Community Benefits Snapshot: Stellantis Community Benefits Agreement (Negotiated under Detroit’s Community Benefits Ordinance)

Highlights

In 2019, Stellantis — at the time known as Fiat Chrysler — announced a $2.5-billion plan to expand its Mack Avenue facilities and modernize its Jefferson North Assembly Plant in Detroit. Given the project’s size and the incentive package it received from the city of Detroit, the expansion triggered Detroit’s community benefits ordinance (CBO). In its agreement with the city, Stellantis promised the project would provide $13.8 million in community investments — including $5.8 million for workforce development, $5 million for education, youth programs and scholarships, and $1.1 million for an impact neighborhood fund, among other benefits — and nearly 5,000 jobs. Stellantis also committed to protecting the quality of life of nearby residents and to comply with all existing federal, state and local laws.

Context

About the project and involved stakeholders: Stellantis’ $2.5-billion plan to expand its Mack Avenue facilities and modernize its Jefferson North Assembly Plant in Detroit triggered Detroit’s community benefits ordinance (CBO), requiring the developer to sign a community benefits agreement with the city — an agreement based on discussions and negotiations with impacted community members. As a result, a Neighborhood Advisory Council (NAC) made up of nine Detroit residents impacted by Stellantis’ expansion project negotiated a community benefits agreement for the project on behalf of the city.

Engagement

Under Detroit’s CBO law, if a developer’s project falls within city limits and is valued at $75 million or more and either receives at least $1 million in property tax abatement or a city-held land sale or transfer valued at $1 million or more, they are required to sign a community benefits agreement with the city — an agreement based on discussions and negotiations with impacted community members. [For a full detailing of Detroit’s CBO process, please see WRI and DFP’s working paper.]

After the project triggered Detroit’s CBO, the city first determined the project’s impact area, then held initial public meetings to elect and appoint the NAC that would ultimately negotiate the community benefits agreement with the developer. NAC members must live within the project’s impact area and must be initially nominated by impact area residents. Out of this pool of nominees, two members are elected by impact area residents, four are selected by the Planning and Development Department, two are selected by at-large City Council members, and one is selected by the City Council member with the largest portion of the project in their distric 

Before the CBO process was publicly announced, the city of Detroit and Stellantis signed a memorandum of understanding (MOU) and agreed to complete the community benefits process within 60 days of announcing the project and triggering the CBO process. In Detroit, this process often takes two to three months. As a result, the NAC had an expedited timeline to be created, understand the scope and impacts of the project, and negotiate benefits for the impacted community.

The entire process, including negotiations with Stellantis and ultimately approving an agreement that was successfully approved by the City Council took about six weeks.

Benefits

Benefits and commitments in the Stellantis agreement were negotiated by the NAC, based on project impacts and community needs identified by the NAC and impacted residents. These included additive benefits — or benefits that are the direct result of the CBA, and not benefits that would occur regardless due to existing programs or laws — from the developer, commitments from the developer to mitigate negative project impacts, and commitments from the city.

Additive benefits and commitments from the developer:

• 4,950 jobs, with priority hire for impact area residents, Detroiters, returning citizens (residents who were previously incarcerated) and veterans.
• $500,000 for rehabilitation of homes owned by Detroit Land Bank Authority (DLBA).
• $1.8 million in home repair grants in the impact area (up to $15,000 per grant).
• $800,000 to fund projects, home repair programs and park improvements, in local neighborhoods.
• $5.8 million in state funding administered via the Detroit Employment Solutions Corporation (DESC) to support employment opportunities for Detroiters.
• $4 million to fund manufacturing career academy programs at Southeastern High School and Career and Technical Education (CTE) facilities for youth and adults. The city also committed to raise $4 million in additional support for manufacturing career academy programs.
• Commitment to develop an automotive manufacturing program at Wayne County Community College.

Commitments to mitigate project impacts:

• $700,000 for a grant program to support residents most impacted by new plant construction to retrofit their homes to reduce noise pollution.
• Removing trees and weeds in city- and DLBA-owned vacant lots, as well as regular maintenance in the impact area.
• Constructing a wall along a street near the plant to serve as a sound barrier for nearby residents.
• Planting ivy and adding murals along barrier wall.
• Building and maintaining a stormwater retention pond surrounding the plant, and adding vegetation and landscaping buffers around the pond.
• Determining truck routes around the plant to accommodate traffic to nearby school and other locales, and establishing a toll-free number for residents to file traffic complaints related to the plant.

City commitments:

• $50,000 to the Timbuktu Academy of Science and Technology to improve its computer lab and library.
• $500,000 to the Grow Detroit’s Young Talent summer program.
• $500,000 for scholarships for students living in the impact area.
• Leveraging two existing small business programs, Motor City Match and Motor City Restore, to support new and small businesses in the project impact area.

Oversight

Since Stellantis’ project was subject to Detroit’s CBO, its agreement with the city of Detroit was subject to the ordinances’ built-in enforcement mechanisms, which include biannual compliance reports written by Detroit’s Civil Rights, Inclusion, and Opportunity (CRIO) department and potential for punitive action — such as fines or lawsuits — from the City Council if Stellantis failed to comply with the agreement.

CRIO monitors the projects subject to Detroit’s CBO. CRIO sends developers a biannual CBO status request letter and mandatory reporting form, requiring the developer to provide updates on their commitments. If projects aren’t hitting targets, CRIO labels the provision “off track” in its biannual community benefits report, notifies the company of non-compliance and provides the company with an opportunity to address the issue. These reports are shared with the respective NAC and the City Council and are made available on the city’s website.

Developers’ failure to fulfill their commitments can also be investigated by CRIO’s enforcement committee, which is composed of city officials and one NAC representative (who does not have voting power within the committee). The NAC can collect complaints from community members and report them to the enforcement committee, or request the committee investigate alleged violations. If the enforcement committee finds a developer to indeed be in non-compliance, the committee must draft a plan to enforce the project agreement and mitigate violations. Once an investigation is complete, the committee presents its findings to the NAC, developer and complainant.

CRIO and its enforcement committee, however, are not authorized by the ordinance to issue any fines or injunctions. If the NAC disagrees with the enforcement committee’s findings, it can appeal to the City Council. If the City Council finds that CRIO didn’t adequately enforce the CBO to get a developer back on track, it can impose penalties, including requiring city-provided subsidies to be paid back, canceling land transfers or land sales and charging developers fees. The city can even sue the developer if it feels the latter is in breach of contract. 

Strengths of Stellantis CBA (Negotiated under Detroit’s CBO)

Detroit’s CBO required a community benefits agreement and provided a framework for community engagement. Some interviewees pointed out that the CBO gives the community a guaranteed seat at the table in certain development projects. Despite the shortcomings of the Stellantis community benefits agreement, affected residents had a formal framework with which they were engaged and allowed to inform the community benefits agreement. Overall, interviewees said the CBO helped provide a more even playing field between developers and communities.

Challenges and Gaps of Stellantis CBA (Negotiated under Detroit’s CBO)

The 60-day negotiation period was too short. NAC members interviewed said the six-week period to negotiate with Stellantis was not sufficient to understand the project’s complexities and potential impacts. One interviewee said:

“We’re experts in the community. But we’re not experts in air filters … they did not give us the opportunity or the time to do the research that we needed to do for our communities to make sure that certain things happened — or that we got the information that we needed to make an informed decision.”

By giving Stellantis the freedom to walk away from the project during the CBO process and forcing NAC members to make decisions without having sufficient time for inquiry — particularly into the project’s potential environmental and human health impacts — some NAC members said the MOU put the NAC at a significant disadvantage during negotiation. As a result, some interviewees called for extending the NAC negotiation timeline.

Community members perceived benefits to be insufficient when compared to the earnings and net worth of Stellantis. Several interviewees shared that they felt the dollar value of the benefits — $13.8 million — agreed to by Stellantis was a drop in the bucket compared to the billions of dollars the company earns every year. One interviewee shared how during the negotiation process, Stellantis did not agree to any new benefits without eliminating one of the initial benefits it had offered, resulting in a zero-sum type of negotiation process. As a result, some interviewees questioned whether the community benefits agreement was indeed a fair deal for the community, suggesting that the value of community benefits should have been proportional to the company’s earnings.

Enforcement of agreement viewed as inadequate by some community members. After the expansion was completed in 2021, local residents began complaining about strong odors and air quality impacts. An investigation by the Michigan Department of Environment, Great Lakes and Energy (EGLE) revealed that Stellantis was releasing volatile organic compounds (VOCs) and hazardous air pollutants (HAPs), which can cause or exacerbate respiratory illnesses including asthma, and have been linked to cancer.

EGLE issued three air quality violations for Stellantis’ Mack Avenue facility — the first in a series of violation notices that continued until May 2023. However, just before EGLE started issuing these violations in September 2021, CRIO’s August 6, 2021 Stellantis project compliance report listed all 66 commitments as either “on-track,” “fulfilled,” or “not started,” raising questions about the validity of the CBO’s monitoring mechanism, given that residents were already complaining of bad odor; eye, nose, and throat irritation; headaches; and other health issues. Later compliance reports (published February 4, 2022; August 10, 2022; and November 15, 2022) listed Stellantis’ commitment to “abide by and comply with all existing ordinances and federal, state and local laws, including the City’s Community Benefits Ordinance” as “off track,” with a compliance plan pending with EGLE.

In 2022, EGLE fined Stellantis just over $136,000 for air quality violations and mandated that the plant install new piping systems, including one that manages energy use and improves air quality at a nearby high school. In total, Stellantis will pay around $283,000 to settle with EGLE and the state of Michigan. Several advocates labeled these fines as a mere slap on the wrist for a multi-billion-dollar company. Additionally, the penalties paid by Stellantis will go to the state of Michigan, not the city of Detroit or local residents, raising concerns that these penalties will not rectify the environmental injustices created in Detroit. To this end one interviewee said, “Money that [Stellantis] has had to pay, as far as a fine, is not even going to impact or touch the people that [Stellantis] really impacts. So, whatever that money is being spent on, it doesn’t matter, because it’s not benefiting the people that [the project’s] really affecting.”

Despite EGLE and the U.S. Environmental Protection Agency’s actions under the Clean Air Act, CRIO’s enforcement committee has not referred Stellantis to the City Council for further punitive action.  Some interviewees said this is evidence that the CBO’s enforcement mechanisms are not effective, or being adequately enforced. 

Some interviewees felt that the project perpetuated environmental injustice and called for the inclusion of a racial equity framework in the CBO process. Given that Detroit and southeast Michigan exceeded ozone pollution limits set under the Clean Air Act at the time of the project’s development, and that increased pollution was anticipated from the expanded plant, Stellantis was also required to ensure that overall emissions wouldn’t increase in the broader metro Detroit nonattainment area under the Clean Air Act. As a result, Stellantis agreed to reduce emissions at one of its existing plants in Warren, Michigan by 10%. Notably, Warren is a predominantly white, higher-income city. The neighborhood around the proposed expansion project, however, is majority Black and low income, with an asthma rate three times the state average, raising environmental justice concerns around the project’s disparate air quality impacts. Given this context, interviewees pointed to Stellantis’ ongoing persistent air quality violations as yet another example of environmental racism in Detroit. Some interviewees said that with a racial equity framework, all CBO-triggering projects would immediately undergo rigorous assessments of a proposed project’s impacts and harms on local communities and outline a plan to ensure equitable distribution of project benefits.