Opportunity Zone Incentives Deserve Public Debate

  • Thursday, August 30, 2018

There is reason to be highly skeptical on the development and implementation of the latest municipal Opportunity Zones program. Numerous agencies define these zones as, “An economically distressed area where new investments, under certain conditions may be eligible for preferential tax treatment."

As Rachel Reilly Carrol so ably describes in Opportunity Zones Program: An Early Overview of Program Details and What’s Ahead, this latest round of tax cuts and incentives was first introduced in the Investing in Opportunity Act and was later included in the passage of the Tax Cuts and Jobs Act (2017). Essentially, a low-income census tract (opportunity zone) is identified for private investment and a fund consisting of capital and resources is pooled together (opportunity fund) to invest in potential properties within these localities (opportunity zones property).

Many individuals such as New York professor Timothy Weaver have compared these policies to the failed empowerment zone policies of the 1980's. Empowerment Zones, Enterprise Communities, and Renewal Communities have all been policies that were historically enacted to address poverty and inequities, yet many of these issues are not only persistent but have been heightened some three decades later. The preeminent social scientist William Julius Wilson in his work When Work Disappears: New Implications for Race and Urban Poverty in the Global Economy (1998), and Audrey McFarlane in Race, Space and Place: The Internal Critique of the Empowerment Zones Program (1999) both discuss the allure of public discourse and rhetoric that is often associated with new government program designs. Positive imagery, the merits of market-based targeting and the creation of numerous subsidies and incentives to invest are generally professed to be vehicles that will enhance and revitalize communities. Yet, rarely is the developmental phase diverse or inclusive, and often times fails to detail the needs of truly distressed and marginalized communities, which are the very ones the policies are meant to target.

There is little talk of the social isolation and spatial mismatch in these communities, and there is a bias to tout the preeminence of industry, “agency” and self-determination without adequately acknowledging the systemic and institutional barriers that helped to create and enhance the social impediments to begin with. There is diminutive concern for the downward mobility that occurs as a condition of these oversights, and by virtue policies fail to include a multifaceted and holistic approach such as education, job skills, development, training, apprenticeship, access to programming and capitol at the human, social and fiscal levels, and as a consequence a recurring pattern of stagnation, dysfunctionalism and hopelessness develops amongst the masses while the fringe benefits of unguaranteed promises and assurances are granted to the classes. As an effect, hiring and opportunity are at times none existent and sporadic at best.

The public should question how the implementation and development of these zones in Hamilton County will be different this time? Programs, which have come and gone in the blinking of an eye, have been advanced in favor of firms and corporations primarily concerned with profit maximization, scarcity, opportunity cost and other economically viable variables. While it may be right to provide incentives to invest, too often has it been done with a keen ambivalence to the needs and concerns of poor and minority communities, and this indicator, benign neglect in actuality, has led to a condition where wide swaths of gentrified areas have seen disinvestment, displacement, distress and decay, only to create a climate where more affluent and at often times non-empathetic firms and individuals buy, sell and trade the resource assets of  marginalized communities at reduced and highly volatile market rates that increasingly fluctuate. As a result, poor and minority communities become ostracized and in many instances nonexistent as the cultural heritage and identity are eviscerated. 

The great irony with the potential development of the Opportunity Zones is the intersection with history we find ourselves embarked upon. 2018 marks 50 years since the Fair Housing Act; Kerner Commission Report; and launch of the Poor People's Campaign; and yet our community is still grappling with unjust lending and housing policies as detailed by Chattanooga Organized for Action’s study on Redlining and Lending, national studies that denote that 37408 is one of the nation’s most rapidly gentrifying areas, and when in 2015 Dr. Ken Chilton, citing statistics such as 31 percent of African-Americans and 38 percent of Hispanics living below the poverty threshold, questioned if economic and social disparities that have occurred will be the “new normal” we must live with?

Other questions also may matriculate? How will review and accountability mechanisms be established to monitor the promises and performance of businesses that are included in these zones? For instance, one major flaw of TIF and PILOT agreements when they were established is that there was no way to track if firms and businesses had fulfilled commitments in areas such as hiring locally, measuring racial, gender and poverty demographics in hiring, open bidding to include local and minority bids, the criteria under which these businesses and firms were awarded, and an annual report, which should have been accessible for public review in order to gauge the fulfillment and progress of these indicators. Likewise, if census tract data is what will be utilized, then there are areas of concern on this front. Namely, gentrification is a contributing factor that leads to Minority Vote Dilution, which is violation of the Voting Rights Act of 1965. Not only does cracking, packing and stacking occur, but these conditions are expeditiously leading to districts once regarded as minority-majority in nature becoming little more than coalition, influence or swing districts. It will lead to gerrymandering because boundaries and districts will be prone to inconsistencies, irregularities and manipulations just as what occurred in the recent election, and the redistricting process will be a contentious one as the perceived contiguous nature of zone and district lines will be repeatedly challenged.

As Edward Glaser notes in Triumph of the City, “The failures of urban renewal reflect a failure at all levels of government to realize that people, not structures, really determine a city’s success.” This is precisely the reason a public debate is needed before adopting these measures.

Eric Atkins


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