Opportunity Zones, created under the tax-cut bill passed last year by Congress, likely will have a large impact upon Vancouver and other cities throughout Washington. The benefits of that impact, however, remain questionable.
City officials are hustling to designate communities where investors can take advantage of tax incentives designed to spur development. As John Collum, economic development planner for Vancouver, told The Columbian: “It’s considered to be a program that would set up untapped capital that would broaden the money that people can use to actually make good things happen in these low-income census tracts and in these communities of need, as well as the ones that haven’t attracted investment. That was the intention behind the original legislation to begin with. We think there are lots of opportunities for Vancouver to look at the use of that money.”
There are, indeed, many opportunities. But before examining them, it is instructive to consider how Opportunity Zones reflect the lack of thought that went into the Tax Cuts and Jobs Act of 2017.
Opportunity Zones provide enormous tax breaks for investors, and their structure encourages investment in areas that already are gentrifying and promising profits for developers. As many a city across the country has learned, gentrification has the effect of raising property values, property taxes and rental rates — and eventually making the area unaffordable for low-income residents.
As Adam Looney of the Brookings Institution wrote last month: “In contrast to the new Opportunity Zones, the policy with the best proven record — Empowerment Zones — focused on people and local services, not just capital investments. They encouraged hiring … offered loan guarantees … and large grants to local government authorities for local services and infrastructure.” Opportunity Zones, on the other hand, are designed primarily to assist developers rather than residents.
This serves as one example of how last year’s tax bill was designed to benefit the wealthy. It also serves as an example of the irresponsible fashion in which the bill came to fruition. The legislation was passed 48 days after being introduced, with little debate and little public input. In the Senate, amendments were written into the margins of pages handed out to the legislators who then were expected to vote on the sweeping law.
In contrast, the often-derided Affordable Care Act — colloquially known as Obamacare — was debated for more than a year in three House committees and two Senate committees. While no Republicans supported the final bill, it included more than 100 amendments, many sought by Republicans.
That was not the case with last year’s tax bill. And now, months after being written into law, the March 26 deadline for Opportunity Zone applications is fast approaching.
While the method for creating Opportunity Zones was deplorable, Vancouver would be wise to take advantage of them, with Fourth Plain Boulevard being an obvious target. Investment in low-income areas is going to happen in Washington cities, and having some of it here is better than the alternative.
But city officials must work to make the process effective for residents. As Andrea Pastor, Fourth Plain project manager, said: “We’d love to be able to revive parts of the area without doing anything that leads to wholesale gentrification. It would be terrible if we make investments in an area only to see the people in the area not able to use them.”
