and 9 months ago

Opportunity Zone fever, debate spreads from Birmingham to the Bronx

In a former warehouse on a dimly lit street in the South Bronx, developers sipping Puerto Rican moonshine listened as a local official urged them to capture a new U.S. tax break by rebuilding the decaying neighborhood.

In Alabama, a young lawyer quit his job after seeing the same tax break’s potential to help one of the nation’s poorest states. He now spends his days driving his Hyundai from town to town, slideshow at the ready, hoping to connect investors with communities.

And on a conference call with potential clients, a prominent hedge fund executive pitched investments in a boutique hotel in Oakland, which he described as San Francisco’s Brooklyn. The project is eligible for the same tax break, designed to help the poor.

Fervor about opportunity zones is heating up across the U.S. For a limited time, investors who develop real estate or fund businesses in these areas are able to defer capital gains on profits earned elsewhere and completely eliminate them on new investments in 8,700 low-income census tracts. The goal is to reinvigorate these areas. But the question is whether the 2017 tax law will, as U.S. Treasury Secretary Steven Mnuchin predicts, pump $100 billion into places that need it most, or if investors will play it safe by funding projects in a few zones already on the upswing.

There’s no lack of optimism among officials in shrinking Rust Belt towns, wind-swept Western landscapes and hurricane-ravaged Puerto Rico, who hope to jump-start local economies. The incentives are so flexible they could be used for everything from affordable housing to solar farms.

Yet on the investor side, much of the attention is fixed on how to turn a profit in already thriving areas. They include neighborhoods surrounding Manhattan, Atlantic beach towns drawing vacation-home developers, bedroom communities near Silicon Valley and anomalies like Portland, Oregon, where the entire downtown was deemed eligible for the breaks.

“The phrase I keep thinking of is ‘gold rush,’” said Michael Lortz, an accountant who works with developers in Portland. “There’s a lot of money from out of town that’s coming here.”

Already, a policy debate is raging. Backers are urging people to reserve judgment, and they say the tax breaks have galvanized cities, businesses and investors to think creatively about boosting parts of the country most in need. Critics say the incentives were poorly calibrated and may amount to a boondoggle far in excess of the official $1.6 billion projected cost.

Americans may have to wait months or years to learn which side is right. That’s because the law doesn’t require investors to disclose projects, making it difficult to tell which areas are benefiting the most.

But there’s plenty of evidence that a boom is brewing. Goldman Sachs Group Inc., which already had an investment team focusing on struggling communities, has disclosed about $150 million in projects in recent months. Purchases of sites inside opportunity zones spiked as the tax law took effect, outpacing growth in other areas, according to Real Capital Analytics, which tracks property sales. Altogether, investors spent 62 percent more on properties eligible for tax breaks in the 12 months through September, compared with those in the same census tracts a year earlier, its data show.

Here are snapshots of what’s happening across America:

Driving Alabama

Alex Flachsbart, 30, has a lot of time to talk when he’s in his SUV crisscrossing Alabama. A lawyer who specialized in economic development grants and tax breaks, he quit his job last year to start Opportunity Alabama, aiming to connect capital to worthy projects. For the past several months, he’s been educating people about opportunity zones, speaking to local officials, business owners and investors.

“I have done the OZ PowerPoint God knows how many times,” Flachsbart, who grew up in the Bay Area, said from behind the wheel one day in December.
When he read about opportunity zones in a 2017 draft of the Tax Cuts and Jobs Act, his mind reeled. Here was an uncapped subsidy far more flexible than anything he’d used before. It could draw investment for an array of projects. He imagined funding startups in Huntsville, where NASA’s presence has lured a deep bench of talented engineers, and the renovation of an old civic complex in Mobile.

Flachsbart’s nonprofit – which has board members from the state’s largest utility and its biggest bank, Regions Financial Corp. – is now in talks for 10 potential projects that need more than $100 million in equity investment, he said. None have been funded yet, but he’s certain some will be. Meanwhile, he keeps driving.

Bronx boost

Port Morris Distillery, which makes a high-alcohol rum called pitorro, was the perfect spot for an opportunity zone pitch. It’s on a block with a colorful mural, industrial buildings ready for loft conversions and views of the Manhattan skyline. Much of the surrounding South Bronx is now an opportunity zone.

“We have always been the most ignored,” Marlene Cintron, the borough’s head of economic development, told an audience of developers and lawyers in November. “These opportunity zones are here for you to take advantage of them.”

The case for the Bronx, where incomes are among the lowest in New York, is that it’s the last borough awaiting revitalization. The tax incentives are designed to unleash it. If developers can buy at current Bronx prices, before seeing a Brooklyn-like rise, the breaks would be massive.

“Huge, huge upside that you’re not going to get if you build a strip mall in Topeka,” said Terri Adler, managing partner of law firm Duval & Stachenfeld LLP, who also spoke at the event.

Yet the Bronx faces a formidable problem: It’s competing with other zones across the city, including waterfronts in Brooklyn and Queens with stronger momentum. The tax break Bronx officials hope will rejuvenate their borough may instead lure more money to what looks like a safer bet across the river.
In November, Inc. selected Long Island City for its next headquarters.

Portions of that Queens neighborhood, including a former plastics factory the retailer plans to occupy, are inside opportunity zones, even though they’re among the city’s fastest-growing areas. In 2017, more apartments were built there than in any other neighborhood in the city.

Baltimore billionaire

One of the arguments over opportunity zones is whether the U.S. is handing wealthy investors and companies big breaks on projects they would’ve done anyway. One example: Hedge fund executive and former White House spokesman Anthony Scaramucci plans to build a “swank, boutique hotel” in Oakland. The paperwork for the permit was filed months before the neighborhood was designated an opportunity zone.

But that project pales in comparison to what’s happening in Baltimore. More than a year before President Donald Trump signed the law, real estate developer Steven Siegel helped negotiate one of the largest public financing deals of its kind for a client, a company owned by billionaire Kevin Plank, founder of athletic-wear maker Under Armour Inc.

In 2016, Baltimore’s city council approved a $660 million financing package for a 235-acre mixed-use development, including new offices for Under Armour, along the city’s waterfront. The area was already designated as an enterprise zone and a brownfield site, connoting additional lucrative tax breaks, and the project attracted a $233 million investment from Goldman Sachs’s urban investment group.

Then came the opportunity zone designation.

The tax break is only supposed to apply to real estate purchased after the law took effect. But lawyers across the country quickly began working around that to get the benefits for projects planned before the law was passed. Many tax experts have recommended sales to new entities. So long as the seller owns no more than 20 percent of the buyer, the transaction counts as arm’s-length and qualifies.

Siegel said his firm, Weller Development, has found enough new investors to comply with the arm’s-length requirement. The company has seen so much demand, he said, that he’s looking to replicate the project elsewhere.

“We’ve been fielding a lot of inbound interest,” Siegel said, declining to name cities that have approached him. “That stimulated us to take this show on the road.”


Boulder balks

In mid-December, during a marathon city council meeting that stretched past midnight, Boulder became perhaps the first jurisdiction in the country to reject its own opportunity zone. Officials in the Colorado town imposed an 18-month moratorium on almost all development in its only census tract earmarked for the incentives.

The move highlights how local officials have the power to respond to criticisms of the law – in this case, that investors may rush to build projects the community doesn’t want. Boulder has long been a favorite spot for growing companies because people want to live there, thanks to its college-town vibe and quick access to nature.

“People think we have too much” development, said Bob Yates, a council member. “We’re not Detroit.”

Though Yates, a former telecom executive, opposed the moratorium and worries it will make things difficult for businesses in the zone, he understands why people in Boulder, a liberal enclave, were skeptical of an idea enacted by a Republican Congress. He just wishes his city would take a more measured approach.

The zone includes an aging mall called Diagonal Plaza. The tax incentives could have spurred investors to redevelop it to include affordable housing, which is sorely needed, he said.

“Boulder’s teachers can’t live in Boulder,” he said. “It’s not a healthy thing to have socioeconomic divide where lower-income people have to live outside of town to serve higher-income people in town.”

(Courtesy of Alabama NewsCenter)

8 hours ago

Roby: U.S. service academies nomination deadline is quickly approaching

It’s hard to believe we’re already halfway through the month of October. November will be here before we know it, and with it comes Veterans Day. This is a uniquely special holiday, and as it approaches, I encourage you to take some time to reflect on the endless sacrifices made by those who have worn the uniform.

It is a tremendous honor to serve the Second District, which is home to two of our nation’s finest military installations, thousands of active duty and reserve personnel, and a large veteran population. Working on behalf of our service members and veterans has always been a top priority of mine in Congress, and it continues to be one of the most rewarding parts of my job. With Veterans Day on the horizon, I am personally reminded of the great debt of gratitude we owe the men and women of our military.


As this important holiday nears, I believe now is an appropriate time to remind high school seniors in the Second District that the deadline to apply for nomination to the United States service academies through my office is less than one month away on November 8 at 5:00 p.m. Central Time. If you or someone you know is interested in pursuing this fantastic opportunity, please remember to submit all necessary materials to my Montgomery office by the deadline.

As a member of Congress, one of my distinct privileges each year is to nominate candidates for appointment to four of the five service academies: The United States Military Academy at West Point, the United States Naval Academy, the United States Air Force Academy, and the United States Merchant Marine Academy. The fifth service academy, the United States Coast Guard Academy, does not require a congressional nomination for appointment.

I can nominate up to 10 individuals for each vacant slot allotted to the Second District. If you are pursuing entry to one of our nation’s distinguished service academies and endeavor to serve our country, I would like to offer my sincere gratitude and wish you the very best. It is because of our veterans, active-duty personnel and young leaders with hearts for serving this nation that we enjoy our uniquely American freedoms.

In the spirit of the upcoming Veterans Day holiday, I offer my sincerest thanks to all who have served our country in uniform. It is an honor to represent you in Congress, and I hope you will call on me if I can ever be of assistance to you. If you are a high school senior in the Second District and are interested in learning more about obtaining a nomination to the service academies from my office, please contact my staff in Montgomery by calling (334) 262-7718. Additional application information is also available on my website:

Martha Roby represents Alabama’s Second Congressional District. She lives in Montgomery, Alabama, with her husband Riley and their two children.

9 hours ago

Tide continues to top AP poll, Auburn No. 11

The Associated Press released their weekly college football poll on Sunday, with the Crimson Tide holding on to the top ranking after a 48-27 win at Texas A&M and Auburn moving up one spot following a bye-week.

Alabama (6-0) received 1,503 total points and 30 first-place votes, while LSU (6-0) moved up to number two with 1,449 points and 12 first-place votes after beating Florida.

Clemson, Ohio State and Oklahoma rounded out the top five, followed by Wisconsin, Penn State, Notre Dame and Florida.

Georgia fell from third to number ten after a stunning home loss to unranked South Carolina. The top seven teams are all undefeated.


LSU and Bama will play in Bryant-Denny Stadium on November 9.

One conference has held both the top two spots 75 times since the AP poll started in 1936, none more than the SEC. Incredibly, this is the 27th time the SEC has simultaneously had the numbers one and two teams in the rankings since 2000. Ten of those times have involved the Tide and LSU Tigers at the same time.

RELATED: Return of ‘rat poison’: Saban warns players about listening to buzz about draft stock, records

Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn

10 hours ago

VIDEO: Almost everyone wants impeachment, Sen. Doug Jones feels the pressure, Alabama Democrats’ chaos continues and more on Guerrilla Politics

Dale Jackson and Dr. Waymon Burke take you through this week’s biggest political stories, including:

— Can President Donald Trump and other Republicans force House Speaker Nancy Pelosi’s (D-CA) hand on impeachment?

— What happens if U.S. Senator Doug Jones (D-AL) votes for President Trump’s impeachment?

— Will Alabama Democrats ever end their infighting and unite as a party?


Jackson and Burke are joined by Lt. General Jim Link (U.S. Army – Retired) to discuss foreign policy matters in Syria and Hong Kong.

Jackson closes the show with a “parting shot” where he talks about how the NBA’s hypocrisy on Hong Kong will undermine all their social justice preening they do on American political issues.

Dale Jackson is a contributing writer to Yellowhammer News and hosts a talk show from 7-11 am weekdays on WVNN.

11 hours ago

Rain barrels helping Alabama city combat flooding

Patsy Stallworth loves her rain barrels.

“I didn’t understand it at first, but after my husband explained it to me, I like it.”

Stallworth has two 55-gallon rain barrels installed at her home in the Mobile suburb of Prichard, catching up to 110 gallons of rainwater for her to use to water her flowers, wash her cars and wash the dirt off the house.


“I was amazed at how it worked,” Stallworth said. “When it rains it fills up really quickly. This is a new adventure for me.”

Rain barrels helping alleviate flooding issues in Prichard from Alabama NewsCenter on Vimeo.

The rain barrels were installed at Stallworth’s home, free-of-charge, thanks to a stormwater mitigation program organized by the Mobile Bay National Estuary Program. Christian Miller, Watershed Management Coordinator for the Mobile Bay NEP, said the rain barrels are a big help in reducing flooding in Prichard, which is part of the Three Mile Creek Watershed.

“We’ve had a lot of issues with residential street flooding and some issues with sanitary sewer runovers, so some of the ways to combat this are to put in these rain-catchment devices,” Miller said. “These two 55-gallon drums aren’t going to solve all of our problems, but as we get more of these out it will hopefully help to reduce these localized issues with residential flooding.”

An inch of rain falling on a typical 1,000-square-foot roof yields more than 600 gallons of water which, in urban areas like Prichard, ends up washing down streets and other hard surfaces, picking up and carrying pollutants into waterways. Miller said increased rainwater harvesting will help reduce impacts associated with residential stormwater runoff.

“The residents have been the biggest champions,” Miller said. “Once we get them in and see what utility they have, they go around and tell their neighbors, the neighbors come to see them and we get phone calls at the office. People really like them and want to have them installed at their house.”

Miller said dozens of rain barrels have been installed in Prichard thanks to donations of materials and labor, including 98 barrels at 46 homes installed by volunteers from Alabama Power Service Organization.

“We’ve got a really good partnership with several different entities,” Miller said. “Greif Packaging and Soterra LLC have donated the barrels and Alabama Power has been really helpful providing supplies and labor to help install. With those folks and Mobile Bay NEP, we’ve really had a good combined effort to put all of these rain barrels out around the community.”

To learn more about the rain barrel program, visit or call the Mobile Bay NEP at 251-431-6409.

(Courtesy of Alabama NewsCenter)

12 hours ago

Return of ‘rat poison’: Saban warns players about listening to buzz about draft stock, records

Two years ago in College Station, Texas, one of University of Alabama head football coach Nick Saban’s most famous lines was born.

After a 27-19 victory at Texas A&M, one in which the Tide led 24-3 and did not close to Saban’s liking, he lamented that positive media headlines about the team were “rat poison” to the players.

It must be something about the Aggies — or maybe it’s just this time of the season — but Saban brought the phrase back after Saturday’s 47-28 win on Saturday.


Speaking to reporters post-game, Saban was asked about quarterback Tua Tagovailoa becoming the school’s career passing touchdowns leader, moving ahead of A.J. McCarron with four touchdown tosses for the top-ranked Tide against No. 24 TAMU.

Saban gave a hat tip to how Tagovailoa handles himself before pivoting to talking about what really is important.

“Well, it means [Tagovailoa] had a great career to this point and we certainly appreciate his competitive spirit, the way he prepares for games, his leadership, the way he practices, his ability to help us score points on offense,” Saban answered. “He’s very instinctive, so it means a lot from that standpoint, but it also doesn’t mean much when it comes to, ‘What are you going to do in the future?’ And I think he has an opportunity, based on the type of offensive team we have, to have great production if he can continue to just stay focused on what we want to do.”

The legendary coach then referenced the genesis of the “rat poison” line two years ago in the same location, before explaining how it is relevant today.

“I mean, this is where — this very seat is where ‘rat poison’ was born,” Saban continued. “So I remember that two years ago, all right? And when I hear things in the media about whether guys are first-round draft picks or they’re setting great records and all that type of thing, that’s not really what I like for players to be focusing on right now.”

He emphasized, “You’ve got to focus on what are you doing right now, not what’s going to happen in the future, not really what happened in the past, but, ‘What can I learn from what’s happened in the past? How can I affect what’s going on right now?’ Because that’s what’s going to affect the future in a positive way. So, that’s how we want our players to think regardless of how difficult y’all make it for us sometimes with some of our players.”

RELATED: Yellowhammer Power Poll after college football week seven

Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn