The Jaxson: Opportunity Zone Program Could Speed Up Gentrification In Northeast Florida

Oct 19, 2018

As a part of the Tax Cuts and Jobs Act of 2017, Congress established a new community development program now known as Opportunity Zones to drive long-term private sector investment into low-income urban and rural communities nationwide.

By putting their money into these Opportunity Zones, investors can receive a variety of tax incentives.

Every state or territory was allowed to designate up to 25 percent of its census tracts as Opportunity Zones, with 8,700 census tracts selected by state governors and certified by the U.S. Department of the Treasury to be officially designated.

However, a quick look across the country suggests that not all Opportunity Zones are equal or representative of low-income communities. Home to the Cleveland Clinic, Case Western Reserve University and University Hospital, Cleveland’s University Circle is now an Opportunity Zone. In Detroit, long economically distressed areas of the city find themselves omitted while an area that’s become Dan Gilbert’s personal redevelopment playground and home to a Whole Foods has been designated. This is because up to 5 percent of census tracts can be designated under an exemption if they are contiguous with a designated low-income community.

Of the 8,700 census tracts designated as Opportunity Zones, 427 are located in Florida. This number comes as a result of Governor Scott’s narrowing down an initial list of more than 1,200 requests from municipal and county governments, regional planning councils, nonprofits, developers, investors and others.

What About Jacksonville?

In Northeast Florida, 34 census tracts are designated as Opportunity Zones, including 19 in Duval County – some of which are well-known projects that are already getting millions in local tax incentives. According to a  Florida Politics, some of the local tracts were selected for strategic reasons, including two in the Cecil Commerce Center area, one in Arlington and one in Mayport.

In Downtown Jacksonville, the Shipyards, Metropolitan Park and TIAA Bank Field now all fall within designated areas. Urban communities designated as Opportunity Zones include the Eastside, Durkeeville, the Rail Yard District, St. Nicholas, New Springfield, Brentwood, Norwood, Lackawanna, Mixtontown and the Philips Highway corridor north of Emerson Street.

Many of these areas were selected partially due to their infrastructure, ability to absorb private capital and having community redevelopment agencies that can now benefit from the program. Outside of Duval County, newly designated Opportunity Zones include Nassau County’s State Road 200 corridor between Yulee and Fernandina Beach, the State Road 16 corridor east of I-95 in St. Johns County and St. Augustine’s Lincolnville Historic District.

Will Opportunity Zones help distressed residents or be a tax cut for gentrification?

Proposed infill development in the Opportunity Zone around Jacksonville’s TIAA Bank Field includes taxpayer-funded projects that come at the expense of the city’s downtown core.  An entertainment center at Lot J and Metropolitan Park could replace the Landing, and JEA could abandon the heart of the city for a new headquarters a mile away.

City Lab questions the Opportunity Zone program and suggests if we use history as a guide, the only thing Opportunity Zones will result in is tax giveaways for investment that would have occurred anyway. It’s hard to argue with that position with the Shipyards, Flagler College in St. Augustine and a section of Philips Highway where hundreds of luxury apartments already under construction are designated Opportunity Zones.

In the case of St. Augustine’s Lincolnville, once called Little Africa, it is already struggling with the negative impacts of displacement from gentrification. Without additional safeguards in place, an extra infusion of investment into a community already suffering from market rate displacement will only help kick gentrification up into high gear.

Predicting Jacksonville’s Future

Given its proximity to redevelopment initiatives around TIAA Bank Field, Jacksonville’s Eastside is a historic black neighborhood where residents could be displaced and the community could lose its historic sense of place and cultural identity if potential negatives associated with the Opportunity Zone program outweigh the positives.

Ultimately, time will tell if the Opportunity Zone program improves economically distressed communities or simply assists in serving as a tax break for the wealthy, ushering in rapid gentrification in areas where private capital is already being invested. Nevertheless, barring an economic downturn, it does not take a rocket scientist to predict sites that are already a redevelopment priority for local officials and politically connected investors will blossom first.

On the other hand, the program does offer the opportunity for proactive residents, investors, community development agencies, nonprofits and business owners to benefit from the tax breaks included in the program. With this in mind, residents, advocates and organizations seeking to mitigate the negative impacts of displacement while also revitalizing their communities must work with their political representatives to develop regulatory safe guards to guide new investment in a manner that builds upon the community as opposed to outright replacing it.