by Mieko Preston, M.Arch
ProPublica has evaluated the effects of the implementation of a 2017 tax cut advertised to benefit poor communities and shared an article of their findings. The idea advocated a tax break for building within economically distressed rural and urban areas, designated “Opportunity Zones”, to promote private investment, economic growth and increase the availability of local jobs. It was lobbied for by big businesses and the wealthiest investors, including Detroit’s own billionaire Dan Gilbert. In 2018 the incentive was adopted, and 2019 has seen a significant bump in development within these zones.
The problem is the tax cut’s stated intentions on paper do not match the reality; the zones were intended to see investment in distressed areas. In actuality throughout the country, the zones ultimately designated by the Trump Administration were in above-median income areas, with already developed zones supporting luxury projects that were already built or in progress at the time of designation. The tax breaks, intended for investment in the poorest communities, instead significantly advantage the owners, investors, developers and the residents that can afford to live within a walkable neighborhood.
In Detroit, NBA owner and Quicken Loans founder Dan Gilbert is promoting impoverishment in the city he has largely influenced in reconstructing. Since 2010, Gilbert acquired over 100 properties throughout the city proper, mostly centered down- and midtown. Gilbert then had a significant role in “guiding” the city and lobbying the state to accept several of his properties as opportunity zones. According to ProPublica, “Of the 10 most impoverished areas in the city [of Detroit]…only two made the cut. Of the 10 least impoverished areas, six were picked. Those include downtown tracts in which Gilbert has substantial investments.” Almost none of the neediest areas in America’s poorest large city were chosen for investment. In fact, many of the wealthiest neighborhoods, like Indian Village, were put forth for selection while other devastated areas, like Chandler Park (85% of residents live in poverty), went ignored.
According to the IRS breakdown, only those that invest in the zone, even if it’s not a business or they don’t live there, can get the benefit of the tax. In other words, as long as they have investment money to put into a project in the zone, they don’t have to pay taxes on that investment for up to 10 years. If that investment cannot be unloaded within 10 years, the taxes owed will be reduced by up to 20%. It’s a tax shelter that won’t even benefit the citizens that live in actual distressed areas.
Gilbert’s tax break will allow him to build up his designated zones in “impoverished” downtown , including his own office and the area adjacent to the Qline, while avoiding having to pay taxes on any of the properties designated for up to 10 years. Meanwhile the poorest neighborhoods have few working street lights, disappearing sidewalks and numerous vacant lots. The economic divide in the city will continue to grow and the resultant disparities will ensure the continued gentrification of the city.