Ohio Dems Slam Republicans for Opportunity Zones, Cleveland Dems Consider Yet Another Corporate Handout

The Ohio Democratic Party issued a press release Tuesday morning slamming Republicans for their support of Opportunity Zones, the sexy tax incentive hatched in 2018, ostensibly to spur investment in low-income neighborhoods.

State Democratic party chairman David Pepper, responding to comments at the RNC from Republican Senator Tim Scott, called the Opportunity Zone incentive "Donald Trump’s tax scam." He said it was a "massive giveaway to Wall Street banks and big corporations like General Motors" that failed to create the jobs and investments it was designed to.

Pepper's comments were geared specifically toward area Republican Shay Hawkins, who's challenging Democratic State Rep. Phil Robinson in Ohio House District 6, which encompasses several of Cleveland's southern and southeastern suburbs. Hawkins is an Opportunity Zone "expert" and co-founder of a trade association for Opportunity Zone investors.

The party statement is consistent with recent findings on the incentive. The Urban Institute, for example, interviewed 70 stakeholders nationwide and concluded that "OZs" were not living up to their stated goals. Indeed, their research found, Opportunity Zones were "providing the biggest benefits to projects with the highest returns, which are rarely aligned with equitable development."

U.S. representative Rashida Tlaib even introduced a bill last year to overturn the OZ designation, calling it another form of corporate greed that often benefited Donald Trump donors. Among others, Dan Gilbert has been a high-profile beneficiary.

The incentive was structured to delay or forgive capital gains taxes on investments made in approved "low-income" census tracts. Some Cleveland council members recognized back in 2018 that Cleveland's list of tracts — submitted to the state by the Greater Cleveland Partnership, with marginal input from both the city of Cleveland and Cuyahoga County — was not reflective of the region's actual areas of economic distress.

Economic development types, though, in defiance of the incentive's purpose, were pleased that downtown and other hot neighborhoods had been included on Cleveland's list. The OZ designation would capitalize on and accelerate existing development momentum, they said. (Never mind that it was also liable to accelerate existing inequities.)

Though Pepper's anti-OZ comments were largely a pretext to endorse Phil Robinson and critique his Republican challenger, they also alluded to "wealthy special interests" and their outsized influence at the Ohio statehouse. 

The Larry Householder-FirstEnergy racketeering scandal, if not the Opportunity Zones, has vividly demonstrated the extent of that influence in Columbus. But it's worth remembering that wealthy special interests control local politics as well.

In Cleveland, trickle-down economics in the form of corporate handouts has been one of the dominant policy prerogatives for decades. Local Dems don't have a leg to stand on, in other words. They couldn't join Pepper in criticizing Opportunity Zones, or the Republicans who work on behalf of OZ investors, without implicating their own support for equally brazen policies of corporate greed. The Q Deal, for example, was exalted by local Democratic leaders in talking points almost identical to the Opportunity Zones. It would create construction jobs, supporters declared. It would spur additional economic development. It would enhance "activity" downtown. All three major Cleveland sports facilities are subsidized at back-breaking public expense based on versions of these arguments, and a handful of others.

The Opportunity Zone remarks from the state Dems happened to arrive in reporters' inboxes only one day after the publication of a story by Michelle Jarboe in Crain's, which reported that Scott Wolstein was seeking an extension on his 30-year Tax Increment Financing arrangement for the Flats East Bank project. This is an extension that should be regarded by all as outrageous.

Thanks to language inserted in the most recent two-year state budget bill, local governments may now add as many as 30 years to existing TIF agreements for qualifying large projects. The Flats East Bank already has a 30-year TIF, which means that for 30 years, taxes that would be going to the city are allowed to be invested back into the project itself. If City Council approves the extension, Wolstein, who was already handed millions in subsidies and tax-free bonds for construction, would be off the hook for 60 years, a term likely to exceed the Flats East Bank's functional life. 

Councilman Kerry McCormack diplomatically told Crain's that he "really didn't love the idea" of a 60-year TIF. But local Democrats should be decrying the corporate greed which permitted it with much more fervor, in fact with the same fervor with which they'd no doubt decry policies crafted by wealthy special interests if they were enacted by those across the aisle. 

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