My Neighborhood Shows How the 'Opportunity Zone' Tax Program Just Helps the Rich

My walk to the Metro each day takes me past a construction site, where there are currently four large cranes looming overhead. Walking along Rhode Island Ave. in the morning means having several large trucks barrel past, exhaust fumes spewing, loaded with building materials bound for what’s being called the “Bryant Street development.”

In the next couple of years, this stretch of northeastern Washington, D.C., will transform from a hole in the ground next to a church and down the road from a McDonald’s and a Sav-A-Lot into an Alamo Drafthouse Cinema, some luxury apartment buildings, and, rumor has it, a grocery store.

And because the area has been designated an Opportunity Zone, investors will be able to reap hefty tax benefits for the money they put into these projects — which shows exactly how the Opportunity Zone program, created by the 2017 Trump tax cut law, has gone awry.

Opportunity Zones are intended to spur investment in low-income communities that aren’t traditionally targets for businessfolk or developers. In exchange for putting their money into areas usually starved of capital and leaving it there for a certain amount of time, investors will pay lower tax rates than they would otherwise. Leave an investment in an Opportunity Zone for 10 years, and the capital gains earned will be tax-free; returns to investors could be increased by up to 70 percent thanks to the program, according to one estimate.

More than 41,000 Census tracts nationwide were eligible to be designated as Opportunity Zones, and investors are already pushing for the upcoming 2020 Census to expand those areas.

On the surface, Washington D.C.’s Edgewood is a perfect fit. The poverty rate in the neighborhood is nearly 30 percent, and the median income is just $28,000, according to Census Bureau data, in a city where the median income is above $82,000.

But there are a couple of big problems. First, the developments that will receive tax benefits because of the Opportunity Zone were well underway before the bill creating Opportunity Zones even existed, thanks in part to a $24 million subsidy from the city itself. The lead development company, MRP, freely acknowledges that its project would have gone ahead without tax incentives.

“We were well underway, almost finalized with our development plans and our program and mix [before the Opportunity Zone designation],” John Begert, a vice-president at MRP, said at the project’s groundbreaking in July, according to WAMU. “We were able to take advantage of it, but it wasn’t an original thesis of the business plan and of the development.”

This is a problem endemic to both Opportunity Zones specifically and corporate tax incentives more broadly: They end up subsidizing companies for investments those companies would have made anyway. According to one study, up to 75 percent of tax incentives given to companies in order to locate somewhere specific actually had no bearing on that company’s decision.

All across D.C. the sort of development occurring in Edgewood has occurred without anything like an Opportunity Zone to incentivize it. A similar debate took place around the building of D.C.’s publicly-funded baseball stadium: Proponents like to point to the surrounding economic development as proof that the $750 million Nats Park was a good investment, but don’t really grapple with the fact that other neighborhoods across the breadth of D.C. developed in exactly the same way without a taxpayer-funded sports complex.

Edgewood is gentrifying rapidly.

But there’s also another question worth asking: Even if the Opportunity Zone were driving actual investment in the neighborhood, would that investment help the people at whom it’s ostensibly aimed? Like much of D.C., Edgewood is gentrifying rapidly; it’s a historically black neighborhood with more and more white people (myself included) moving in and driving up real estate prices, as it’s one of the few pockets of the city where there is any chance of a young professional being able to purchase a house somewhat near the Metro system. For white households in the neighborhood, the poverty rate is 2 percent; for black households, it’s 31 percent, according to the Census.

Rent and home prices are inevitably on their way up; there are currently two homes within the Opportunity Zone that are on the market for around $950,000, per Redfin. This will all hurt current residents who can’t afford higher living expenses.

Those same residents threatened with displacement likely won’t be able to take advantage of the new housing being built either, because D.C.’s average rent for a two-bedroom apartment is $1,550, and many so-called luxury buildings charge much more. Future jobs at the movie theater or other retailers likely won’t pay enough to cover that amount, and just 116 of a total 1,450 units in the Bryant Street development will be designated as affordable housing under the city’s Inclusionary Zoning program, which allows for units to be set aside for families making 50, 60, or 80 percent of the area’s median income.

The new development is meant to entice new people, not aid the ones already there.

Small businesses are under pressure due to the increasing property costs. Our local dry cleaner recently closed after the owners’ landlord refused to renew their lease. It will be replaced by a condo building. In order to make way for the new development, a Big Lots store, a couple of fast food joints, an H&R Block, and a kind of strange drum shop were also all forced to close.

There are no requirements that investors even track whether members of the community are benefiting from the money and amenities Opportunity Zones bring in. D.C. received a grant from a private foundation that will enable it to do at least some data collection, but the zone is already here and the grant was just announced this week. So, the cart is very much before the horse.

As city councilmember Brianne Nadeau wrote last year, “Unfortunately, the design of the program has some serious flaws, and will likely accelerate the patterns of displacement caused by runaway capital that we’ve already seen for decades, but on a federally-subsidized scale.” Indeed, the developer who receives a tax break that had nothing to do with the decision to invest in Edgewood undeniably benefits from the Opportunity Zone. But after that, it’s unclear who else comes out as a winner. There will almost inevitably be displacement, and nothing is being done to help the folks affected by it, particularly those who aren’t homeowners.

My neighborhood certainly isn’t the only one in D.C. where projects that were already planned, surrounded by blocks that were gentrifying all on their own, received Opportunity Zone designations. Nor is this a situation unique to the capital city. But it’s a particularly egregious example of how the rhetoric around a program meant to help economically disadvantaged communities doesn’t come close to matching the reality.

To sum it up, that my neighborhood is an Opportunity Zone is patently absurd.

On Tuesday, the Senate Health, Labor, Education, and Pensions committee will vote on the nomination of Eugene Scalia to be the next secretary of labor. A long-time employment lawyer, Scalia has a robust track record in pushing back on policies intended to make workplaces safer, more accommodating, and more accessible, particularly for workers with disabilities.

During the course of his career, Scalia has denied the science behind repetitive stress injuries, prevented UPS drivers injured on the job from having the ability to form a class to sue, and — most outrageously — insisted that an employee at Ford Motor Company should soil themselves at work rather than be allowed the privacy to work from home.

In the Ford case, Scalia defended the company against a claim that it had failed to accommodate a person with Irritable Bowel Syndrome. The plaintiff had requested telework as a reasonable accommodation, which the company refused and countered with an offer to move the employee’s cubicle closer to the restroom.

When the plaintiff explained that simply standing up could trigger a loss of bowel control, Scalia argued that they should have taken “self-help steps such as using Depends (a product specifically designed for incontinence) and bringing a change of clothes to the workplace.” In other words, when an employee asked for support, Scalia argued that she should wear a diaper and be ready to change her pants.

Scalia’s nomination has the potential to set back disability employment policy by decades.

This is not just a case for me. It is personal. As a person who has lived with inflammatory bowel disease for 34 years, I have requested and received the accommodations cited in this case. It’s not unusual for me to need quick access to a bathroom four, six, or eight times during a workday. On the days when that number is higher, I take advantage of telework. On days when it’s lower, I come to the office confident that my disability will not keep me from the work I love. Not because I’m forced to wear Depends — which would put me at risk for complications from inflammation or infection — but because of laws like the Americans with Disabilities Act that protect my right to accommodations that work for me.

Scalia’s nomination has the potential to set back disability employment policy by decades. The Department of Labor has a critical role in driving policy on disability employment, helping make the workplace safer and more accessible, and helping move the needle away from subminimum wage employment.

It might be easy to dismiss this administration’s nomination of Scalia as just one more dangerous appointment competing for our attention. That’s not what I see here. What I see is a nominee who endangers every worker’s right to reasonable accommodations. Not just the 3 million Americans who live with bowel disease, but the more than 60 million Americans with disabilities who depend on the ADA to protect them from discrimination by employers.

Trevor Powell* was a high school student working part-time at Target in Sioux Falls, South Dakota, in 2007 when he first heard about job openings for collections agents at First Premier Bank from a friend’s mom.

“I just wanted a job that paid more,” Powell explained. First Premier offered him $16 an hour in base pay, which could rise with incentive pay to $18 to $20 an hour depending on Powell’s success in collecting debts.

In a country where middle-class wages are hard to come by without a college degree, the comparatively good pay of debt collection can be a big draw. According to data from the Bureau of Labor Statistics, the median hourly pay in 2018 for debt collectors was $17.32, a big step-up in pay from other lines of work such as retail sales ($12.75) or fast food ($10.89).

71 million U.S. adults have fallen behind on a bill and now have debt in collections. According to data from the Federal Reserve Bank of New York, U.S. household debt is at an all-time high — and behind our system of easy credit are roughly 300,000 debt collectors, working for both lenders and 3rd-party collection agencies, whose job it is to recover money from American families.

These debt collectors may not match your expectations of slick-talking hucksters willing to do whatever it takes to get paid. Like many of the debtors they collect from, the collectors are often low-income themselves. While most have a high-school diploma or equivalent, some, like Powell, are teenagers. 69 percent of debt collectors are female.

At relatively low wages, debt collectors are expected to engage in what University of Brighton psychologist Carl Walker has called “mental warfare” in order to collect; the industry can leave behind scars for both the borrowers and the collectors. It’s a grueling job. In a 2016 Consumer Financial Protection Bureau survey, debt collection agencies with more than 250 employees reported an average turnover rate of 75 percent to 100 percent.

If you were born into the middle class, you’ve probably never heard of Powell’s former employer, First Premier, but it’s a major player in America’s system of subprime credit. At one point, it accounted for as much as 47 percent of all subprime credit card solicitations sent out in the United States, and now it’s the nation’s 12th biggest issuer of Mastercard credit cards.

First Premier credit cards often come with eye-popping fees. One, for example, has a $300 credit limit, a $95 one-time “program fee,” $75 in total monthly and annual fees in the first year, $120 in monthly and annual fees in all subsequent years, and a 36 percent APR. Those exorbitant prices draw in only those consumers with few other options for credit.

As Powell explained, if the borrower couldn’t pay on the spot, the collections agents at First Premier would ask for a “promise to pay.” There was folk wisdom about what different promises to pay meant: a $20 money order on the 3rd of the month meant the customer was on disability, and if it was coming on the first of the month, it meant the customer was a senior collecting Social Security. Getting a customer’s checking account credentials was ideal — it let First Premier automatically debit the customer’s bank account on the specified date — but debit and credit card payments, payments by Western Union, or money orders were all fair game as well. A lot of customers were surprised or angry about how much they owed.

The job “definitely broke you down,” said Powell. “At a certain point, you felt like you weren’t doing the right thing.” Powell “no-called, no-showed” — e.g. got fired after failing to show up to work — a little more than a year after he started. “The lion’s share [of customers] probably would have been better off if they had never opened the card,” he said.

The company’s current interest rates in Arizona were as high as 180 percent per year.

When Chaz Fertal went in for his job interview at Checkmate in Phoenix, Arizona, in 2010, he was originally afraid he was getting duped in a Craigslist scam. Fertal showed up to an office that appeared deserted, with blacked-out windows, only to find out the building had been intentionally obscured; Checkmate was concerned that angry customers would try to track the debt collectors down. Fertal’s base pay at Checkmate was around $2,000 per month, but offered the possibility of big commission checks. Fertal says his biggest was around $4,400, meaning your pay could more than double if you were good at getting borrowers to make payments.

A current Checkmate employee confirmed over the phone that the company’s current interest rates in Arizona were as high as 180 percent per year. As Fertal explained, a customer wouldn’t actually have to make progress on paying down their debt for the Checkmate collector to earn his commission. If customers fell behind and went into collections, Fertal said he would earn commission whether he convinced them to pay the full balance or if he convinced the borrower to pay off outstanding interest while taking out a new loan. For the purposes of commission, taking on a new loan counted as “paying off” the old one.

Fertal said the incentive scheme encouraged agents to push borrowers into these loan “rollovers.” “You’d talk to a customer on the phone who after four or five months would still owe the whole amount” and they’d be outraged, Fertal said, when they realized the payments they’d made had done nothing to pay down their debt.

For Fertal, there was a clear day, he said, when he realized he didn’t want to work at Checkmate anymore. When Checkmate customers applied for loans, they typically gave Checkmate a bank account routing and account number, giving Checkmate the right to withdraw payments; if a customer went past due, the loan entered default, and, Fertal says, Checkmate would attempt to withdraw the whole outstanding loan balance from the customer’s checking account. If Checkmate wasn’t successful at withdrawing the full amount, they’d break the balance into smaller amounts and try again — Fertal said the company’s practice was to make three attempts per day, starting at 4:30 in the morning, just after any direct deposits would have landed in the borrower’s account overnight. The only way, Fertal says, a borrower could stop the process, was by making a promise to pay and providing a credit card number or debit card number to do so.

Fertal remembers one borrower well. Overnight, Fertal says, Checkmate had taken the woman’s “entire paycheck, I think it was a thousand dollars,” he says. “She had two or three kids. She told me, ‘I have nothing to feed my kids, our refrigerator is empty, they took everything.’ I went to the ACH department and they couldn’t reverse it. She told me, ‘I don’t know what I’m going to do, the only thing I can think of is killing myself’ — and I knew it wasn’t a lie, you could hear the loss in her voice. I remember telling her, ‘your kids need you more than anything right now, and that that’s not the answer.’ I was trying to see if there was anything we could do, even taking out a new loan, but she still had a balance on her existing loan.”

Fertal quit shortly after that phone call in 2011, and he said he still thinks about that woman and her family.

Fertal and Powell’s experiences show the toll subprime credit and debt collection industries take not only on their customers, but on the front-line agents as well. These debt collection jobs offer Americans a step up in financial security, in exchange for taking on the difficult role as intermediary between high-priced lenders and consumers in dire straits.

“The environment would just be toxic. You’d get a worse and worse impression of people,” said Fertal. “The reality is that you’re not talking with people who are in a great place in their life.”

Editor’s note: Trevor Powell asked that his name be changed for privacy.

This post has been edited to clarify Fertal’s commission earnings.

Recently, the Washington Post uncovered a Trump administration proposal to monitor the smartphones of people with mental illness, under the guise of detecting and preventing violence before it occurs. This new strategy is consistent with a slew of remarks Trump has given in recent months targeting people with mental illness, including an explicit call to expand institutionalization.

However, President Trump is not alone in targeting people with mental illness in the aftermath of gun violence instead of focusing on access to guns. New York Gov. Andrew Cuomo and Texas Sen. Ted Cruz, among others, have done the same. If they’re successful, it will be another hard hit against marginalized communities during an administration when they are already under attack.

The American legal landscape is a complex web of laws that subject mentally ill people and those experiencing acute crisis or suicidality to surveillance and restrictions of their rights, which most notably includes the right of states to involuntarily commit a person with mental illness or to mandate outpatient treatment. Undergirding this legal framework is the presumption that people with mental illness are prone to violence (whether against themselves or others).

This is sanism: The system of institutionalized oppression that systematically disadvantages people perceived or determined to be mentally ill, while granting privileges to those considered sane.

The legal link between violence and mental illness is so strong that the United States often uses institutionalization as part of the broader carceral system. Among the most glaring examples of this are the insanity defense, people who are deemed incompetent to stand trial, and sex offenders who are confined to mental institutions even after the completion of their criminal sentence.

Technically, people charged under these laws are not sent to prison. However, institutionalization functions as a form of medical incarceration; patients are not free to come and go, and are often confined in hospitals for a longer period than they would have been confined to jail or prison. In fact, the population of forensic patients in state psychiatric hospitals has grown so rapidly that many state institutions are at or beyond capacity, with some patients held for decades or even indefinitely.

The specific legal criteria for involuntary civil commitment vary across states, but most states rely on the dangerousness criterion. In theory, it assesses if a mentally ill person poses a threat of danger to themselves or others to determine whether to initiate civil commitment proceedings. However, states generally do not distinguish between the danger posed to oneself and the danger posed to others in determining the appropriate interventions. The law affirms that states, pursuant to their parens patriae power, or the authority to act as a guardian for those unable to act on their own behalf, have a substantial interest in subjecting people with mental illness to involuntary commitment to ensure their safety or their community’s safety.

So even when no crime has been committed, people can be medically incarcerated. In a country that guarantees a constitutional right to liberty and due process, that poses a serious problem.

Trump’s call for increased institutionalization, therefore, bears a striking similarity to the cruelty of his other policies: It capitalizes on widespread anxiety about community safety in order to justify expanding carceral control of “deviant” groups. People of color and other historically marginalized populations will bear the brunt of any such expansion. People of color are more likely to be found incompetent to stand trial, and Black people are three to four times more likely than white people to be diagnosed with psychotic disorders. Black and Native people are disproportionately impacted by institutionalization and are more likely to be mandated to receive involuntary outpatient treatment.

The American mental health system is violent.

Much like the proposal the Trump administration is weighing today, previous policies meant to reduce gun violence ultimately increased surveillance and criminalization of people with psychiatric disabilities. For example, 43 states currently require or authorize that people flagged by the state due to certain mental-health adjudications have their names reported to the FBI’s National Instant Criminal Background Check System (NICS). Four more states require such collection in an in-state database, each of which place people who have been involuntarily committed on lists alongside those convicted of violent crimes to bar them from purchasing firearms. Following the shootings at Virginia Tech, mental health related reporting to NICS spiked by 700 percent in just under seven years.

This becomes increasingly important as a focus on suicide becomes a larger target in gun violence prevention. While politicians have previously been met with skepticism for pinning mass shootings on mental illness, they have found support when focusing on the danger that people with mental illness are presumed to pose to themselves. This allows politicians to dodge the issues underpinning mass gun violence, instead targeting a population of people with much less political capital (people with mental illness) rather than the main perpetrators of mass shootings (straight white men). In that sense, they are leveraging sanism to protect white supremacist patriarchy.

As a result, the focus on suicidality is likely to increase the number of people who are institutionalized, without decreasing the number of mass shootings.

The American mental health system is violent. People with mental illness, particularly people of color with mental illness, are increasingly subject to punitive coercive treatment instead of community-based models for healing and care. The national fixation on mental illness which inevitably follows mass shootings is harmful not only because it does nothing to curb gun violence, but because it is a pretext for entrenching and expanding oppression.

Each time gun violence and mental illness are discussed together, we ultimately reinforce the discriminatory assumptions which animate our laws and justify dehumanizing treatment and oppression of psychiatrically disabled people.

Several weeks ago, the NYPD pulled up on me and a friend while we were standing outside of my friend’s home. Four officers jumped out of an unmarked car. I guess they psychically knew that we were about to smoke a joint, though neither one of us actually had weed in our hands.

While searching us, one of the officers said, cynically, “It ain’t legal yet,” though the “it” was not found on us.

It was around 10 p.m. and I was too tired to assert my rights or to say that I was in a meeting with their commissioner earlier that week about NYPD’s plans to build community-police relations. We accepted the harassment, survived the interaction, and went to our respective homes to smoke our blunts in peace, like most white people who now claim Crown Heights as their home.

Police murders of unarmed people in America sprout from seemingly benign harassment like that which happened to me and my friend, a military veteran — like what happened to Eric Garner, who was strangled to death for bootlegging cigarettes.

In August, California passed a law making it less legal for law enforcement to kill Black and Brown people such as Eric Garner. California’s recently passed Assembly Bill No. 392, described by some as one of the toughest standards in the nation for when law enforcement officers can kill, is progress. Known as the “Act to Save Lives,” the law removes barriers to prosecuting officers who unlawfully use lethal force. The new law also redefines when a peace officer’s use of deadly force is deemed justifiable, based on the totality of the circumstance.

The LAPD alone killed 172 people in 2017. This new law would presumably decrease that number because police will be able to use deadly force only when, based on the perspective of the officer, it is necessary in defense of human life.

Advocates such as Cat Brooks at the Anti Police-Terror Project are the architects of this new law, potentially setting a legal precedent to be replicated across the country.

Acknowledging the success of the efforts of these advocates can occur while we also question whether substantive progress has been made. Five years ago, more than 500 journalists, lawyers, medics, organizers, pastors, students, tech experts and videographers participated in what would be called the “freedom rides,” which were response to the murder of unarmed Mike Brown by Ferguson police officer Darren Wilson.

The group of freedom riders, along with the local residents of Ferguson, had a list of demands, including: “a decrease in law-enforcement spending at the local, state and federal levels and a reinvestment of that budgeted money into the black communities most devastated by poverty in order to create jobs, housing, and schools. This money should be redirected to those … departments charged with providing employment, housing, and educational services.”

California’s new law doesn’t address that concern.

Rightfully, the Act to Save Lives regulates policing with impunity. Police will no longer easily get away with the “I feared for my life” script; they will have to prove after the murder or assault that a “reasonable officer in the same situation would believe that a person has the ability…and intent to immediately cause death or serious bodily injury to the peace officer or another person.” All of this substantiation would be done after the hashtag for this person is created and goes viral.

What is still to be tackled is the oversaturated deployment of police into communities of color.

Which brings me back to Brooklyn. This fall in the East New York section of Brooklyn, less than a mile from where I was harassed, the NYPD is opening its first stand-alone community center — a $10 million investment by the City of New York.

Now, positive police-community relations are a plus for any community, but it is not where we need to invest $10 million dollars in a community where in 2015, the rate of preterm births, a key driver of infant death, is the fourth highest in the city; the teen birth rate is higher than the city average; and the rate of elementary school absenteeism is eighth-highest in the city.

Social welfare is not a function of police training, nor is it a part of their corporate culture. More importantly, policing as a practice has a foundationally biased perspective of poor Black and Brown communities, and that is a truth we all should be honest enough to sit with.

The step after this acknowledgement is changed behavior. Listening followed by action.

Over the past year or so, I have been in roundtable conversations with a diverse array of actors in the criminal legal system. Organizers, directly impacted people, loved ones of the impacted, along with academics, judges, prosecutors, defense attorneys, elected officials, social workers, historians, cops, prison guards, and wardens — basically all the cogs in an irreformable and irreparable old steam engine.

The convenings are a part of a project that Bruce Western of the Columbia University Justice Lab called the “Square One Project.” The home page provokes the following scenarios:

Imagine neighborhoods soaring in education instead of arrests.

Imagine community groups leading the effort to end violence in our towns and cities.

Imagine a response to crime that brings communities together instead of breaking them apart.

The next Square One roundtable convening will take place in Detroit in October, and I also wonder, “can police imagine a community that does not rely on them as a dominant resource?”

In communities such as East New York and Ferguson, police-community relations are one problem of many: High unemployment, negative prenatal outcomes, bad water, dilapidated and unaffordable housing, and the list can go on. More of a police presence is not a solution to any of the above.

Emory University Sociologist Abigail Sewell asserts that “part of the solution may be to reduce police contact in the first place.” With that reduction can come abundant and sustainable investments in community-based organizations and individuals of expertise who reside in the projects and hang on the street corners — the community writ large.

Regulating the justifications for police use of deadly force is a commendable step in the right direction. The leap that communities like East New York need, however, is an investment in reducing the social determinants that give law enforcement the excuse to have a suffocating presence there.

Black and Brown neighborhoods do not need more overseers, or more state of the art smaller jails. We are capable of thriving without emphasis on our perceived criminality, and we are capable of taking care of ourselves, just like those in places like Beverly Hills, Los Angeles, or Carrol Gardens, once we are provided with the tools to deal with the tentacles of American racism, such as poverty, the distribution of money, and overpolicing. The “Seven Neighborhoods Study” produced by formerly incarcerated people in the 1990s found that there was a “direct connection between low income, racially isolated, underserved communities…and encounters with law enforcement that result in prison or death.”

Only time will tell whether the Act to Save Lives will have a measurable positive impact on police interactions with Black and Brown people. That new NYPD community center will come as a win for those focused on building a new paradigm for police-community relations.

But the academic and practitioner in me still thinks about Malcolm X, who famously said, “If you stick a knife in my back nine inches and pull it out six inches, there’s no progress. If you pull it all the way out, that’s not progress. The progress is healing the wound that the blow made. They won’t even admit the knife is there.” I know that police harassment is an underlying and extralegal blade that can be wielded at any time in the name of progress.

Yes, it is less legal to be killed by police, but I still feel the knife.

My Neighborhood Shows How the ‘Opportunity Zone’ Tax Program Just Helps the Rich

Eugene Scalia Ruled It’s Ok to Make Disabled Workers Soil Themselves on the Job

Debt Collecting Promises High Pay. All It Costs Is Your Soul.

Increasing Surveillance of Mentally Ill People Won’t Stop Mass Shootings

California’s Use of Force Law Is a Start, But Not What Communities Really Need

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