In an attempt to finally help people recover from the recession, states across the country have embraced a federal program that allows them to designate under-resourced Census tracts as “opportunity zones.” The opportunity zones program was first envisioned by the Economic Innovation Group, a think tank whose mission is to “empower entrepreneurs and investors to forge a more dynamic economy throughout America,” and was included in last year’s Republican tax bill. The idea is that if the government incentivizes real estate development and business investments in certain low-income areas — the so-called “opportunity zones,” which are chosen by state governors — regular people will benefit.
A Brookings Institution report from earlier this month found that 59 percent of areas designated as opportunity zones were in “economically distressed” areas. In the best-case scenario, developers will use these incentives to build quality affordable housing for middle- and low-income people, particularly in rapidly-gentrifying cities like San Francisco and New York. However, it’s just as likely that opportunity zones are just another form of corporate welfare that won’t trickle down to the masses.
According to a report from Bloomberg, Georgia has designated parts of Atlanta as opportunity zones, including the site of the city’s potential Amazon headquarters. (Atlanta is one of 20 finalist cities in Amazon’s ongoing search for its second corporate HQ.) A large swath of downtown Detroit — much of which is owned by Dan Gilbert, founder of the predatory mortgage loan firm Quicken Loans and member of the EIG’s “Founders Circle” — has also been given opportunity zone status. This doesn’t mean that Amazon or Gilbert will automatically receive tax breaks; Amazon hasn’t even chosen where it’ll have its next headquarters. But developers have plenty to gain from getting tax breaks to invest in gentrifying areas.
“It could be used to take affordable housing and convert it into market-rate condos,” Brett Theodos, a senior researcher at the Urban Institute, told Bloomberg. “Amazon could engineer it into an investment vehicle for HQ2.”
There are some historical precedents for this. President Clinton had “empowerment zones.” In the ‘80s, Republican Jack Kemp introduced a similar program, called “enterprise zones.” And researchers at the Mercatus Center, a “market-oriented” think tank based at George Mason University, found that enterprise zones and similar policies often contributed to cronyism and corruption.
Opportunity zones aren’t a new idea — they’re just the latest iteration of Reagan-era policies that didn’t work the first time around.
