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Opportunity Zones: An Empty OZ


You may have missed it, but tucked discreetly into President George W. Bush's acceptance speech at the Republican Convention was a freshly minted community development proposal to strengthen local distressed economies throughout the country. Upon Bush announcing the creation of "Opportunity Zones" in his September 2nd address, the White House subsequently revealed in a two page press releasethat 40 urban and rural areas would soon be eligible for a range of tax incentives for small businesses and be "moved to the front of the line for certain assistance programs". The stated goals of these zones are "to assist America's transitioning neighborhoods" and extend "economic prosperity‚to every corner of our country".

For New Yorkers, this talk of stimulating economic development in designated urban "zones" might sound familiar. "Enterprise" Zones were originally introduced to the American scene in the late 1970's by former New York State congressmen Jack Kemp and Robert Garcia. Kemp, who was later named head of the U.S Department of Housing and Urban Development (HUD) in the 1980's, tried unsuccessfully to launch Enterprise Zones under the George H.W. Bush administration. But it wasn't until Bill Clinton took office and Harlem Congressman Charlie Rangel championed the cause that the idea of using tax incentives as catalysts for private investment in poor neighborhoods was fully realized - and significantly expanded - in the form of the newly fashioned "Empowerment" Zone (EZ).

Rangel ensured that New York City, specifically Harlem, Inwood, Washington Heights and the South Bronx, would be included in America's first round of EZ funding in 1994. As a result, Upper Manhattan and the South Bronx received $250 million in Federal tax credits and $100 million in Federal funding for commercial development, job creation, social services, health care and cultural development. This investment pool was matched by an additional $200 million in total commitments from New York City and State.

At that time a total of 72 urban areas and 33 rural areas nationwide were named Empowerment Zones or Enterprise Communities (which cover smaller or less-densely populated areas) and received a total of $1.5 billion in performance grants and more than $2.5 billion in tax incentives. The Taxpayer Relief Act of 1997 authorized a second round of EZ designations and in 1999 an additional 15 distressed urban communities and 5 rural areas became eligible for an additional $3.8 billion in federal grants and tax-exempt bonding authority.

High Hopes, Few Details

Given this legacy, the Opportunity Zone (or "OZ", in the spirit of HUD shorthand) seemed to promise a credible federal effort to spur job growth through small business development. More importantly, the commitment to the OZ program seemed to reinforce the "Ownership Society" Bush so frequently invokes.

Although quite light-handed in its own promotion of the OZ program, the Bush Administration has certainly encouraged high expectations. As with any big ticket government program, OZ aspirants will have to run a bureaucratic gauntlet by submitting an application and a plan "which sets concrete, measurable goals for reducing local regulatory and tax barriers to construction, residential development and business creation." Of course, if approved as an OZ, considerable reporting will be required by the organization representing the designated area.

Once selected, an OZ community would presumably become a veritable hothouse of enterprise and social development. According to the White House press statement, an OZ represents a "comprehensive, results-based approach, expanding the focus of assistance beyond economic activity to encompass education, job training, affordable housing, and other activities critical for a vibrant community." A HUD official described Opportunity Zones as a holistic, inter-agency effort which would involve, in addition to HUD, the Department of Labor, the Treasury Department, the Small Business Administration, the Commerce Department, the Department of Education and potentially other federal agencies.

But perhaps the greatest enthusiasm was expressed by the Zone granddaddy himself, Jack Kemp, when he wrote effusively of how he saw the OZ's place in history. When bundled with Bush's proposed Social Security reform and tax reform, Kemp declared, Opportunity Zones represent "perhaps the boldest domestic policy vision since FDR's ‘New Deal' or LBJ's ‘Great Society'." "[B}ut unlike FDR and LBJ", Kemp continued, "Bush's vision is consistent with individual liberty, free markets and entrepreneurial capitalism."

Given the fact that Opportunity Zones were offered up barely 60 days before the election, maybe it's unfair to take such flourishes too seriously. But, for the record, let's just say that if you peek behind the curtain of the great and wonderful OZ, you may find the view less than breath-taking.

First of all, it's hard to find details on the Opportunity Zone, a supposedly historic presidential initiative that has somehow managed to fly far below many a radar screen. An official I spoke to at HUD, the agency that would most likely coordinate the administration of the OZ program, confessed that he hadn't actually heard the phrase Opportunity Zone until it left the President's lips on national TV. All he knew was what was already outlined in the press release.

When I pressed another HUD spokesman for more information – proposed costs, timetable, additional literature, etc. - he affirmed, with no detectable sense of irony, that "the devil is in the details" and suggested I call the White House advisory body, the Domestic Policy Council. My phone calls to the White House did not yield any more information, not even a proposed rough dollar amount of the program, much less a person willing to go on the record about it.

Community Inspiration

Ken Knuckles, the President and CEO of the largest and arguably most successful EZ in the country, the Upper Manhattan Empowerment Zone, was wholly unfamiliar with the OZ until I shared the press release with him. Logic dictates that Knuckles would be an interested party, since one of the two ways a community can qualify to be an Opportunity Zone is by already having designation as an Empowerment Zone, Enterprise Community or Renewal Community (a second tier zone created by the Bush administration).

The other way for an area to qualify as an OZ is by receiving a newly proposed, largely yet undefined, designation as a "community in transition". This is described only as an area that has "suffered from a significant decline in the economic base, including a decline in manufacturing and retail establishments", and is "transitioning to a ‚21st century economy."

"Upper Manhattan was not the inspiration" for Opportunity Zones, Knuckles concluded after reading the OZ release. In fact, as Bush criss-crosses the country on the campaign trail, offering to deliver an OZ to a neighborhood near you, he is unabashedly and explicitly seeking to woo swing state voters still seething over the alleged export of American manufacturing jobs oversees. While conspicuously short on other details, the release goes as far as listing examples of communities that might qualify for Opportunity Zone designation, including election battleground territories like "Cuyahoga County, Ohio" and "Erie County, Pennsylvania".

Community Development Record

Knuckles harbors serious doubts that OZ's could ever prove to be effective in densely populated, non manufacturing-dependent, areas like New York, in large part because tax incentives are offered by Opportunity Zones to the exclusion of any other economic development tool or stimuli . This is a signature feature of the Bush administration; the Empowerment Zones introduced by the Bush Administration in a third round authorization in 2002 were stripped of all federal grants, investment dollars and leveraging opportunities originally provided under the Clinton administration, leaving tax incentives alone to do the job of "empowerment".

Knuckles expressed no interest in relinquishing Upper Manhattan's hard-fought-for EZ status, a consequence, apparently, if Upper Manhattan or any EZ were to, for some reason, seek OZ designation. In his opinion, this would represent a trading down. "Low-interest, patient capital", which is something the first round of Empowerment Zones were set up to provide, is what is needed in Harlem, Knuckles insisted, "over and beyond tax incentives".

Dawn Rivers Baker, who, as Editor-in-Chief of the MicroEnterprise Journal, tracks and comments on federal policy as it relates to the micro- and small business community, dismisses the OZ proposal as an empty campaign gesture. She maintains the Bush administration has consistently tried to dismantle small business support mechanisms that have traditionally been provided by the federal government.

To illustrate her point Baker compiled a laundry list of small business programs the Bush administration has tried to cut or eliminate by budgetary means since January 2001, including the New Markets program for low-income entrepreneurs, the Small Business Development Center program and the Small Business Administrationitself. If not for the intervention of Congress, Baker insists, these programs and others like it would have been gutted. Other critics point to the fact that the Bush Administration has attempted to weaken a wide range of community development programs and safeguards like the Section 8 subsidized housing program, the Community Development Financial Institution program and the Community Reinvestment Act. Bush even cut the Empowerment Zone from his 2004 budget, only to have it restored, again, by Congress.

This is especially unsettling considering that the OZ model seems to be lifted directly from the tax relief section of the EZ playbook. Opportunity Zones do include some added perks, like lower income tax rates for businesses and the ability for businesses to "expense" an additional $100,000 for the purchase of tools and equipment under new tax policies. But, according to Michael Barr, who as a Treasury Department official from 1995 to 2001 helped design and implement Empowerment Zones, all the other OZ features – investment incentives, priority designation when applying for existing Federal programs; incentives to hire new workers; regulatory relief – already exist under the Empowerment Zone program.

"It's quite disappointing", Barr lamented. "What you have here is a lot of hype without substance or content; right now it looks like there's a lot of work for communities to go through [to receive OZ designation], without a whole lot of added benefit."

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Governors Island Plan: Last Chance to Get It Right?


I was tipped off to a major public meeting to chart the future of Governors Island that was being held in the middle of the summer.

Not surprisingly, given the timing, no more than a couple of hundred people wound up hearing preliminary ideas from the team of consultants working on the plan for the island. Still, the discussion was lively and there were lots of great ideas. And a number of speakers echoed the gnawing questions from my inner Brooklyn self about whether the planning process would serve the diverse populations of this city of eight million people.

Can The City Plan an Island?

This could be the city's last chance to get planning right for a major chunk of city land accessible to the entire metropolitan region. When the five boroughs were consolidated in 1898 only a small portion of Manhattan was densely developed. It was an historic opportunity to plan the future metropolis. It didn't happen. Instead the city let developers do pretty much what they wanted. Zoning outside of lower Manhattan was fairly liberal. Developers even took the lead in planning the subway lines, the main determinant of new growth. The result is a concrete and asphalt city with one of the lowest ratios of open space per person in the country. The last island that the city planned, Roosevelt Island, turned out to be another dense cluster that mimicked the overdeveloped East Side of Manhattan, albeit with greater sensitivity to good design. The city also missed the opportunity to plan for Staten Island, which got eaten up by unplanned sprawl after the South Richmond Plan was rejected in the 1970s.

The United States Coast Guard moved out of the 172-acre Governors Island in 1997 and last year it was turned over to the City and State of New York. It soon became clear that it was going to be hard to get the public investment required to turn it into another apartment complex like Roosevelt Island, nor the political support needed to give it to hotel and casino operators. So the federal, state and local governments agreed to deed restrictions that required it be redeveloped for recreation, education and limited commercial activities. At least forty acres must be for parks, at least 20 acres for educational uses, and 30 acres for "public benefit uses." That leaves over one-third of the land above water for other, possibly commercial, uses.

The body in charge of planning is the Governors Island Preservation and Education Corporation(GIPEC), a subsidiary of the Empire State Development Corporation. GIPEC's board is appointed by the Mayor and Governor.

A Model Island?

Governors Island may actually fill in some of the city's missing green space. We can all breathe a little easier knowing that one of the basic principles for planning the island is that it will be virtually car-free. Actually the island can be a giant demonstration project, an environmental oasis in a city with an epidemic of asthma and respiratory diseases and a horrible record of non-compliance with federal clean air regulations. It could have the city's best network of bicycle and pedestrian paths, with stunning views from waterfront promenades. At the planning meeting there seemed to be widespread approval of a car-free island, but some people also wanted to see it become a regional hub for maritime activity, which could conflict with the vision of the island as a bucolic paradise.

A seed planted by the planning consultants was the idea that the island could become a model of environmental and economic sustainability. Concretely, this could mean that it would produce its own energy and food for consumption in restaurants and dining rooms. And waste could be reduced, recycled and composted instead of being exported as it is in the rest of the city. This could be a "zero waste" island.

The consultants didn't go this far, but clearly Governors Island could become a model in many ways for the city's neighborhoods, generating valuable lessons in environmental management and sustainability. Without a permanent residential population, however, it would never match the conditions of most neighborhoods.

Enclave for the Elite?

But at the July meeting, many of the invited guests were troubled by the possibility that Governors Island would become an exclusive enclave. Indeed, this was probably the main question on everyone's mind. "We want to make sure this is not just an elite island," affirmed one speaker. Aside from worrying that those present at the meeting didn't reflect the full diversity of the city's neighborhoods, people were concerned that the "limited" commercial development being talked about -- the consultants mentioned an executive conference center, restaurants, a boutique hotel, a spa -- could chase away island visitors without deep pockets.

Some people worried how accessible the open space would be. Will the island have recreational facilities for everyone or only those who belong to organized teams? Will people with big families have places to romp, picnic and barbecue, or will it be a pristine place only for the genteel class or Manhattan's singles scene? One person cautioned that public access to the island's waterfront wasn't enough. "You can have public access in a private enclave, like Battery Park City," where the waterfront is technically open to the public but is designed in such a way that it's not inviting to the broader public.

Which gets us to Brooklyn. According to Craig Hammerman, the district manager of Community Board 6 in Brooklyn (the man who had tipped me off to the meeting), "Brooklyn seems to have been an afterthought." Through an accident of history, Governors Island wound up under the jurisdiction of Manhattan and belongs to Manhattan's Community Board One. Yet it's actually closer to Brooklyn than Manhattan. His community board asked the mayor to take a look at the community board boundaries, but to no avail. "The planning process appears to have been already determined," says Hammerman. Indeed, boutique hotels, pristine promenades and nature preserves may remake Governors Island in the image of Battery Park and leave no room for the people of Red Hook and Sunset Park. The next planning meeting will be scheduled for this fall. It should be in Brooklyn, there should be more outreach to neighborhoods, and it shouldn't be held when few New Yorkers are around.

Tom Angotti is Professor of Urban Affairs and Planning at Hunter College, City University of NY, editor of Progressive Planning Magazine, and a member of the Task Force on Community-based Planning.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Helping Pay The Rent: Section 8 Saved; Emergency Rent Coalition Created


With the lack of affordable housing a seemingly permanent crisis (See "Affordable Housing 2004"), paying the rent seems to be getting more difficult for more and more people. Of some 370,000 cases filed in Housing Court in 2003, roughly 90 percent were against tenants for non-payment of the rent. Last month, an annual survey completed by the United States Census Bureau revealed what few doubt: More people are spending more of their income on rent. The percentage of New Yorkers spending more than 35 percent of their income on rent rose, the survey found, from 38 percent to 42.5 percent.

There are two main avenues of help for those unable to pay their rent: ongoing help from government sources and emergency help from government sources and private sources, like charities and religious institutions. The Section 8 government subsidy for the chronically poor is the most important source of help people can get paying the rent that continues based on their need. A coalition of charitable agencies that helps individuals in an emergency situation is increasingly becoming an important source of assistance, filling in, more or less, for the government. There have been recent developments in both.

SECTION 8 SAVED

The city's main weapon to fight homelessness and make housing affordable - the federal rent subsidy known as Section 8 - was saved at the end of August when the U.S. Department of Housing and Urban Development restored about $55 million in the program's funding for New York City, in response to an appeal by the New York City Housing Authority. Originally, HUD had proposed cutting $125 million.

But Section 8, whose share of HUD's budget has increased by 27 percent over the last three years, will still face significant cuts next year, advocates fear, particularly if President George W. Bush is reelected.

A housing authority spokesperson said if the agency faces a shortfall due to cuts, it will not cut the subsidy payments it makes to landlords nor ask tenants to pay more but instead look for savings in administration of the program.

Section 8 subsidies help pay the rent on apartments for 220,000 people in New York City. Any new vouchers are reserved for those facing serious housing emergencies: homeless families, victims of domestic violence, children in the care of the Administration of Child Services and intimidated witnesses to crimes.

Hundreds of thousands more people not in these categories technically qualify to receive Section 8 but are unlikely to get it - the waiting list has been closed for almost a decade. The assistance comes in two forms: 1. vouchers allow individuals to pay just 30 percent of their income to a private landlord, the landlord being paid the difference by the subsidy program. 2. Individuals can also reside in Section 8 housing projects.

As I have written before ("Section 8 and the Single Landlord") many of the nearly 30,000 private landlords who participate in Section 8 in the city are opting out of the program because, they say, it imposes too many rules and does not pay the rent in a timely fashion.

EMERGENCY RENT COALITION

Later this month, a new non-profit organization, the Emergency Rent Coalition, will elect its first board of directors. It is a group of about 20 agencies that separately offer a critical service to New Yorkers on a daily basis - rent arrears assistance. But by all accounts they never come close to meeting the need.

"We just felt there was such a need to come together to talk about some of the issues and concerns and try to create a system that worked," recalled Judy Milone, a co-founder of the coalition and assistant director of client services at the Federation of Protestant Welfare Agencies. "The need is so great."

The Emergency Rent Coalition started about four years ago with little more than a dozen people from various agencies trying to establish order in providing rental arrears assistance, a subcategory of the chaotic world of financial help available in New York City. It includes major charities like Catholic Charities and the Metropolitan Council on Jewish Poverty and smaller outfits like Lenox Hill Neighborhood House.

No one can say exactly how much money goes to help people pay their rent or how many people actually get help. But advocates conservatively estimate that tens of thousands of New Yorkers get help that adds up to tens of millions of dollars every year.

The assistance can come from a variety of sources, public and private. The city uses federal, state and city money to provide assistance through grants and loans to people facing a housing emergency. Charities, religious institutions and community-based organizations of all stripes use federal and private money to provide similar emergency assistance.

The private agencies often cooperate to help a person who owes rent by each chipping in one month's rent when the need is great. The coalition formed because few agencies do it in quite the same way. More confusing for the person seeking help is that, until about three years ago, he or she had to call each agency separately. The coalition's efforts are hoping to change that, but that change will not come quickly, Milone said.

"Clients are still given lists by all sorts of places that are very outdated, with tons of agencies and wrong phone numbers and wrong workers' names," she said. "And they're told to go find a few thousand dollars and that's just ridiculously hard."

Centralizing the list of agencies with money available was one of the group's first goals. The United Way of New York City funds the hotline for rental arrears assistance today at the agency I work for, the City-Wide Task Force on Housing Court. With just one number to call, the thinking goes, people in crisis can avoid even greater frustration that comes from hearing 'No' many times over.

Rent arrears assistance from charities has become an even more critical service because the city and state have cut their programs significantly, advocates said. It is no secret among the workers at charities that welfare caseworkers actively discourage people from applying for "one-shot deals" - grants and loans that are earmarked to help people pay back rent. Even when they are not discouraged, though, the process is rarely simple or easy.

"The best way I can describe it is that the one-shot deal is very inconsistently applied," Milone said. "Many of our clients tell us that they have been turned away on grounds that don't really sound legal and before a full assessment has been done."

Members of the Emergency Rent Coalition save thousands of people from eviction with timely financial assistance, but the need is enormous.

As opposed to ongoing rental assistance through Section 8 or shelter subsidies paid by state and federal welfare programs, public and private agencies offer emergency assistance on a one-time basis when a person meets certain criteria.

First, the person's need for the assistance should stem from a legitimate emergency, like a medical illness, a death in the family, loss of employment or a reduction in work hours. Second, the person needs to demonstrate that he or she can pay the future rent - that the arrears accrued due to the emergency but that ongoing assistance is not necessary. Finally, the person should not have a chronic issue paying the rent - if they are repeatedly seeking assistance, they will have a tougher time getting it.

These criteria are not etched in stone, but thanks to the coalition's meetings they are more and more becoming the norm at the many agencies administering assistance.

At the city's welfare offices, known also as "job centers," case workers for the Human Resources Administration offer emergency assistance as grants and loans called "one-shot deals." These are targeted to households on social security and families facing eviction and the working poor. For people receiving public assistance, separate grants are available to cover arrears.

When people are denied one-shot deals, they are often told to call the charities for assistance. And the coalition's efforts are aimed at making that easier for tenants facing a court case for non-payment of rent.

"I think we've really made the field more accessible," Milone said. "But I think we have a long way to go. I would not want to be a client. These people must be dizzy."

Joe Lamport is the assistant director of the City-Wide Task Force on Housing Court, a coalition of commp://y housing organizations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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