A Yacht Club, Michael Milken And Tesla: Meet 10 Of The Nation's Swankiest Opportunity Zones
There are more than 8,700 opportunity zones nationwide, but considering that reporting on their results isn't required, there isn't much data to assess the efficacy of the program designed to lift distressed areas out of poverty.
While there is some evidence that they are helping spur real estate development, often in places that probably would have already seen it anyway, there has also been criticism of the program for its opaqueness and questionable zone choices.
The U.S. Treasury Department keeps some data in a searchable form, including the income and poverty rates of each of the OZs, based on census data. Bisnow took a close look at that info to break out 10 of the most eyebrow-raising OZ program selections.
In theory, OZs are supposed to target neighborhoods and towns badly in need of job growth and business activity. Opportunity zones tend to have lower incomes, higher poverty rates and higher unemployment rates than the national average, the Urban Institute notes, including underinvested areas and those already attracting substantial capital. The guideline set by the Treasury Department is for an OZ to have at least 20% poverty.
The following are a handful of opportunity zones that are arguably, and occasionally outrageously, not the sort of blighted areas Congress had in mind.
Among the 89 opportunity zones in metro Miami-Fort Lauderdale lies Census Tract 12099001700, which includes part of West Palm Beach, and more specifically, the Rybovich superyacht marina.
Reportedly the tract was included in the OZ program by Florida Gov. Rick Scott at the request of Rybovich owner Wayne Huizenga Jr. Huizenga has said he plans to develop upmarket apartments in the area to go with the marina.
As a whole, West Palm Beach County real estate is valued at about $210B, with median home prices at about $300K.
Sparsely populated Census Tract 32029970200, with a population of about 4,000 and a poverty rate of 7.5% (the percentage of the population below the federal poverty line), is just east of Reno, Nevada.
It is an opportunity zone despite that poverty rate, and is also home to a Tesla Gigafactory, Switch Citadel data center campus and a Google data facility. Tesla by itself has a market cap of about $375B, while Google comes in at a market cap of a bit over $1 trillion. Median home values in Reno are about $403K.
The designation reportedly came at the request of former junk bond king Michael Milken, who has development interests in the area.
Part of Downtown Portland, Oregon, is Census Tract 41051010600, an opportunity zone with a population of about 2,400 with a high poverty rate (48.4%). Even so, as part of fast-growing Portland, the area has attracted upmarket development.
Under construction in the zone, and taking advantage of the OZ designation, is Block 216, which will include a Ritz-Carlton hotel, as well as the most expensive condos Portland has yet seen.
Downtown Portland is largely the domain of renters, with rents around $1,650/month, above the average of $1,430/month for all of Portland. The median home price for the market is $449K.
Napa, California, has two opportunity zones, one of which covers much of Downtown. The early 2010s poverty rate of Census Tract 06055200202 was 15.8% out of a population of about 3,000.
Investment in the area picked up before it became an opportunity zone, including the redevelopment of Napa's 156K SF Town Center, which it turned into First Street Napa, and the upmarket hotel Andaz Napa.
Napa is by no stretch of the economic imagination a needy place, with median home prices at about $688K, and million-dollar properties common on the market.
Oakland includes 30 opportunity zones, but much of the redevelopment action has been in just one OZ, Census Tract 06001402800, with a population of about 3,500 and a poverty rate of 43.3%.
Median home prices in Oakland, while a bargain by California standards, are elevated in the national scheme of things, coming in at about $801K.
Only four years after selling for $12M, 1611 Telegraph Ave. (Latham Square) was purchased for $62M by San Francisco-based Sansome Street Advisors in 2018. At 1955 Broadway, Uber sold Uptown Station to CIM Group for $180M, 750% more than what it changed hands for just three years earlier.
Much of Long Island City in Queens in covered by OZs, including distressed areas such as the Queensbridge Houses public housing project.
But the OZ formed from Census Tract 36081000100, has a population of about 6,400 and a poverty rate of 11.4%. It hugs the East River and has been the site of considerable development, including thousands of apartment units in the Hunters Point South development, the Hero development, Queens Plaza Park Tower, Bevel and others. Apartments rent for a median of $2,850/month for a one-bedroom.
For a short while, a location in this OZ was to have been one of two HQs for Amazon. Had that development proceeded, the retail giant would have been able to take advantage of the OZ tax break.
One characteristic of a poor household is low income, but that is also true of college students. Put a lot of college students together and one gets a university neighborhood or town, with unique characteristics including a collection of residents who are decidedly low income, but hardly poor.
That low-income measurement is the apparent basis for a number of opportunity zones near universities. In the case of the University of Southern California in Los Angeles, its Census Tract, 06037222700, had a poverty rate of 88.3%, though no one would argue it is a blighted area.
USC has an endowment of about $5.7B, with tuition for a year running close to $60K. Buying a house in that part of Los Angeles will run a median of $789K.
The Brookings Institue reports similar OZs near other major universities, including Indiana University of Pennsylvania, Illinois State University and Liberty University.
IUP's Census Tract (42063961102) has a theoretical poverty rate of 89.7%, while Illinois State's (17113000200)'s poverty rate is 87.8%. Their respective endowments are $65M and $148M.
The evangelical Liberty University in Lynchburg, Virginia, which has an endowment of about $1.6B, is also in an OZ defined by Census Tract 51680001400, with a theoretical poverty rate of 53.2%.
