How Opportunity Zones Are Hurting The Growth Of Low-Income Black Neighborhoods

Redlining is back in fashion, we see.

Photo credit:Blavity

| July 15 2019,

5:16 pm

At first glance, opportunity zones seem like the perfect executive order to help low-income black communities gain the infrastructure and resources they need: More corporations will pour in and money from investors go to the community.

There is a possibility for more jobs to be offered to residents in these communities as they start to rebuild. However, this means people get displaced and pushed out by the investors and corporations using their city as a new profit ground. 

Opportunity zones are specific neighborhood zones outlined by the government as places of “opportunity” for investors who invest in housing and business development. These zones are often in low-income predominately black neighborhoods.

For example, in Los Angeles County, low-income neighborhoods such as South Central, Watts, and Compton are all designated by the government as opportunity zones. Yet, in each of these neighborhoods, black residents are the second-largest racial group living there, behind Latinx residents. 

These designated zones became a legal matter when it was placed into the Tax Cuts and Jobs Act of 2017. The government gave investors federal tax incentives, which will defer taxes until 2026. This means rich investors can avoid paying taxes if they invest in poor neighborhoods, enabling wealthy entrepreneurs to develop in them, despite being overlooked for financial and institutional support.

According to the National League of Cities, state governors handpicked 25 percent of their states’ low-income areas where the poverty rate is up to 20 percent of the population and/or the average family income is 80 percent below the median income for that certain neighborhood. An investor can then create an opportunity fund where 90 percent of the fund will be invested in a business that operates in the opportunity zone, or undeveloped, or established property.

Opportunity Zones are legal and justified redlining — something most poor and working-class black neighborhoods have historically faced through the racist practice of housing discrimination laws. When redlining took place in the 20th century, black people were displaced from their neighborhoods and strategically segregated into specific areas where they continue to receive no resources for survival.

Opportunity Zones follow a similar formula as redlining — with the same justification and tactics — yet it takes advantage of its historical effects to provide the resources they were never given.

Many of the retailers and businesses with the most locations are already situated in low-income neighborhoods such as McDonald's and Dollar Tree. This leaves room for bigger conglomerates such as Whole Foods and Starbucks to come in, leading to a displacement of residents due to a rise in rent and retail prices.

As a result, small businesses that have been there much longer will also be pushed out. Community ties become dispersed and the city no longer becomes recognizable to its people. If these businesses are there to serve the people but are removing them from their neighborhoods instead, this does not bring community reinvestment like the Opportunity Zones Program claims it will build. 

None of the businesses are held to policies that require them to put the community first and the communities are not involved in the process. Opportunity zones place power in the hands of the state and federal government, and disempowers the people. It also gives more allowance to big businesses before taking any consideration from the residents or even local government.

Opportunity Zones pick up where redlining left off and disguises itself into an improvement mission for low-income black people. Basing a city’s financial security on the revenue it will bring does not eliminate the city’s poverty. It instead builds control and reliance on businesses by giving them the power to determine the livelihood of the city’s residents.