Introduction to Infrastructure Community Benefits in Canada
November 5, 2019
This is one of a series of articles, based on a report commissioned by the Canadian Council for Public-Private Partnerships (CCPPP).
“Community benefits” are physical or socio-economic benefits for a local community, leveraged by dollars already committed to major infrastructure and land development projects. A Community Benefits Agreement (CBA) is a legally binding and enforceable contract that sets forth specific community benefits for an infrastructure or development project.
CBAs are a form of social procurement, at the intersection of labour force and infrastructure development. In Canada, CBA development has been influenced by their evolution abroad and, to a smaller extent, the use in other Canadian industries of similar socio-economic advancement policies, including aerospace and defence, resource extraction, and electrical utilities, which have been using similar programs for decades. CBAs are common in the USA and UK for infrastructure development projects.
CBAs should not impede growth, large projects, or P3s. CBAs should ensure that local benefits – job creation, local economic improvements, housing, etc. – really happen and assist those who are most affected by the project.
An analysis of eight major CBAs in the USA showed that the incremental costs of CBAs range from 0.5 to 2.5 percent of overall project cost. This is within the 3 percent guideline for socio-economic advancement programs of many types used around the world in various industries.
In Canada, federal and provincial governments have instituted variations on CBAs. Several provinces and territories have legislation or guidelines respecting community benefits in procurement, including British Columbia, Manitoba, Nova Scotia, Ontario, Quebec, and Yukon. Infrastructure-specific CBAs have been developed in BC, Manitoba, and Ontario.
Municipal governments have most strongly embraced policies around social procurement and community benefits. Typically, municipalities first look at social procurement generally, and then look at community benefits policies, sometimes via a “test case” CBA and sometimes via a community benefits framework (CBF) that will inform or direct subsequent public CBAs. The key difference between a Community Benefits Framework and a Community Benefits Agreement is that a CBA is legally binding: if the agreement’s terms are not met, legal recourse can be made. A CBF is a set of guidelines, which can be enacted by a government for public procurement projects.
Given the known future requirement for construction labour, it appears natural that CBAs in Canada emphasize such labour development. In non-residential construction, almost 132 thousand workers will retire between 2019 and 2028, and more than 32 thousand new positions are forecast, meaning firms will need to attract and retain more than 164 thousand new employees within the next decade.
Since infrastructure CBAs in Canada have been used mainly by municipalities for smaller local projects, while P3’s are used for larger projects, the intersection set of P3 projects with CBA’s is currently fairly small.
Community benefits can be determined by a community engagement process (“grassroots” or “bottom-up”), or through government policy (“top-down”). Benefits typically include:
- Jobs, apprenticeships, or training targeted to low-income or disadvantaged communities
- Procurement directed to local suppliers and/or social enterprises
- Affordable housing
- Community amenities, from grocery stores and daycares to park space and public art.
There are three formats of CBAs:
- Private CBAs are legal agreements signed between developers and community groups
- Public CBAs include community benefits requirements in public Requests for Proposals
- Hybrid CBAs are multi-party agreements with developers, governments, and community groups.