On June 10, 2020, President Trump held a roundtable in the White House where he remarked that Opportunity Zones are a “bold idea” that have “worked much better than at our wildest dreams.” This optimism about Opportunity Zones is shared by many conservatives, like Senate Finance Committee Chairman Chuck Grassley, who has said that Opportunity Zones “have the potential to transform some of the most economically underdeveloped parts of the country and lift millions of Americans out of poverty.”
Nevertheless, when talking about the challenges faced by Black communities to reap the benefits of these incentives, even conservative radio host Sonnie Johnson acknowledged how Opportunity Zones cause the gentrification of Black communities, though she attributed that effect to Democrats manipulating Opportunity Zones at the state level. Of course, the effects of segregation and displacement by the implementation of Opportunity Zones in low-income communities has been recognized on various fronts, including by Rep. Rashida Tlaib (D-Mich.) who is pushing legislation to repeal the tax break entirely.
For us in Puerto Rico, where a whopping 98 percent of the territory has been declared an Opportunity Zone, we see investors are lining up with high hopes of reaping these benefits, while low-income communities are afraid of being completely displaced by the new economic development.
All but two percent (in yellow) of the territory of Puerto Rico has been designated an Opportunity Zone. (Map via PolicyMap.com)
Both the federal Law and Puerto Rico Opportunity Zone regulations prescribe to the zero-sum assumption that all investment — regardless of its nature or intention — is an absolute gain for the community. This approach is fundamentally flawed and misleading. Without the proper checks and balances, many projects, though profitable for their investors, will be detrimental to host communities, will not provide good job opportunities for their residents, and may even cause them to lose their land and homes.
The high rise Ciudadela development, which towers over Santurce, San Juan, has been cited as a prime example of what is possible with Opportunity Zones. What those who celebrate that project fail to mention is that it was a financial failure that bankrupted developers, sparked corruption scandals, and resulted in the brutal displacement of a once-vibrant working-class community. The project delivered a fraction of the investments and housing units promised. Ciudadela was an example of the government’s embrace of big private developments without considering the externalities they may have on a community. Twenty years later, the Santurce story still leaves a bitter taste in locals’ mouths.
This no-holds-barred, quasi-religious surrender to private investment is only further enabled by Puerto Rico’s military occupation-era eminent domain law. Government entities become owners of a property upon the mere presentation of an eminent domain declaration, even before a hearing and discussion of whether the fair compensation was met or not. Worst of all, cases such as Ciudadela’s are common, with private developers utilizing the government to snatch up property when homeowners and local businesses refuse to sell. In fact, the former mayor of Barceloneta today sits in prison for taking bribes from developers in exchange for access to condemned land.
In this same note of surrender, unchecked Opportunity Zones will only incentivize public disinvestment, price out families from their communities, further concentrate poverty, and position investors to pressure the government to take away peoples’ homes and businesses for their own mega-projects. Without a doubt, low-income neighborhoods throughout Puerto Rico need good-paying jobs, new places to work and play, and resilient, quality housing. Yet, the Opportunity Zone framework at a federal and local level fails to establish things like preferences for fair market or affordable housing, hiring for local residents, protections for communities at-risk of displacement, or citizen participation.
At the end of the day, leaving Opportunity Zones unchecked will perpetuate a colonial economic relationship where big-buck investors from the mainland United States freely grab up Puerto Rico’s offerings. Protections for citizens, community participation and prioritizing affordable housing and other community wants must be incorporated into the Opportunity Zone regulations so that they may better address — instead of exploiting — the needs of Puerto Rico’s lowest-income communities.
Luis Gallardo is co-Director and founder for the Center for Habitat Reconstruction, a San Juan-based non-profit dedicated to promoting the conversion of vacant and abandoned properties into affordable housing and community development. Gallardo has ample experience working with non-profits, community organizations, and city governments on issues of property rights, blight, and advocacy. With a Master of Public Administration with a concentration in City Management from Valdosta State University, Georgia, as well as a Juris Doctor from the University of Puerto Rico, Luis has demonstrated a particular interest in tenure security, community participation, and municipal law.