SAN FRANCISCO, Mar. 16, 2018 – CRC recently submitted a letter to Governor Brown to raise concerns that the Opportunity Zone program that was included as part of the 2017 federal tax reform bill will facilitate the displacement of low-income communities and communities of color. More than 30 CRC members signed on. The text of the letter follows:
Dear Governor Brown:
The undersigned civil rights and community development organizations write with a sense of urgency regarding the Opportunity Zone program that was included in the 2017 federal tax reform bill.
Specifically, we are gravely concerned that this program, as currently structured, will contribute to displacement of low-income residents and residents of color in the selected census tracts. We understand that you are currently soliciting comments on which low-income census tracts in the state you should designate as qualified Opportunity Zones for the purposes of ensuring favorable tax treatment for investments in those areas.
The California Reinvestment Coalition (“CRC”) builds an inclusive and fair economy that meets the needs of communities of color and low-income communities by ensuring that banks and other corporations invest and conduct business in our communities in a just and equitable manner. As you know, the City of Oakland, much of the San Francisco Bay Area, Los Angeles, and large parts of the state of California have faced intense and increasing gentrification pressures over the last few years, leading to an alarming rise in evictions of residential tenants and small businesses, and home foreclosures on seniors and long term residents who were able to build assets only to see those assets stripped away. This has led to destabilization of families, disruption of community institutions, a weakening of the fabric of neighborhoods, and re-segregation of communities. This displacement crisis is been fueled by the overriding profit orientation of real estate investors, as well as the enabling financing of displacement by banks, private equity firms and other Wall Street entities. Investors and their financial backers are co-conspirators in the displacement crisis whereby funds are secured for projects that lead to the foreseeable, if not intended, eviction of low-income tenants, homeowners, and small businesses, many of whom are people of color. We are currently developing an Anti-Displacement Code of Conduct where banks, lenders and investors can sign on and join us in stating that not every investment is a good one, and not every loan is helpful to low-income communities and their residents and small businesses.
The Opportunity Zone program, as designed, will take California in the opposite direction. It assumes a trickle down philosophy that all and any investment in low-income areas is good for neighborhoods. But we are very much concerned about the harmful consequences from such an approach, regardless of whether these harmful results were unintended, or unconsidered. The program appears to put in place NO anti-displacement restrictions on the kinds of investments that will secure favorable tax treatment. Not only are displacing activities not excluded, but investments eligible for favorable tax treatment need not further affordable housing development and preservation, small business development, quality job creation, support for cooperative small business and housing models, or local hiring and minority vendor goals. There should be no tax benefit for investments that are harmful and destabilizing to low-income communities. In order to prevent further displacement under the guise of Opportunity Zones, we urge you to take the following steps:
Formally submit a request for a 30-day extension to submit census tract designations to the U.S. Department of the Treasury so as to provide more time to view the program, and potential Opportunity Zone tract designations, through an anti-displacement lens.
Ultimately, restrict Opportunity Zone designation only those low-income census tracts that are least likely to be subject to displacement pressures.
Explore the development of further anti-displacement enhancements to the Opportunity Zone program so that eligible investments are further defined and other parameters set, in order to ensure that investments lead to true community development that benefits existing
residents, small business, workers, and communities.
Thank you very much for your consideration of these urgent community concerns. If you should have any questions about the issues raise here, or wish to discuss this matter further, please feel free to contact CRC Executive Director Paulina Gonzalez, or Deputy Director Kevin Stein, at (415) 864-3980.
Very Truly Yours,
Asian Pacific Islander Small Business Program
California Capital Financial Development Corporation
California Community Economic Development Association
California Housing Partnership
California Reinvestment Coalition
California Resources and Training (CARAT)
Causa Justa: Just Cause
CDC Small Business Finance
Community Housing Opportunities Corporation
Community Legal Services of East Palo Alto
Consumer Advocates Against Reverse Mortgage Abuse (CAARMA)
East Bay Asian Local Development Corporation (EBALDC)
East Bay Housing Organizations (EBHO)
East Los Angeles Community Corporation (ELACC)
Fair Housing Council of the San Fernando Valley
Housing and Economic Rights Advocates
Housing Rights Center
Inland Fair Housing and Mediation Board
Koreatown Youth + Community Center
Lawyers Committee for Civil Rights of the San Francisco Bay Area
Main Street Launch
Mission Economic Development Agency (MEDA)
Public Interest Law Project
Public Law Center
Richmond Neighborhood Housing Services, Inc.
Small Business Finance Fund
The New Oakland
Women’s Economic Ventures