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By BERNARD CONDON and STEPHEN BRAUN, Associated Press
NEW YORK (AP) – Much of the New York City neighborhood selected by Amazon for one of its new headquarters is in a federal "Opportunity Zone", a designation created by the Donald Trump's tax revamp that offers developers potentially millions of dollars in capital gains tax breaks to invest in high-poverty, low-income regions.
Critics wonder if Long Island City, the rapidly gentrifying neighborhood of Queens located on the other side of the East River since the skyscrapers of downtown Manhattan, needs such breaks. The projected median income around the campus of Amazon is $ 130,000 a year, poverty is half of the city average and the new buildings were built well before the tax recast.
"Just look at the Manhattan skyline, you can already see billions of dollars of private investment there," said Don Peebles, a New York-based property developer. "Long Island City does not seem so high on the list for needing significant tax incentives to stimulate economic development."
Under the new tax law, the authorities of each state have designated 8,700 such zones throughout the country. Nearly 35 million Americans live in such areas, communities that in most cases have higher rates of poverty and unemployment than other communities in the United States or who have or almost have pockets of poverty. need for development. The state's choices were finalized only after approval by Treasury Department officials in July. The site of the other new Amazon headquarters in Crystal City, Virginia, was not in an area of opportunity.
Amazon did not mention the tax breaks from the Long Island City Opportunities Zone Tuesday in any of its announcements regarding the new campus. The spokesman of the company, Adam Sedo, refused to specify if Amazon considered to prevail.
But investors were already jumping.
Craig Bernstein, founder of the investment fund OPZ Capital, said the capital gains reduction was a good public policy because it encouraged investors to invest in new housing, which could be done. high demand as soon as Amazon created 25,000 new jobs in the sector. district.
"This will help speed up the process of building the surrounding area," said Bernstein.
Bernstein said his fund plans to invest in two buildings near the Amazon site to develop mixed sales and housing spaces. With the installation of Amazon, he explains, he sees another reason to take a risk: a "captive audience" of workers looking for apartments and stores.
Moreover, Amazon operates the state of New York to obtain grants and tax breaks worth more than $ 1.5 billion, the richest in the history of the United States. State and more than triple of those offered by Virginia.
Investors who invest capital gains in Opportunity Zone projects may defer tax on such gains until 2026. If they decide not to withdraw their investment from their investment for up to seven years, they benefit from Another advantage: tax gains. And they can totally exclude the payment of taxes on any further appreciation of those gains if they keep the investment for a decade. The capital gains tax can reach 23.8%.
Critics fear that such advantageous tax savings will benefit real estate interests wishing to direct investments in areas that are not really at a disadvantage, but which are already reinforced by the gentrification of neighborhoods or by their proximity to neighborhoods. expanding institutions such as hospitals, colleges or others.
"These areas incite companies that do not need support," said Barry Lynn, executive director of the Open Markets Institute, a think tank critical of financial inequality and the monopoly of companies.
The Treasury Department did not immediately respond to a request for comment.
Long Island City was quickly gentrified by the new tax law. Since 2010, more than 9,000 apartments and houses have been built, a construction boom that makes this neighborhood the fastest growing city, according to the city's urban planning department. Thousands of other units are planned.
Despite the new offer, prices are high. Last year, two-bedroom apartments off the Anable Basin where Amazon would move would have cost an average of $ 4,300 per month, according to the Streeteasy brokerage website. This equates to the rent of certain buildings located in the Upper East Side, on the other side of the East River, in Manhattan.
The census area where Amazon moves has a poverty rate of 10%, half of New York's, and household income of $ 130,000 a year is twice the median of the city.
This makes the region too rich to qualify for tax breaks, but the tax law allows such regions to adapt to neighboring areas that qualify. For example, Amazon's Anable Basin site is only one kilometer away from the census tract containing Queensbridge Houses, the largest social housing complex in the country, where the median income is 14,000 USD and the poverty rate close to 50%.
Stephen Braun reported from Washington.
Copyright 2018 The Associated Press. All rights reserved. This material may not be published, disseminated, rewritten or redistributed.
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