Structuring Development for Greater Community Benefit

Richmond Community Needs & Opportunities

Richmond Community Needs & Opportunities 

About the Richmond Community

The development of the UC Berkeley Global Campus presents a critical opportunity to address socioeconomic exclusion burdening Richmond residents and to improve the long-term economic vitality of the City of Richmond. Richmond’s past economic growth and slow economic recovery has failed to strengthen the economic stability of the majority of residents, particularly people of color, resulting in a weak local economy where residents struggle with high unemployment, economic exclusion, and chronic poverty. Forty percent of Richmond residents live in poverty, measured as twice the federal poverty threshold—a family of four with two children that earns less than $47,250 annually.

There are four priority areas where Richmond community needs and the capacity of the campus development coincide: employment, housing, education, and local business.

One out of five Richmond renters has an annual income under $20,000.

Employment. Employment in Richmond continues to be a fundamental challenge affecting the well-being of children, youth, and adults, as well as overall neighborhood stability. Richmond was hit hard by the recession and experienced continuously rising unemployment rates that surpassed the Contra Costa county, state, and national levels. The city’s unemployment rate has decreased since the 2010 all-time high of the past decade at 18.5 percent, but remains above the national unemployment rate, reflecting a statewide trend of slow economic recovery. According to the June 2015 Bureau of Labor Statistics report, Richmond had an unemployment rate of 5.6 percent,12 slightly above the national unemployment rate of 5.3 percent13 and, more notably, well above the San Francisco metropolitan area’s 4.2 percent.14

The benefits of the shifting labor market have not been equitably distributed. Underemployment and unemployment are substantially higher among young adults, formerly incarcerated residents, immigrants, and others with additional barriers to employment. For example, 78 percent of formerly incarcerated Richmond residents are unemployed, according to a recent survey.15 Communities of color often disproportionately suffer during downturns in the economy and slow economic recovery. July 2015 labor reports show that unemployment rates in California among Caucasians is 6.4 percent, 7.8 percent among Latinos, and 12.9 percent among African Americans—more than twice that of Caucasians.16 While African Americans are 7.3 percent of the total workforce in the East Bay, they are 19.5 percent of the unemployed workers.17 Richmond unemployment trends are no exception to racial economic disparities in the state: young black men between the ages of 16 and 24 in Richmond have the highest unemployment rate at 36 percent.18

Furthermore, Latino and African American workers are underrepresented in occupations with the highest median wages. Among the 15,000 workers in the East Bay who are Laborers and Helpers, the median wage is $14 per hour, and more than 50 percent of workers are Latino, while Latinos are 20 percent of the total workforce. In the science, engineering, and computer-related occupations, the median wages range from $37 to $46 per hour. In these higher paying professions, the Latino and African American populations combined are less than 10 percent of the workers, even though they are 27 percent of the total workforce.19

Housing. Major development projects like the Berkeley Global Campus are inextricably linked to issues of housing affordability and inclusion. The Berkeley Global Campus is already changing the way Richmond is perceived; and as a major employer, it will host workers who want to live close to their workplace. Both factors would increase the demand for and value of housing in the city. Richmond homeowners will likely welcome increased property values, but many Richmond residents are renters for whom increased housing demand may do more harm than good. The increased housing demand brought about by the new campus may contribute to increases in rent, threatening to make housing less affordable for low-income residents. 

More than 9,000 Richmond residents (48 percent of all renters) are low-income renters already overburdened by their housing costs, meaning that they pay more than 30 percent of their income toward housing. One out of five Richmond renters has an annual income under $20,000. In the neighborhoods across Interstate 580 from the project site, 25 to 50 percent of all households are lowincome, cost-burdened renters. With no disposable income, these residents are particularly vulnerable to displacement in the event that their housing costs increase at a greater rate than their income. The effects on housing affordability are likely to have highly racialized outcomes, as Black and immigrant communities were disproportionately targeted for sub-prime lending and have higher percentages of renter-occupied households. 

Major development projects like the Berkeley Global Campus are inextricably linked to issues of housing affordability and inclusion.

The City of Richmond is projected to need an additional 743 units of housing for low and very low-income residents over the next eight years, according to the Association of Bay Area Governments Regional Housing Needs Assessment.20 In addition to expanding the stock of affordable and available housing for low-income workers, the existing stock of affordable housing must be preserved. While the City of Richmond is developing new land use designations in the area around the planned campus through the Richmond Bay Specific Plan, the housing in this project is unlikely to be sufficient to meet the demand for affordable housing. Financing for affordable housing is extremely limited across the state, particularly in cities like Richmond where local tax revenue is limited. 

Education. An estimated 28 percent of youth in Richmond live in poverty. According to the most recent data available, only one third of the graduates from the three public high schools in Richmond had completed the courses required to be admitted to a California State University.21 Finishing college increases a person’s wages by more than 40 percent on average. However, the education system in Richmond is not fully cultivating its potential for lifting youth out of a cycle of poverty.

Educational attainment in key classes such as Science, Technology, Engineering, and Mathematics (STEM) and University of California/California State University requirements fall short of the pressing needs of Richmond students. Statistics from Richmond High School offer a glimpse into the state of education for youth in Richmond: in the 2013 Annual Yearly Progress report from the California Department of Education, 16.1 percent of Black students and 28.6 percent of Latino students from Richmond High met proficiency rates in math. While tests do not provide a full picture of aptitude, they do uncover broader issues within Richmond’s schools that cannot go ignored. Advanced placement courses and other courses help students gain skills and attain employment after high school, such as Health Science and Medical Technology, Building Trades and Construction, and other professional fields. Such courses, however, are under-resourced.22

Wealth allows families and communities to weather periods of hardship and pass on economic opportunity to the next generation.

Community Wealth. In addition to income inequality, Richmond residents face great wealth inequality. Wealth accumulation is critical for communities to overcome chronic poverty and achieve long-term economic growth; wealth allows families and communities to weather periods of hardship and pass on economic opportunity to the next generation. The wealth of a typical American household fell by onethird between 2005 and 2010. The loss hit African American families hardest, for whom wealth fell by 60 percent, while white families lost 25 percent of their wealth. The result is an even wider racial wealth gap than before the recession. In 2010, the median household net worth of white families was $110,729 while net worth of Latino and African American households was $7,424 and $4,995, respectively. Richmond’s wealth inequality could be mitigated through the increased opportunities for low-income residents, particularly people of color, to own a business, a home, retirement accounts, investments, land, or other assets.23

EXISTING COMMUNITY INVESTMENT RESOURCES 

Even without the forthcoming development of the Berkeley Global Campus, the previously highlighted needs of the Richmond community demand immediate attention and investments. However, the City’s ability to meet its economic vitality goals in coming fiscal years and to adequately address economic exclusion is crippled by inadequate funding. Currently, both public and private community development efforts are insufficiently funded and face future financial uncertainty as well as other obstacles to adequately address the economic needs of the local community. 

The City of Richmond faced a budget shortfall of $7.4 million for its 2015-16 budget, and some expect it to reach $9 million this year.24 This is the city’s fourth consecutive year of a budget deficit. Richmond also faces severely diminishing Housing and Urban Development (HUD) resources as a result of the devastating budget cuts from sequestration and inadequate federal budget funding levels. For FY2015, the City received $1,092,323 in Community Development Block Grant (CDBG) funding, and $389,071 in Home Investment Partnerships Program (HOME) funding, a drop of 2 percent and 7.4 percent, respectively.25 These reduced funding levels are hardly sufficient to address the gross economic exclusion in Richmond. Furthermore, the City itself acknowledges difficulties in administering HUD grants in recent years, citing obstacles that “delayed the completion of past projects” and “eliminated a key source of leveraged funding for both projects and staffing.”26

In addition, Moody’s Investors Service recently downgraded the City of Richmond’s issuer rate to Baa1 from A1, pension bonds to Baa2 from A2, and placed the city and wastewater enterprise ratings under review for possible downgrade. Moody’s report cited total assessed valuation (AV) remains well below pre-recession levels despite tax base growth, and the city’s $45 million in cumulative deficit over the last six years. The report also noted that “further deterioration of financial position and liquidity through continued deficit spending” could lead to even lower ratings.27

Private foundation investment cannot adequately substitute for the lack of public funding in the City of Richmond. The Richmond Community Foundation is the only local foundation and has a small mini-grants program. The California Endowment’s “Healthy Richmond” is a major grant-making initiative, but it is a 10-year commitment that is designed to conclude in 2020.28 Given the large scale of unaddressed community needs, it is not feasible for private foundations to solely provide investments needed, let alone offset any new economic setbacks for Richmond’s low-income communities. 

The Berkeley Global Campus presents a historic investment opportunity that could approach the scale of existing needs. Executive Director of the Oakland-based East Bay Economic Development Alliance, Darien Louie, estimated that the total economic benefit to Richmond could reach $4 billion at build-out.29 However, development of the campus does not automatically guarantee that the existing Richmond community receives benefits from the project. In fact, it does not generate tax revenue from local property taxes the way a typical private development project does. Public agencies do not pay property tax or sales tax, the primary sources of revenue for the city. But it does require public infrastructure, which the city may help finance through an infrastructure financing bond. 

The Berkeley Global Campus presents a historic investment opportunity that could approach the scale of existing needs.

Policy Framework for Maximizing Community Opportunity

There are several spheres of policy and practice in which action will be necessary for achieving the broadly inclusive impact that many in the community and at the University have envisioned. This section offers an overview of the policy areas and roles of the primary institutions, before delving more deeply into the importance of the finance model. To maximize impact, partnerships are often required that advance a shared goal and integrated strategy based on the unique capacity and mission of the institutions involved. This is why many of the most important spheres of policy for this project involve agreements between key players. 

This brief description of institutional roles and policy priorities is based on analysis of the authority, capacity, and missions of the city, the University, and community-based and service organizations. For the City of Richmond, the University and national lab, and service providers and non-profit organizations, we briefly list the areas of policy and practice that are most relevant to achieving a bold vision of community inclusion. 

This image of the bay was taken by Rasheed Shabazz

CITY POLICY 

  • Housing policy to protect low-income renters and housing development to meet additional demand
  • Leveraging its government role to secure binding commitments to community benefits
  • Programs supporting pathways to campus opportunities, including employment training, small business support, and youth programs
  • Coordination and monitoring of Community Benefits Agreement implementation
  • Land use and infrastructure in the surrounding neighborhood to support campus development, maximize community connections, and facilitate economic cluster effects.

UC BERKELEY AND LAWRENCE BERKELEY NATIONAL LABORATORY 

  • Community Benefits Agreement with community stakeholders and the city delineating specific goals and strategies to achieve community benefits
  • Development Agreement with master developer that integrates all relevant commitments from the Community Benefits Agreement
  • Project Labor Agreement that integrates all relevant commitments from the Community Benefits Agreement
  • Modifications to various UCB and LBNL policies related to employment and procurement to achieve community benefits goals. 

SERVICE PROVIDERS AND NON-PROFIT ORGANIZATIONS 

  • Engagement of community residents in planning, monitoring, advocating, and supporting community benefits commitments and activities
  • Development of Community Benefits Agreement goals aligned with community needs and priorities
  • Coordination and monitoring of Community Benefits Agreement implementation
  • Design and implementation of programs connecting residents to campus opportunities, including educational programs, employment training, small business support, and youth programs.

EFFORTS TO ESTABLISH A COMMUNITY BENEFITS AGREEMENT

At the time of this report’s publishing, the university had not yet entered into a Community Benefits Agreement. However, there has been progress over the past year, thanks to the efforts of community, city, and university leaders. 

  • Richmond community groups ACCE, Safe Return Project, and CCISCO began organizing in 2013 to engage the broader community and the university in developing a CBA. In response, the university established a Community Working Group, and the group is now facilitated by an outside consultant. The working group is tasked with submitting recommendations to the Chancellor for a CBA. The Chancellor appointed the Community Working Group members, and the group is chaired by UCB and LBNL.
  • The three community groups joined together with the Contra Costa Labor Council, the Contra Costa Construction Trades Council, and AFSCME 3299 to form the Raise Up Richmond Coalition. The coalition organized to inform and engage Richmond residents, community groups, interfaith organizations, students, and UC workers. The elements of the CBA that the campaign is calling on the university to agree to include housing, job training, employment, small business procurement, and education policies.
  • The campus Community Working Group has established committees to develop draft recommendations related to local hiring, workforce development, local procurement, and housing.
  • In February, the Richmond City Council adopted a resolution to “encourage the UC System and regents to enter into a Community Benefits Agreement to ensure that Richmond receives equal benefits from the UC Berkeley Global Campus.”i
  • In late May, UC Berkeley Chancellor Nicholas Dirks presented an open letter to the Richmond community, committing to “signing binding agreements that will ensure Richmond benefits from the campus’s development and operations that go far, far beyond [the university’s] legal obligations.” Chancellor Dirks reiterated the university’s commitment to collaborate with the Richmond Community Working Group, stating, “When the Working Group process is completed, [the university] will enter into appropriate agreements that will define and guarantee the benefits that will accrue to the community as a result of the project.”ii

OPPORTUNITIES THROUGH A COMMUNITY BENEFITS AGREEMENT

A critical tool that ties together much of these areas of policy is a Community Benefits Agreement (CBA). A CBA is “a legally enforceable contract, signed by community groups and by a developer, setting forth a range of community benefits that the developer agrees to provide as part of a development project.”30 Through a CBA, the development of a project has the added values of inclusiveness, enforceability and accountability, transparency, coalition-building, efficiency, and a clarity of outcomes. These agreements establish legally binding and measurable objectives and actions to be carried out during the project.31 See the following sidebar for a brief history of efforts to establish a CBA for the Berkeley Global Campus in Richmond. 

The policy and program proposals coming out of community advocacy and Working Group planning provide a useful starting place for understanding the importance of the financing of the campus. Some of the policy recommendations above do not require significant financial investments. But to reach the necessary scale, some require financial resources beyond what the City of Richmond can currently afford. 

Community proposals that will require significant investment include:

  • investment in workforce development programs that support historically excluded workers;
  • funding for a program to assist low-income tenants at risk of displacement;
  • support toward affordable home ownership by investing in an Affordable Housing Trust Fund that will subsidize the development of affordable housing units and fund rent-toown and down payment assistance programs;
  • investing in the creation of a Community Land Trust to ensure a long-term stock of affordable housing;
  • support for Richmond teachers with training, curricula, and equipment;
  • creating internships and experiential learning opportunities for high school and community college students to build career pathways in Science, Technology, Engineering, Arts and Math (STEAM) fields;
  • sponsoring an “anchor opportunity study” analyzing campus purchasing opportunities for new, small, minority-owned, and worker-owned businesses; and
  • creating a fund for launching and building capacity of small, minority-owned, and worker-owned businesses offering goods or services to the campus

Other policy recommendations that do not require additional financial resources include:

  • adopting a hiring policy targeting local and disadvantaged workers for Berkeley Global Campus positions;
  • instituting a living wage policy, and extend union bargaining agreements to the new campus;
  • creating a process for coordination of UC programs with community input and transparency;
  • ensuring that UC Berkeley and LBNL staff meet regularly with a community business working group to identify new opportunities for collaboration; and
  • structuring contracts and the contract bidding process to encourage inclusion of small, minority-owned, and worker-owned business. 

More detailed analysis of these and other strategies can be found in the Haas Institute’s Anchor Richmond report, as well as by attending meetings of the Community Working Group or the Raise Up Richmond Coalition.