FEATURED ARTICLE: Will Opportunity Zones Boost America's Distressed Neighborhoods?
helped some once-undeveloped sites evolve into valuable commer- cial and residential properties, but not all of them. The same is likely to be true with census tracts. It’s very possible that a relatively-small number of census tracts will ab- sorb a majority of all fund activity – and cash. TAX COLLECTIONS The federal government estimates that tax collections will drop by $1.6 billion per year because of the Opportunity Zone program. Given that many jurisdictions base their tax collections on income reported to the IRS, it can be expected that state tax collections will also fall as a result of the OZ program. This may or may not be a bad result, de- pending on how the money furthers development and job growth within a jurisdiction.
employment in the county dropped from 5.3 percent to 3.2 percent in that time, and typical monthly rents rose 44% to $858.” Is a 44% increase over six years unreasonable? That’s an average gain of roughly 6% compounded annually. According to the Institute on Taxation and Economic Policy (ITEP), “the idea behind the new tax break is to provide an incentive for wealthy individuals to invest in the economies of struggling commu- nities. Despite alleged intentions, it appears opportunity zones are turning into yet another windfall for wealthy investors and may en- courage displacement of people in low-income areas, working against the provision’s intended goal.” And yet, better economic times in small areas do not necessarily lead to gentrification. Writing in The Washington Post, Jesse Van Tol, chief executive officer of the National Community Reinvestment Coalition, argues that localities can have both increased invest- ment and minimal gentrification by adopting protections for long-time residents. Such strategies can include homestead exemptions to offset rising property taxes, homestead tax credits for elderly or disabled homeowners, more density for developers in exchange for more affordable housing units, and funding to help local busi- nesses buy their buildings. Opportunity zones are here, they’re real, and they have begun to attract big money. Whatev- er problems growth represents in selected census tracts, such expansion will likely be seen as better than the population de- clines, falling home prices, and underfunded government services which now plague thousands of local communities.
LOCAL RESIDENTS Census tract residents could be major O-Zone beneficiaries if invest- ments result in more local employ- ment. But, who will get the new jobs? It’s very possible that newly-funded Opportunity Zone investments will create jobs that are actually held by residents from other census tracts. Think of Long Island City. Lots of job seekers could be residents from other areas, individuals who live just a few minutes away by subway. The assumption is that local res- idents will welcome outside invest- ment. But, they might not. Amazon was prepared to spend several billion dollars to build out the HQ2 project in Long Island City and prom- ised to do so without Opportunity Zone benefits. Then, in February, the company decided to end the project in the face of local oppo-
sition. City and state officials had offered
huge subsidies to capture the
One goal of the Opportunity Zone effort should be to improve the
widely-de- sired Ama- zon project and those subsidies themselves became a matter of dispute.
financial stand- ing of residents in given census tracts. This can be tricky be- cause economic growth leads to more real estate demand, meaning that home prices go up, property
“Amazon is a billion-dollar company,” tweeted newly-elected Repre-
taxes increase, and residents are often displaced, especially those with fixed incomes. In Irion County, TX, with a popu- lation of 1,516, The Pew Charitable Trusts report that “the county’s energy jobs tripled to 187 between 2010 and 2016, the latest federal data available, at average annual wages of more than $63,000. Un-
sentative Alexandria Ocasio-Cor- tez. “The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our sub- way is crumbling and our commu- nities need MORE investment, not less, is extremely concerning to residents here.” (emphasis hers) CENSUS TRACTS The Superfund program has
14 think realty housing news report
Made with FlippingBook Online newsletter