Community benefits agreements: The key to unlocking your next construction project 

In East Boston, Mass., the utility Eversource put forward plans to develop a new electrical substation on an undeveloped piece of land in 2014. But it took a full decade before Eversource could move forward with the project. The delay wasn’t because of supply chain issues or wobbly finances. Instead, Eversource wound up in a prolonged legal fight with neighbors in the primarily Spanish-speaking neighborhood, who felt inadequately informed of the plan and took to the courts to defend themselves.

This kind of long, litigious delay isn’t uncommon, particularly today with America on a building spree. Construction spending on manufacturing has doubled since 2021, data centers are in hot demand and federal legislation has bolstered energy and transportation infrastructure spending across the U.S.

With this growth comes heightened scrutiny over how projects affect local communities – and how communities play a role in the project’s development. While community input is necessary for securing permits, the process can be long and daunting for companies. And if it’s not done right, it can be acrimonious, resulting in lawsuits and appeals that throw a project way off-schedule.

That potential for delay is, in part, why there’s been so much public policy focus on streamlining permitting and siting processes to speed up project approvals. Businesses tend to look at community input as burdensome and challenging — something to just get through in order to get going. But let’s be candid: No community wants to be used for cheap land or easy access to resources. Communities that face economic hardships or environmental challenges want assurance that a new project will provide benefits, especially if the project will use important natural resources or add even modestly to local pollution.

A rise in community benefit agreements 

By addressing controversial topics and involving local stakeholders early, a well-managed community input process can move smoothly, accelerate construction, provide certainty and reduce the risk of litigation. Community benefits agreements (CBAs) are an important tool to achieve that outcome. These formal contracts between developers and nearby communities spell out how a project will benefit the area. They can even improve the proposed project. For instance, traffic flow can be optimized, or exposure to sensitive receptors can be minimized.  

CBAs have been used sporadically and on an ad-hoc basis for decades, but have become increasingly common in the past five years, with federal and state legislation designed to strongly encourage or require them occurring in New York, California and Massachusetts. 

Around the same time that Eversource was trying to build its electrical infrastructure, a coalition of community groups and city officials in the nearby coastal city of Salem was finalizing a CBA with the developer of a new facility to serve the region’s budding offshore wind industry. Among its benefits: job pathways for local residents, funding for the public school’s career technical education, and commitments to electrify port equipment as it became available. Notably, it took only 14 months for the developer, the city and stakeholders to reach the agreement and get on the same page.

Not every CBA is welcomed. In East Boston, after seven years of struggle, Eversource and two community groups attempted to develop a CBA, too. But Eversource received even more blowback from the community when it became clear that the ratepayers themselves might have to shoulder the costs of the proposed benefits.

Creating effective agreements

When planning a significant project requiring community input, companies can reach out early to key stakeholders from the community, including neighborhood groups and leaders from churches and cultural and civic centers. The outreach process could launch as soon as a project site is selected. The idea is to engage with the community before any opinions or plans have fully hardened so public input can be incorporated into planning, design and other parts of the process.

Companies should be clear about the nature of the “community.” While local or state officials will undoubtedly be involved, a project’s closest neighbors may have very different priorities from the broader municipality in which it’s located. Ideally, a well-organized coalition of community-based organizations will speak through self-chosen leaders.

Community meetings shouldn’t be limited to traditional company or government spaces, or business hours. Businesses can seek community input at major neighborhood events and festivals, school fairs, farmer’s markets and church and cultural programs. And they should be cognizant of translation and interpretation services that might be needed to get full neighborhood input.

The needs, desires and concerns expressed at these meetings can guide the process for and drafting of the CBA. For instance, the community and the company could decide together on a schedule in which the company develops the initial draft, presents it for discussion at subsequent meetings and takes comments that can be incorporated as warranted. That may require childcare, refreshments and other amenities to facilitate residents’ participation.

Terms of the agreement may range from investments in local education and human services, workforce development and project labor agreements, environmental protections and mitigation, and infrastructure funding and local purchasing agreements. For example, in Salem, the developer agreed to $56,000 in annual education-related spending, while committing $108,000 annually towards workforce development, including local hiring goals, scholarship and apprenticeship programs, and explicit targets related to diversity and union labor. The agreement also included annual investments of $100,000 in city services. The specifics will vary, but most CBAs include local hiring commitments that ensure the community has access to jobs generated by the project. 

Clearly stating the shared understanding of how the community and the company will co-exist — and what a successful project will mean for both — sets the company up for a productive partnership and avoids costly delays as the project takes shape.  

Massachusetts appears to have learned from its challenges like East Boston. Last year, the state finalized legislation that requires a robust public participation component in the process to site and permit energy infrastructure. These requirements, which include guidelines for CBAs, came as part of a broader statute designed to accelerate the build-out of energy infrastructure. By pairing new community input requirements with a more streamlined permitting process, Massachusetts showed it believes robust and early public participation doesn’t have to be a burden to projects — and can actually be an asset for efficiency. 

The post Community benefits agreements: The key to unlocking your next construction project  appeared first on Trellis.