Tuesday, July 9, 2019

Opportunity You Say?

Between Nashville's aspiration to gentrify an entire city they are using every tool in the sleaze playbook to accommodate their desperation to rid themselves of every poor person and/or Black person they can as quickly as they can.  If they continue to underfund the Police the reality is that the Black Community will manage to accomplish this goal single handed with the violence that permeates their community. If they don't kill each other they will imprison the rest and in turn drive as many families of color from the region in a type of weird ass genocide.  Ah the South.

But the hilarity ensues when Nashville in its perpetual state of delusion believes Amazon is going to fill the coffers of the city with 5,000 jobs with an "average" salary of 150K. This is oddly the same figure that Alliance Bernstein stated and that the CEO who engineered said deal is now retiring I wonder what will actually transpire, new broom and all.  And I believe EY, the accounting firm, said the same, despite the fact that their own internal averages are nowhere near that for standard accounting gigs (56-72K according to Glassdoor).  And then we have Apple Music supposedly setting up shop which is odd as they are now transitioning into streaming music and why they need a specialized local office to do as such with a large crew is of course debatable as they have a significant outpost in Austin which could serve as the foundation for said endeavors.

The reality is that Nashville has no fucking clue what kind of city it wants to be - Med, Ed, Music, Tourist, White Collar, Government/Municipal or a jack of all trades and master of none?

Now this is from City Lab with regards to Amazon and the promises made and not kept.  They are already under fire for numerous issues about legitimacy of second sellers on the site and in turn their lack of oversight that has led people to be harmed, counterfitted items and also have books reprinted with information that could ultimately do harm and of course the violations of proper payments and royalties. 

 So really Nashville do you think they are going to do any of this shit because they leased some space?  Hey guess what they did that in Seattle and promptly sublet it. 

What is truly laughable is the hysteria surrounding the Opportunity Zones that have my apparent hood, Wedgewood Houston, declared one (good to know I was living in a ghetto, but why was my rent not cheaper?) and the Dickerson Pike now one with Champagne wishes and Caviar dreams to build out that area of town.  

Construction on the largest land development in decades on the east bank of the Cumberland River in Nashville is getting set to begin in several months.

Chicago-based Creek Lane Capital partnered with MRP Realty of Washington D.C. to buy 13 acres in East Nashville between Jefferson and Cowan streets for $42.5 million on Friday.

On Monday, the team announced that they will start building 600 apartments surrounded by offices and 50,000 square feet of retail shops called The Landings at River North early next year.

The project will include a new pedestrian bridge connecting Germantown to East Nashville, a waterfront public park, and a marina.
River North development site is the location for a 1.3 million square foot land acquisition on the east bank of the Cumberland, directly east of McFerrin Park, for large apartments, offices and shops, pictured Monday, July 1, 2019, in Nashville, Tenn.Buy Photo

River North development site is the location for a 1.3 million square foot land acquisition on the east bank of the Cumberland, directly east of McFerrin Park, for large apartments, offices and shops, pictured Monday, July 1, 2019, in Nashville, Tenn. (Photo: Courtney Pedroza / The Tennessean )

Investors have been working on a vision for this site for years, and hope to eventually expand commercial riverfront redevelopment on the east side down to Interstate 65.

"We valued the opportunity to do waterfront development in the city, and that’s the draw," said MRP Principal Matthew Robinson. "We think growth here will outpace other areas."

The Landings at River North, which is likely to attract more investment around it, and on nearby Dickerson Pike, is expected to open about two years after dirt starts moving.
New bridge and park coming

Work on the park and pedestrian bridge connecting Germantown and East Nashville will begin at the same time as the commercial development.

The park will initially span 4 acres behind Topgolf, but is ultimately expected to stretch for one mile along the river.

Metro Council allocated $20 million from the capital funds budget, mostly financed by general obligation bonds, to help pay for the infrastructure improvements. The money will go toward street widening, new sidewalks and upgraded traffic signals along Jefferson and Cowan streets, as well as infrastructure throughout the development.

"I look at this project and see great opportunities for this city," Mayor David Briley said. "I live on the other side of the river and I look forward to the day when this is complete and we get Cleveland Street connected all the way over here so I can ride my bike to Shelby Park on a bike lane from downtown."

The Landings at River North will overhaul the squat industrial warehouses and vacant waterfront lots behind Topgolf Nashville into 7-story-tall multifamily residential buildings, offices and shops.
River North development site is the location for a 1.3 million square foot land acquisition on the east bank of the Cumberland, directly east of McFerrin Park, for large apartments, offices and shops, pictured Monday, July 1, 2019, in Nashville, Tenn.Buy Photo

River North development site is the location for a 1.3 million square foot land acquisition on the east bank of the Cumberland, directly east of McFerrin Park, for large apartments, offices and shops, pictured Monday, July 1, 2019, in Nashville, Tenn. (Photo: Courtney Pedroza / The Tennessean )

"There will be a lot of food, beverage and entertainment uses," Robinson said. "We're not in a position to announce any tenants but it's going to be a destination location."
'Nashville's premier neighborhood'

The vision for River North began nearly 20 years ago, when Chicago-based Monroe

The firm has already secured entitlements on the lots so construction work can begin now.

"We've worked collaboratively with the city to develop the vision for River North that you see here today," said Don Allen, principal at Monroe. "Together with the city's investment in infrastructure, this will be the catalyst for development on the east bank and will make River North Nashville's premier neighborhood."

Allen hopes to expand the River North project to ultimately include 105 east bank waterfront acres.
This investment was spurred by a new federal tax break designed to boost economic development in distressed areas. The "Opportunity Zone" status allows investors to defer some tax payments for up to a decade.
"We were looking at this site before it was made an Opportunity Zone," Robinson said. "The Opportunity Zone helped it along but we were already interested."

Yeah sure.  Here is what Opportunity Zones really do.

One Trump Tax Cut Was Meant to Help the Poor. A Billionaire Ended Up Winning Big.

Opportunity zones are meant to spur new investment in poor areas. But Under Armour’s Kevin Plank is getting a tax break for investments that are not new and not in a poor tract. And Plank’s area was picked over neighborhoods that are actually poor.

Under a six-lane span of freeway leading into downtown Baltimore sit what may be the most valuable parking spaces in America.

Lying near a development project controlled by Under Armour’s billionaire CEO Kevin Plank, one of Maryland’s richest men, and Goldman Sachs, the little sliver of land will allow Plank and the other investors to claim what could amount to millions in tax breaks for the project, known as Port Covington.

They have President Donald Trump’s 2017 tax overhaul law to thank. The new law has a provision meant to spur investment into underdeveloped areas, called “opportunity zones.” The idea is to grant lucrative tax breaks to encourage new investment in poor areas around the country, carefully selected by each state’s governor.

But Port Covington, an ambitious development geared to millennials to feature offices, a hotel, apartments, and shopping, is not in a census tract that is poor. It’s not a new investment. And the census tract only became eligible to be an opportunity zone thanks to a mapping error.

As the selection process was underway, a deputy chief of staff to Maryland’s governor wrote in an email that “Port Covington does not qualify” as an opportunity zone.

Maryland’s governor chose the area for the program anyway — after his aides met with the lobbyists for Plank, who owns about 40% of the zone.

“This is a classic example of a windfall benefit,” said Robert Stoker, a George Washington University professor who has studied economic development in Baltimore for decades. “A major investment was already planned and now is in a zone where they are going to qualify for all kinds of beneficial tax treatment.”

In selecting Port Covington, the governor had to exclude another Maryland community from the opportunity zone program. In Baltimore, for example, the governor dropped part of a neighborhood that city officials recommended for the program — Brooklyn — with a median family income one-fifth that of Port Covington. Brooklyn sits just across the Patapsco river from Port Covington, in an area that suffers from one of the highest drug and alcohol death rates in Baltimore, which in turn has one of the highest drug fatality rates nationwide.

In a statement, Marc Weller, a developer who is Plank’s partner in the project, defended the opportunity zone designation. “Port Covington being part of an Opportunity Zone will attract more investors, foster more economic growth in a neglected area of the City, and directly benefit all of the surrounding communities for decades to come,” Weller said. Supporters say the Port Covington development could help several nearby struggling south Baltimore neighborhoods.

Developers say Port Covington will be a “city within a city” geared to millennials and featuring offices, residences and a hotel. (Matt Roth for ProPublica)

An official in the administration of Maryland’s Republican governor, Larry Hogan, said, “The success of that project is really going to go a long way to providing benefits for the whole city of Baltimore.” The official added: “The governor is a huge supporter of the development.”

A spokesperson for the state’s Department of Housing and Community Development, which was involved in the selection process, said that “due to the time limits of the federal tax incentive, the state of Maryland did purposefully select census tracts where projects were beginning to increase the odds of attracting additional private sector investment to Maryland’s opportunity zones in the near term.”

The Birth of a New Tax Break

In December 2017, Trump signed the Tax Cuts and Jobs Act, his signature legislative achievement. Much criticized as a giveaway to the rich, the law includes one headline provision that backers promised would help the poor: opportunity zones. (Listen to the “Trump, Inc.” episode where we travel to an opportunity zone where the Kushner Companies owns large tracts of property.)

Supporters of the program argued it would unleash economic development in otherwise overlooked communities. “Our goal is to rebuild homes, schools, businesses and communities that need it the most,“ Trump declared at a recent event, adding, “To revitalize these areas, we’ve lowered the capital gains tax for long-term investment in opportunity zones all the way down to a very big, fat, beautiful number of zero.”

The provision has bipartisan support. “These cities are gold mines,” New Jersey Sen. Cory Booker, a 2020 presidential hopeful and main Democratic architect of the program, told real estate investors in October. “They’re domestic emerging markets that are more exciting than anything you’ll see overseas.”

Here’s how the program works. Say you’re a hedge fund manager, you purchased Google stock years ago, and are sitting on $1 billion in gains. If you sell, you’d send the IRS about $240 million, a lot less than ordinary income tax but still annoying. To avoid paying that much, you can sell the shares and put the $1 billion into an opportunity zone. That comes with three generous breaks. The first is that you defer that $240 million in capital gains tax, allowing you to invest more money up front. But if that’s not enough for you, you can hold the investment for several years and you’ll get a significant reduction in those taxes. What’s more, any additional gains from the new investment are tax-free after 10 years.

It’s impossible to predict how much the tax break will be worth to individual investors because it depends on several variables, not least whether the underlying project gains in value. But one investment pitch projected 10-year returns would jump to 91% from 29% on a hypothetical $1 million investment. That includes $284,000 in tax breaks — money the federal government would have collected from taxpayers with capital gains but for the program.

The tax code already favored real estate developers like Trump, and his overhaul made it even friendlier. Investors can put money into a range of projects in opportunity zones, but so far most of the publicly announced deals are in real estate. The tax break has led to a marketing boom, with Wall Street pitching investors to raise funds to invest in the zones. Critics argue that the program is flawed, pointing out that there’s no guarantee that the capital investment will help community residents, that the selection process was vulnerable to outside influence, and that it could be a giveaway for projects that were going to happen anyway. In a case in Chicago uncovered by the Real Deal, two tracts already slated for a major development project were selected by the governor as opportunity zones even though city officials hadn’t initially recommended them.

Under the new law, areas of the country deemed to be “low-income communities” would be eligible to be named opportunity zones. The Treasury Department determined which census tracts qualified. Then governors of each state could select one quarter of those tracts to get the tax benefit.

That governor prerogative turned out to be very useful to Kevin Plank.

Plank’s Dream

In 2012, Plank-connected entities quietly began buying up waterfront property on a largely vacant and isolated peninsula south of downtown Baltimore. Often using shell companies to shield the identity of the true buyer, they ultimately spent more than $100 million acquiring much of the peninsula. Plank’s privately held Sagamore Development now controls roughly 40% of the area that would later be named an opportunity zone.

In early 2015, more than two and a half years before Trump’s tax law passed, Plank revealed himself as the money behind the purchases. He planned a new development and headquarters for Under Armour, the sports apparel company he started after coming up with the idea as a University of Maryland football player. Today, Under Armour employs 15,000 people. Plank has a net worth of around $2 billion.

Though the Port Covington area was cut off from downtown by I-95, Plank said he likes the location because of the visibility. “When people drive through Baltimore [on I-95] I literally want them to drive through and go, ’There’s Baltimore on the right. There’s Under Armour on the left,’” he told The Baltimore Sun.

A year later, Plank’s firm took his vision to the general public, running TV and print ads touting the new project. One of the ads, reminiscent of the Democratic presidential primary spots airing at that time, was filled with a diverse cast sharing their dreams for a new city within a city.

“We will build it. Together,” the ad begins, before running through a glittering digital rendering of contemporary urban design features. Office towers, shops, transit, parks, jobs — all of it to be anchored by a new world headquarters of the city’s most visible brand name, Under Armour. Sagamore would spearhead the project and sell land to others who would build businesses and housing.

Even before qualifying for the opportunity zone break, taxpayers were going to subsidize the development. Days after the ads touting togetherness, Plank proposed that the city float $660 million in bonds to help build what the company has said would be a $5.5 billion development. Opponents contended Plank’s proposal amounted to corporate welfare that would exacerbate the city’s stark economic and racial divides. But the company agreed to provide millions of dollars to the city and a group of nearby low-income neighborhoods to gain support for the project, and the City Council passed the measure that fall.

As Under Armour’s stock plummeted in 2017 amid slowing sales growth, progress on the Port Covington project lagged. That September, Goldman Sachs stepped in to commit $233 million from its Urban Investment Group. Hogan, himself a real estate developer, personally spoke with the then-CEO of Goldman, Lloyd Blankfein, about the deal.

Meeting With the Governor’s Office

In the weeks after the 2017 federal tax overhaul passed, Plank’s team spotted an opportunity.

Nick Manis, a veteran Annapolis lobbyist who has also represented the Baltimore Ravens, reached out to Hogan’s chief of staff about Port Covington, according to emails obtained by ProPublica through a public records request. The developers and their lobbyists had given at least $24,000 to Hogan’s campaigns in recent years.

But the developers had a problem.

The Friday before the meeting, a deputy chief of staff to the governor wrote in an email that “Port Covington does not qualify” for the coveted tax breaks.

The Port Covington tract, which includes a gentrified corner of South Baltimore north of the largely empty peninsula, was too wealthy to be an opportunity zone. There is a second provision of the law for wealthier tracts: A tract can qualify if it is adjacent to a low-income area. But Port Covington failed that test, too. Its median family income — nearly 160% of Maryland’s — exceeded the income cap even for that provision.

Port Covington was out — unless the tract could somehow be considered low-income in its own right.

On Feb. 5, the Port Covington development team arrived at the second floor of the statehouse in the opulent governor’s reception room to meet with top Hogan aides. The agenda for the meeting included opportunity zones, as well as transit and infrastructure issues. The developer’s team requested that the Port Covington tract be made an opportunity zone. The state officials “acknowledged their interest in receiving that designation,” a Hogan administration official said.
Bank Error in Your Favor

Three days after that meeting, Plank and the Port Covington developers got bad news. The Treasury Department released a list of census tracts across the country that were sufficiently poor to be included in the program. Port Covington was not included in that list.

Three weeks later, however, things turned around. The Treasury Department issued a revised list. The agency said it had left out some tracts in error. The revised list included 168 new areas across the country defined by the agency as “low-income communities.”

This time, Port Covington made the cut.

It couldn’t have qualified because its residents were poor. It couldn’t qualify because it was next to some place that was poor. But the tract could qualify under yet another provision of the law. Some tracts could make the cut if they had fewer than 2,000 people and if they were “within” what’s known as an empowerment zone. That was a Clinton-era redevelopment initiative also aimed at low-income areas.

Port Covington wasn’t actually within an empowerment zone, but it is next to one. So how did it qualify? The area met the definition of “within” because the digital map files the Treasury Department used showed that Port Covington overlapped with a neighboring tract that was designated an empowerment zone, Treasury officials told ProPublica.

That overlap: the sliver of parking lot beneath I-395. That piece of the lot is about one one-thousandth of a square mile.

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