Subcommittee approves bill barring community benefits agreements as condition of ECD incentives

At a February 2025 Business & Utilities Subcommittee meeting, members voted 8-2 to send House Bill 1096 as amended to the full Commerce Committee. The bill, sponsored by Chairman Vaughn, would bar local governments, nongovernmental organizations and trade groups from requiring companies that accept Economic and Community Development (ECD) incentives to enter into so-called community benefits agreements (CBAs).

Supporters said the bill protects companies that accept state incentives from facing additional, negotiable requirements imposed by third parties after the state’s approval. “This bill prohibits these local governments as well as NGOs and trade organizations from entering into or forcing people who receive ECD benefits from entering into that community benefits agreements,” Chairman Vaughn said when introducing the measure and an amendment that set the bill’s effective date to apply to agreements entered into after July of this year.

The amendment (drafting code 3718) was added on a voice vote before the committee took final action. The amendment clarified the bill’s effective date: the prohibition would apply to agreements entered into, executed or modified after the effective date (July), not to preexisting contracts, and the committee adopted the amendment before considering the bill as amended.

Supporters described the measure as a protective, permissive rule: companies would remain free to enter voluntary agreements but could not be compelled to accept third-party demands as a condition of receiving ECD assistance. The sponsor noted an earlier law that required secret-ballot union elections for entities receiving ECD incentives and said this bill was intended as a further step to limit external leverage.

Opponents said the bill could discourage voluntary partnerships that yield community benefits. “These community benefit agreements…only generate goodwill,” Representative Clemons said, summarizing arguments that CBAs can include workforce development, affordable housing contributions, partnerships with schools and other community supports. Several members asked whether the bill would prevent companies from voluntarily undertaking community investments; the sponsor and other backers answered that voluntary activity not tied to accepting ECD funds would remain permitted but that contractually binding provisions tied to ECD acceptance would be barred.

Representative Hardaway raised constitutional concerns about the state regulating private contractual relationships. The subcommittee paused for the Office of Legal Services, and Leaven Middleton of that office said the amendment’s prospective effective-date language mitigates retroactivity concerns: “I’m not aware of any constitutional issues,” Middleton testified, adding the change limits the statute to agreements entered or modified after the effective date.

The committee discussion focused on three categories of prohibited provisions the bill would bar from CBAs when tied to ECD incentives: provisions that (1) contractually bind an employer to fund or provide specific services, amenities or mitigation to a community or nongovernmental entity; (2) establish employment criteria, including wage and hour requirements; or (3) require an employer to use a unionized workforce. Sponsors said those limits are intended to prevent local approval processes from escalating into additional, shifting contractual conditions beyond state land-use and zoning rules.

The committee approved the bill as amended and voted to send it to full Commerce on a recorded vote of 8 ayes and 2 nays.

The bill now goes to the full Commerce Committee, where members will decide whether to schedule further hearings or floor action.