When Congress passed (and President Trump signed) a bill to dole out tax breaks to investors financing projects in designated “opportunity zones,” we’re not sure this is what they had in mind.
According to Bloomberg, Former Trump Communications Director Anthony Scaramucci is taking advantage of the tax breaks to cash in on the “gentrification boom” in Oakland, Calif. by building what he describes as a “swank hotel” on the site of a now-closed gas station. Scaramucci, who is launching a REIT to invest in several projects (the hotel is one of the first), described the project thusly during a call with possible investors.
When U.S. lawmakers enacted a new tax break to help low-income communities last year, backers said it would lift up some of the most distressed parts of the country.
But that wasn’t the pitch former White House spokesman Anthony Scaramucci used on Tuesday to recruit investors for a real estate investment trust that will seek to claim the tax incentives by investing in some of the nation’s newly created “opportunity zones.” Here’s how he described one of the REIT’s first projects, a Moxy Hotel on the site of a gas station in Oakland, during a conference call with potential clients.
“For those of you who have yet to go to Oakland, California, or that part of the Bay Area, I can tell you that it’s fully gentrifying. Oakland is effectively becoming the Brooklyn Heights of San Francisco,” Scaramucci said. “We think we’re going to be building a swank, boutique hotel there that’s going to create excessive economic rents for the REIT.”
The Mooch’s project appears to validate criticisms from non-profit groups who have questioned whether some of the eligible urban communities included in the bill (Amazon’s Queens headquarters will sit inside one) truly stand to benefit from these incentives. Some have even argued that the handouts to investors will only accelerate the displacement of low-income residents (as gentrification has been known to do). Swaths of New York City, Los Angeles and Seattle have also been targeted for incentives. Though, to be fair, many of the rural areas affected by these “opportunity zones” aren’t gentrifying (in fact, they’re most likely facing the opposite of gentrification as anybody who can leaves for a part of the country with a better economy).
And the Mooch is also planning another project near South Carolina’s Port of Savannagh that could create 1,000 jobs by building a warehouse and logistics facility.
And as we have pointed out in the past, if you think gentrification is such a bad thing, keep in mind: The opposite is much worse.