by Christopher Paslay
A recent study ranks Baltimore a “Top Opportunity Zone for Smart Growth Potential.”
In December of 2018, George Washington University’s Center for Real Estate and Urban Analysis helped publish a study titled, “National Opportunity Zones Ranking Report.” It’s executive summary began by stating:
The Tax Cuts and Jobs Act of 2017 included a new powerful economic development tax incentive — Opportunity Zones — designed to encourage long-term private capital investment in America’s low-income communities. With over 8,700 Opportunity Zones — spanning the entire continental US, the District of Columbia and US territories — now eligible to tap into over $6 trillion dollars of unrealized capital gains to support redevelopment projects and new businesses, there’s enormous excitement amongst investors and local policymakers. Equally, there’s enormous concern among local policymakers and community groups who are afraid that this tax incentive will crowdsource unmanaged gentrification and displacement or accelerate climate change.
To weigh the good against the bad, the report calculated which Opportunity Zones in which areas not only had the greatest potential for success, but also which areas had the most social equity — the highest access for the poor to participate and benefit.
Ironically, Baltimore was listed #5 in the nation for Smart Growth Potential, behind only Philadelphia, Seattle, San Francisco, and Portland. This not only means the city is a wise choice for investors, but also that this investment has the best opportunity to directly benefit local residents who are struggling with quality of life issues.
These findings are important, especially when critics of “opportunity zones” say gentrification is harmful to residents, and that the poor get displaced while wealthy investors get tax breaks and enjoy the benefits. But this is not necessarily the case. In fact, a recent working paper from the Philadelphia Federal Reserve sheds new light on the issue. As reported by the City Journal:
Several previous studies have already cast doubt on the conventional wisdom that gentrification causes widespread displacement of poor, longtime residents. “The Effects of Gentrification on Well Being and Opportunity of Original Resident Adults and Their Children” goes further by recasting gentrification as a potential force for income integration and social mobility.
The first thing noted in the study is that gentrification displaces very few people. “An influx of college-educated residents into formerly lower-income neighborhoods—the accepted definition of gentrification—increases the probability that vulnerable, less-educated renters move to another neighborhood by about 3 percentage points,” the City Journal reports.
An even bigger surprise is what happens to low-income residents who stay put compared with those who do move out. “The stayers remain at the same poverty levels as before gentrification, but they see less poverty in their midst,” reports the City Journal. “Homeowners enjoy a big increase in their home values, enough to offset the inevitable rise in taxes.”
Curiously, gentrification has a positive effect on children. “Kids living in gentrified neighborhoods see less poverty and more educated neighbors, and they develop more advantageous networks,” writes the City Journal. “Most strikingly, gentrification increases the probability that children of less educated homeowners will attend and graduate college.”
In short, Trump’s Opportunity Zones are having an impact on urban poor. In a July 16th cabinet meeting, H.U.D. Secretary Dr. Ben Carson reported additional positives to President Trump. Here are some highlights Carson mentioned:
- Opportunity Zones are home to approximately 35 million Americans — about 10 percent of our population.
- Over the past year, property sale prices in Opportunity Zones have increased by 20 percent, which is about double the appreciation rate for eligible non-selected areas.
- The National Council of State Housing Agencies announced that its Opportunity Zone Fund Directory has expanded to nearly $29 billion in anticipated investment.
- In Salt Lake City, a big multi-family dwelling is being built with a center for helping autistic people enter the workforce.
- The Governor of Maryland is spending $56.6 million for training programs to supercharge Opportunity Zones in his state.
- In Mississippi, Governor Phil Bryant has approved a special Opportunity Zones cycle as part of the low-income housing tax credit program offered through the Mississippi Home Corporation.
- In Michigan, Governor Gretchen Whitmer has issued an executive directive that focuses state procurement practices on businesses located within Opportunity Zones.
“Opportunity has no color, but it colors everything,” Dr. Carson told President Trump. “Opportunity has no creed, but it gives people strength to believe. Opportunity has no religion, yet it gives us each faith. And I want to thank you for the faith that you’ve shown to the Revitalization Council as we have championed this incredible initiative across the country. This is a game changer. Major game changer in this country. And we look forward to building on this exciting momentum.”
“What’s happened with Opportunity Zones is somewhat of a miracle,” Trump said. “Nobody in their wildest imagination thought this could happen.”
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