Activism

Loren Taylor Hopes to Use Federal “Opportunity Zone” Tax Breaks to Foster Local Development

Published

7 years ago

December 5, 2019

The Oakland City Council is seeking ways to minimize displacement of tenants and small businesses and leverage community benefits under the federal Opportunity Zone Program in the U.S. tax code created by the Trump Administration, which has so far been criticized for offering huge tax breaks to wealthy investors who open businesses or build real estate projects in low-income urban neighborhoods.

Under current tax regulations, there are no requirements for investors to consult with city governments or create jobs, build affordable housing or other projects to promote equity and programs that would benefit local communities.

Recently, there have been exposés, including in the New York Times, citing how these Opportunity Zone programs around the country have enriched billionaires. Congresswoman Rashida Talib (D – Mich.), among others, is backing legislation to repeal this part of the tax code. “The American people have been scammed,” she said.

Locally, District 6 Councilmember Loren Taylor has been working with the City Administration to design an Opportunity Zone program that can be leveraged to develop projects that serve Oakland neighborhoods, while avoiding some of the most damaging aspects of the Trump regulations that would displace local residents and businesses.

“There has been a very intentional focus on bringing equity and a community orientation to a program that was not designed to do so. We all acknowledge that,” said Taylor, speaking at Tuesday’s Community and Economic Development (CED) Committee meeting.

“We’re doing a little bit of judo, using other people’s momentum against them so that we can advance our own efforts. That’s really what we’re doing on behalf of our community,” he said.

Gloria Bruce of East Bay Housing Organizations said, “This (legislation) carries a lot of urgency about displacement and how investment can happen without displacement. “As currently framed at the federal level, (the regulations) are place-based, not people based; so, we really need to center people in this conversation,” she said. “Nationally, there has been a big amount of investigative reporting, (including) in the New York times, about how this tool has mostly been used to (fund) projects that have already would have happened or things that are luxury development(s). we don’t want that to happen in Oakland.”

The federal government has designated 30 Oakland census tracts in East and West Oakland as Opportunity Zones. Investors who make a long-term investment or property in one of these census tracts can defer or reduce their federal capital gains taxes.

“Oakland’s Opportunity Zones have more renters, higher poverty rates, and larger Black and Latinx populations than the city overall,” according to the report prepared by city staff for Tuesday’s Community and Economic Development (CED) committee meeting.
While the city seeks to promote equity and community benefits in local development, “federal regulations do not currently require local community benefits or investor reporting to local governments, (although) projects must still comply with local development regulation”.

According to the staff report, “…local governments can influence Opportunity Zone investment by highlighting and supporting beneficial local projects.” There are a number of potential local projects proposals, but the underlying obstacle. is where to find funding or investors.

“The City’s Opportunity Zone goals should be to increase engagement and local awareness of the designation, help direct investment to projects that benefit Oakland’s Black population, communities of color and women-owned businesses, and prevent displacement due to loss of affordable residential and commercial space,” the report said.

Seeking to implement Opportunity Zones in Oakland, the city administration has already formed an Opportunity Zone Working Group that includes the Departments of Economic and Workforce Development, Planning and Building, and Housing and Community Development.

The City has also received funding from the Rockefeller Foundation to create a new position, Chief Opportunity Zone Officer, (who has already been hired) to support equitable development in Opportunity Zones, whose work will be supported by two VISTA volunteers.

“The first reported investments in Oakland, as well as nationwide, have been in hotels and primarily market-rate housing located in the Uptown/Downtown area,” the report said. “Funds for projects in West and East Oakland exist but are still raising capital.”

Seeking to repeal the Trump Tax Code regulations, Rep. Tlaib said in a statement, “Opportunity Zones were supposed to help uplift low-income community and those living in poverty, but instead we are seeing them benefit billionaires and their luxury projects….the current Opportunity Zone law fails to drive real benefits to low-income communities instead often rewarding President Trump’s donors.”