousands of jobs at a time when the city needs a major economic boost.”

When I ask why the project is barreling forward so quickly, Sagamore’s president, Marc Weller, says that if Sagamore’s TIF is not approved as soon as possible, the city “may miss out on hundreds of millions of federal dollars that require TIF approval.” Specifically, he cites federal grant programs, like the Department of Transportation’s FASTLANE grant, which require cities to make local matching contributions in order to access funds.

But Weller made clear that government subsidies aren’t the only reason for the rush and that Under Armour’s growth is of pressing concern. The company, he says, “has simply outgrown its space” and therefore needs to “aggressively move forward with the construction of a new campus.”

Asked if the company will leave the city if the TIF deal falls though, Geddes answered, “the primary purpose of the Port Covington redevelopment is to allow Under Armour to grow in Baltimore City, and to keep the many direct and related jobs in Baltimore.” #WeWill see.

 

 

Can Affordable Housing Help Retain Teachers?

Originally published in The American Prospect on November 18, 2015.
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On December 1, Allison Leshefsky, an elementary school gym teacher in San Francisco, will be evicted from the rent-controlled apartment she’s lived in for the past ten years. She and her partner pay $2,000 a month in rent, but if their place were put on the market, it would likely go for at least $5,000 a month—far more than any public school teacher could afford. As of August 2015, one-bedroom apartments in San Francisco rented for an average of $2,965 a month, and two-bedrooms for $3,853. Leshefsky’s landlord, who manages and partially owns nine San Francisco properties, has gained notoriety for evicting or allegedly forcing tenants out, in order to rent their units for more money.

Leshefsky has decided to finish out the school year teaching in San Francisco, even if that means paying jacked up prices for an air mattress she finds on Craigslist. “I’m making a commitment to get through the rest of the year regardless of whose couch I’m on or whose overpriced house I’m in,” she says. “I’m making a commitment to my students to finish this out.” But then, she says, she’ll have to leave.

In recent years, a growing number of researchers, policymakers, and philanthropists have directed their attention to the relationship between housing instability and student achievement. A great deal of evidence has shown how homelessness and housing insecurity can negatively impact a student’s behavior, which creates problems not only for them but for their classmates and teachers as well. A host of educational interventions are being tried in conjunction with local housing authorities, and some cities are even tying housing vouchers to specific struggling schools—in the hopes that such requirements will reduce student turnover and increase school performance.

Yet despite the perennial quest for top-notch teachers, less attention has been paid to the relationship between educators and their housing. It doesn’t require a great stretch of the imagination to think that teachers’ instructional capacities could be impacted by conditions they face outside the classroom, such as high rents, or unsafe housing. “There is no possible way the city can recruit talented people and maintain them with the housing crisis here,” says Leshefsky. “Students deserve teachers that are secure in their homes, and when a teacher is not secure, they can’t be the most effective educator.”

The city of San Francisco seems to agree. Last month, San Francisco’s mayor announced a new plan, formed in partnership with the school district and the teachers union, to provide housing assistance to some 500 public school teachers by 2020. Elements of the plan include forgivable loans, rental subsidies, housing counseling services, and the development of affordable housing specifically for teachers. This month, 73 percent  of San Francisco voters approved a ballot measure that will help make this plan a reality.

Across the country, other variants of teacher housing developments have cropped up, or are in the works—though the motivations for them, and allies behind them, differ from city to city. From San Francisco, to West Virginia, to Philadelphia, the efforts to attract, or retain, teachers through subsidized housing is growing more pronounced, and debates over how such projects impact their surrounding communities are likely to intensify in the coming years.

MATTHEW HARDY, the communications director for the San Francisco teachers union, says the union has a three-pronged strategy to deal with the city’s housing crisis. The first involves fighting for higher wages. In December 2014, the union negotiated a substantial salary increase for teachers and aides—a raise of more than 12 percent over three years. “But if we just limited ourselves to that, we’re not going to be successful,” says Hardy, which is why the union has also been pushing for teacher housing—using surplus district property—and for broader affordable housing policies for all city residents.

“Of course San Francisco is a wonderful place, and some people are willing to make immediate sacrifices to get their foot in the door, but it gets to a point where teachers start to wonder if they should continue paying $1,500 a month for a tiny room or move to the suburbs [where salaries are higher and housing is cheaper] and make $15,000-$20,000 more,” says Hardy. “We need to find ways to support teachers early in their careers, but also those who are more experienced and might want to start a family or buy a home.”

“If affordable brick-and-mortar teacher housing were actually here right now, and not several years in the future, then there would be no doubt in my mind that I would have continued to stay in the district,” Leshefsky said, wearily.

A very different sort of housing crisis plagues McDowell County, West Virginia—a poor, rural area, with a population that’s fallen by 80 percent since the 1950s. Teachers aren’t being priced out, but few want to move there, and those who might be so inclined struggle to find attractive housing options.

In 2011, former West Virginia First Lady Gayle Manchin asked Randi Weingarten, the president of the American Federation of Teachers (AFT), to help her figure out a way to improve McDowell’s school system. They started to organize a coalition of public and private organizations to tackle not only educational issues, but also regional poverty. In a speech given in 2012, Weingarten called this effort “solution-driven unionism.” Rather than shut down a school that’s struggling, she argued, unions can push to strengthen them with wraparound services. Then “learning improves, the school improves, community schools become more attractive than private or charter schools, people return to them with new confidence, home values increase and communities are renewed.”

Part of the McDowell plan includes not just wraparound services for community members, but also new apartments to attract teachers who might not otherwise want to move to McDowell County. As the lead coordinator involved in the teacher housing complex told Governing, “You can’t expect someone to leave life on a college campus for an isolated area where they live in the middle of nowhere and don’t know anybody.”

“What we’re constructing is the first multiple-story building in the area in decades,” said Weingarten in an interview. “The housing will address three big issues: the high teacher vacancy rate, the dearth of available housing, and the need for economic development.”

WHILE McDOWELL COUNTY’S “teacher village” won’t be the nation’s first, others are generally found in urban areas, and have been constructed largely without the involvement of the local teachers unions. In fact, partners more closely aligned to the educational reform movement have led them—those with ties to charter school networks and organizations like Teach for America.

In 2012, then-Mayor of Newark Cory Booker, New Jersey Governor Chris Christie, leaders from Google and Goldman Sachs, and others gathered to break ground on the Newark Teachers Village—a downtown Newark development that houses three charter schools, a daycare facility, more than 200 subsidized teacher apartments, and nearly two dozen retail shops. The project received tens of millions of dollars in tax credits. (The Wall Street Journal reported on the event with the headline: “Viewing Newark as a ‘Blank Canvas’”.) The real estate development group that spearheaded the project, RBH Group, is listed as a Teach for America corporate sponsor, and one of RBH’s founding partners, Ron Beit, is the chairman of the board of TFA’s New Jersey chapter.

The Newark Teachers Union, an affiliate of the AFT, originally backed the Newark Teachers Village—though Newark teachers say that their now-deceased president, Joseph Del Grosso, did so without consulting union members. The AFT is an affiliate member of the AFL-CIO, a federation of labor organizations that includes construction unions, and some think Del Grosso supported the plan because it carried the potential to create new construction jobs, not because it was actually in the teachers’ interest. However, despite Del Grosso’s initial support, the union was ultimately uninvolved with the project.

“They basically shut out the public school teachers and the public school union,” said Weingarten in an interview. “Just like they shut out the community from their reform efforts, they shut us out too. Initially we had conversations [about the Teachers Village], and then we were stonewalled.” Had the AFT been involved, then the union likely would have invested pension funds into the project, which may have broadened, and diversified, the project’s mission, and given more stakeholders a say in shaping its development. The union could have also pushed to bring on different types of asset managers, like the AFL-CIO Housing Investment Trust, which they used in West Virginia and San Francisco. Ron Beit did not return repeated requests for comment.

Over the past couple years, similar teacher housing projects have opened up in other East Coast cities. In 2009, the Seawall Development Corporation established Miller’s Court in Baltimore, using millions of dollars in local, state, and federal tax credits—and another, Union Mill, a few years later. The lead developer, Donald Manekin, was a former board member of Teach For America, and said he originally got the idea to build teacher villages when he saw 100 new TFA members arriving in Baltimore each year. “We’d sit at the end of these board meetings and say wouldn’t it be great if there was a great place for teachers new to the city?” He made these remarks to Newsworks in 2013, as his company prepared to build another teacher housing complex in Philadelphia.

Teach For America’s vice president for administration, Matt Gould, told The New York Times that his organization backs the projects because they “allow [teachers] to have safe, affordable housing. It’s a recruiting tool.” Teach For America is also reportedly looking into New Orleans and Washington as additional cities to expand teacher housing.

I spoke with Thibault Manekin, Donald Manekin’s son, and co-founder of Seawall Development Corporation, about his work building teacher housing. “Really our goal was to provide Class-A apartments and space for teachers doing the most important work in our city, which is helping kids get an education,” he said. To do this, the Manekins provide teachers with a free fitness center, free parking, reduced rent, lounge space, and other amenities that one might find in a more expensive apartment building. (Their website describes the buildings as “an urban oasis”.) Manekin says his company is in the middle of a similar project in Springfield, Massachusetts, and helping others think through comparable developments in other cities. “Yeah, I think you’ll start to see this spread more,” he said.

I asked him if he thought Baltimore teachers had struggled to find safe or affordable housing before he and his father embarked on their projects. “I think the challenge was that teachers, often new to Baltimore, and new to the classroom, weren’t living with like-minded people, and so might be making bad decisions on where to live,” he said. “As a result of that it makes the job that much harder. We just wanted to provide them with a world class space at a significant discount.”

While safe and affordable housing was available, he went on, “you wouldn’t really be living with people in the same boat as you.” They wanted to establish a space where teachers could lean on one another outside of the workplace.

Weingarten says the union was not included in the Philadelphia project, and was only cursorily consulted with for the Baltimore developments.

BRANDEN RIPPEY, a Newark public school teacher who has been working in the district for 18 years, said he acknowledges that Newark needs to build better housing to attract high-quality teachers. “Newark isn’t San Francisco. You do need to work to draw people in, and some of the housing we have here is in bad neighborhoods, and there is crime,” he says. As well, most of Newark’s teachers live outside of the city, so the idea of enabling teachers to establish roots as residents within the community is something he also likes. “I support the idea of creating good, affordable housing for working class people. The problem is that [the Newark Teachers Village] is clearly designed for white, young professional types, at a time when we desperately need more housing for poor people of color.”

Rippey notes that the Teachers Village is located close to other redevelopment projects in downtown Newark. “It’s just becoming a little yuppie commercial district,” he says. “The reality is they have a vision for gentrifying the whole downtown.” Rippey believes that these projects serve as a way to easily import TFA teachers, and by extension, weaken union power. Whereas developers like Beit and Manekin see the teacher housing complexes as positive ways to build communal spaces for local educators, Rippey thinks they can serve as a vehicle to isolate new and relatively young teachers from the union and the broader community. “It’ll keep those teachers residentially, and almost culturally, segregated,” he says.

IN A WAY, these Teachers Villages function as sort of a camp experience. You may be making a two-year commitment to live and work in an unfamiliar city, one that perhaps you, or your family, worry is unsafe. You know that you’re going to be working hard, long days—and so living in close quarters with people going through similar experiences might be quite comforting. All in all, it appears to be a pretty good deal—you’ll be afforded lots of amenities and discounts, you’ll live in a place you know is secure, and you’ll have the chance to develop friendships with other “like-minded” individuals.

In 2013, Mark Weber, a public school teacher and an education policy doctoral student, wrote some strong critiques about these new teacher housing projects.

It’s the perfect scheme: Beit and his private investors get tens of millions of dollars in tax credits to finance the development. He then turns around and rents his commercial units to charter schools, which drain tax revenues away from the neighboring public schools (which could sorely use the money to shore up their crumbling infrastructures). Those schools then pay their young teachers, recruited from TFA, who then turn around and pay rent to Beit. So Beit’s managed to develop three revenue streams—tax credits, charter school rents, and teacher residence rents—all made possible by the proliferation of charters and TFA.

And here’s the real beauty part: If the neighborhood gets gentrified and property values rise, the increases accrue to the property owners—like Beit—but not the people who actually live in the neighborhood. Think about it: If these teachers were buying brownstones and condos, the rising property values would accrue to them. But, because they’re renters, and not owners, they don’t see any of the increase. Their presence will raise the value of the neighborhood’s properties, but they’ll get none of the reward (assuming everything goes according to plan).

I called Weber to discuss some of his thoughts in greater detail. He sounded skeptical that these subsidized projects had much value at all: Will they really help attract lifelong educators into the profession, or will they just serve as a nice perk for young teachers who wouldn’t stay in the classroom beyond a few years anyway?

“If these charter schools need young people who are willing to work long hours and do the career for just a couple years, then things like teacher villages are almost custom-made, because you’re not going to be buying condos, and it’s close to your work,” he said. “Is that sustainable? I would argue no if we’re trying to build a workforce that sees teaching as a lifetime career. We could continue to build, or we can ask ourselves if we’re paying teachers enough money. If you can’t comfortably live here without staying in subsidized housing, maybe that’s a problem.”

Others have also questioned whether this whole subsidized housing deal isn’t just a misplaced way to avoid paying teachers significantly higher salaries. An individual used to feel more comfortable entering the teaching profession—despite its lack of prestige or big paychecks—given the relative stability if offered: a middle-class life, solid health care benefits, and a stable pension to live on during retirement. Today, however, those sorts of guarantees are beginning to fall by the wayside.

“If you’re not going to offer good health care benefits, what are you going to offer to get people to join the profession?” asked Weber. “Some modest rent control in hip neighborhoods? That’s not going to help the neighborhood much, and that’s not going to be much of an incentive to go into teaching.”

MAYBE SUBSIDIZED HOUSING that targets young professionals won’t be what it takes to help attract career educators, yet it’s clear that cities do want to help recruit and retain educators who actually live in the communities in which they serve—an effort that may require more than just a salary increase (though that would help.) Whether it’s a Teach for America participant looking for a supportive communal space, or a mid-career educator with a family who wants to live closer to his or her workplace, thinking about the intersections between housing and teaching is something that even the most progressive unionists, like Rippey, believe we should be doing more of.

Weingarten defended the AFT’s McDowell and San Francisco projects, and contrasted them with the ones in Baltimore, Newark, and Philadelphia. “We’re not looking to create a boutique pipeline for some people to work in different communities, it’s not that,” she said. “It’s about creating affordable housing so people can establish roots in the cities in which they live.”

Still, even teacher villages more closely aligned to the reform movement are helping young teachers, and local nonprofit organizations, forge better ties with the communities in which they serve. “The amount of teachers that have actually stayed in the classroom and in Baltimore, and then gone out and bought homes has been really inspiring to see,” said Thibault Manekin. Of the 30 homes he and his father have built in Baltimore, he says 20 have been sold to former tenants of Miller’s Court and Union Mill.

Would Leshefsky be willing to live outside San Francisco and continue working at her school with a longer daily commute?

“No, I would not be willing to do a two-hour commute just to serve a community that I don’t belong to,” she said. “I’m one of the most constant people in my students’ lives right now, and I don’t think someone who lives outside the city can necessarily connect with their students in the same way. We’re all going through very similar struggles.”

 

The Wrong Way to Revitalize A City

Originally published in the February 2015 print issue of In These Times Magazine.
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Baltimore workers rally for fair urban development near the Horseshoe Casino construction site on April 20, 2013.

The pro-corporate American Legislative Exchange Council (ALEC) has come up with yet another strategy to bolster the power of big business. Republican lawmakers in Michigan plan to introduce an ALEC-backed bill that would ban “community benefits agreements” (CBAs), one of the few options local activists have to fight for equitable development. A CBA is a contract between community groups and developers of publicly subsidized projects. In exchange for community support, a developer might agree to offer quality jobs, living wages, affordable housing or environmental protections. ALEC’s CBA ban, which specifically prohibits a local minimum wage, would be unprecedented.

The contrasting stories of Baltimore and Buffalo, New York, two economically depressed cities that launched ambitious development plans, show what happens to workers and the poor when safeguards like CBAs are–and aren’t–in place.

The Inner Harbor myth

Baltimore was one of the first U.S. cities to rebrand itself as a tourist and entertainment hotspot in response to the painful post-war impact of deindustrialization and white flight. Beginning in the 1950s, Baltimore poured millions of dollars, through tax breaks and subsidies, into building up its Inner Harbor entertainment district and other attractions. By the early 1980s, these projects were bringing more than 18 million visitors to the city annually, leading many politicians and pundits to proclaim that Baltimore was in the midst of a terrific revival.

But it was never an equitable one. Between 1959 and 1995, Baltimore lost 75 percent of its industrial jobs, and by 2008, the city had lost a third of its population. Despite the tall, shiny buildings and bustling shopping centers downtown, blight and abandonment plague many corners of Charm City. As anthropology professor David Harvey wrote in 1992, “If people could live on images alone, Baltimore’s populace would have been rich indeed.” Instead, in 2012, more than 25 percent of the city lived in poverty, including 37 percent of the city’s children.

Meanwhile, the Inner Harbor is still drawing 14 million visitors a year and remains a point of pride for local leaders. In 2013, the city released plans to build up the Harbor even more over the next few decades. “Anything that’s great for tourists is great for locals,” Tom Noonan, CEO of Visit Baltimore, told the Baltimore Business Journal.

The approximately 1,500 restaurant and retail workers at the Inner Harbor might disagree. In 2011, United Workers–a human-rights organization led by low-wage workers–and the nonprofit National Economic & Social Rights Initiative co-published a report on Inner Harbor’s labor conditions that documented abuses such as chronic wage theft. The report profiled many workers, including Nadja Martens, a server at Hard Rock Café, and Jason Bandy, a server at Capitol City Brewing Company. Both saw big paycheck decreases during the winter months, when tourism was slow and tips were scarce. “During … November, December, January, February, 100 percent of the time I was not paid minimum wage,” said Bandy.

This report was the first investigation of its kind. “The formal measure of success for these public investments [in the Inner Harbor] has been a superficial assessment of whether a rundown area has been ‘cleaned up,’ whether customers are happy, whether businesses and investors are making money,” the report stated. “Job creation has been addressed as a simple matter of quantity–how many jobs are created–not of quality.”

Todd Cherkis, a Baltimore organizer with United Workers, puts it this way: “There’s the myth about the Inner Harbor, and then there’s the reality.”

A different approach

In 1994, in response to the bleak conditions, Baltimore citizens mobilized the nation’s first grassroots living wage campaign, fighting to establish higher wage standards for businesses that receive government subsidies. The campaign was historic, but activists won a watered-down victory: The new requirements applied only to city contractors, not all publicly subsidized developers.

Since 1994, more than 120 other municipalities have seen their own living wage campaigns, inspired by the original Baltimore activists. One was Los Angeles, which enacted a living wage ordinance in 1997. A year later, LA residents pushed for what would become the nation’s first CBA–a labor agreement tied to an incoming Hollywood shopping mall and entertainment complex. Dozens of cities have since negotiated their own CBAs; 28 were in effect nationwide as of 2012.

The story of the waterfront development in Buffalo, New York, provides a strong contrast to Baltimore’s. In 2004, the state-run Erie Canal Harbor Development Corporation (ECHDC) embarked on a plan to transform Buffalo’s waterways into a Great Lakes version of the Inner Harbor. Using a $350 million grant from the New York Power Authority, the ECDHC planned to give approximately $40 million in public subsidies to outdoor-sporting goods store Bass Pro, to be the anchor tenant, and Benderson Development, to build the retail store.

“When we found out about all this, we were really concerned about the size of public subsidies for private businesses, particularly for Bass Pro, a low-wage employer,” says Andy Reynolds, a communications organizer with the Buffalo-based non-profit Coalition for Economic Justice (CEJ). “We began to learn about community benefits agreements as a best practice, so we started a coalition to launch one of our own.” The result was the Canal Side Community Alliance, a coalition of more than 60 community organizations launched in 2009 to put public pressure on both developers and local political leaders. By 2013, the Canal Side Community Alliance was able to get the state to agree to a CBA. The project is still underway, but with less emphasis on retail and a greater commitment to local needs like good jobs, Buffalo’s Inner Harbor–in theory–will look quite different from Baltimore’s.

To be sure, CBAs are no panacea. If developers do not hold up their end of a CBA agreement, the community coalition must hold them accountable, which in many cases means going to court. Such sustained oversight is challenging and sometimes unsuccessful. And, as Peter Marcuse, professor emeritus of urban planning at Columbia University, writes, “CBAs … often provide only a limited reach for alternative means of making the planning process truly democratic.”

Still, CBAs are far better than nothing, and the fact that they are in ALEC’s crosshairs is a testament to their efficacy. As Matthew Raffol writes in Advocates’ Forum, “By organizing residents of low-income communities and granting them access to development planning processes, CBA coalitions transform these residents from objects of urban development policy to subjects who actively shape development decisions [and] exact a price on private capital that it would not otherwise incur.” In other words, when faith, labor and community groups come together to make demands on municipal projects, they shift the dynamics of urban power and set the stage for further demands.

Hope yet for Baltimore

In April 2013, hundreds of Baltimoreans rallied at the site of the new Horseshoe casino to celebrate a deal that local unions, with the help of Maryland state officials, had brokered with Caesars Entertainment Corp. The 1,200 permanent casino staff would be allowed to organize without management opposition, using a simple-majority “card check” process.

That victory is being used to fuel a push for fair development throughout the city. In October 2014, a new group called One Baltimore United–comprised of labor, faith and community organizations–rallied outside City Hall for higher-wage jobs, improved schools and better public services. “Our goal is to show that the Inner Harbor model is outdated,” says United Workers’ Cherkis. The coalition is keeping a close watch on future development projects and sees CBAs as one tool in its arsenal.

Cherkis expresses cautious optimism: “The landscape to address these issues is definitely changing.”