An emerging criticism of opportunity zones is that the new investments can price residents out of local housing. In the neighborhoods near Cummings, it’s a mixed picture. Some modest housing is being built in the zone, said Harrison Diamond, Huntsville’s director of economic development. But there are also high-end apartment complexes in the works near the park where rents would be out of reach of many local residents, he said. Although some younger families are moving in, he said, “we’re still waiting for more changes to help lift the neighborhood.”
Mary Ellen Judah, an affordable housing advocate, called the program a missed opportunity. “There was very little outreach beforehand to people in the area, so it’s no surprise that they haven’t seen the benefit,” said Judah, executive director of the group Neighborhood Concepts.
For all the rivalry between Musk and Bezos, Branson is outpacing them in the opportunity zone space race—with projects in California and New Mexico to advance his goal of charging would-be space tourists for suborbital flights.
Branson’s Virgin Galactic is building its so-called SpaceShipTwo at the Mojave Air and Space Port in California, a civilian testing facility that is home to a handful of other aerospace companies and is part of a designated opportunity zone.
Virgin Galactic also announced this year that it would operate space tourism flights out of Spaceport America, a sleek launch field and terminal in New Mexico. The state spent more than $220 million in taxpayer funds to build the facility more than a decade ago—before the opportunity zone program had even been proposed—with the understanding that Virgin would one day base its tourist flight operations there. The opportunity zone benefit could be applied to ongoing lease payments and site improvements. That operation is expected to create about 200 jobs, New Mexico economic development officials said.
New Mexico officials declined to say whether Branson asked for the Virgin Galactic location to be included in the program. Local officials in California said they didn’t have discussions with anyone at Virgin Galactic and pushed to have the Mojave site included because of its job-creation potential. In filings with the Securities and Exchange Commission, the company indicates that it hasn’t yet paid federal taxes because it hasn’t begun flying paying passengers or turned a profit.
Service at Spaceport America is scheduled to begin early next year, with Branson as the first passenger. Hundreds of people have put down a deposit on the $250,000 fare for a suborbital flight. Virgin Galactic has said it expects to become profitable in 2021. Some analysts predict the company’s annual revenue could top $1 billion in a few years.
Biden, who vows to eliminate many of Trump’s tax breaks for the wealthy, has indicated that he will preserve opportunity zones while pushing for more transparency and better deals for communities.
In the meantime, financial advisers who have been marketing opportunity zones to investors have found a silver lining in Biden’s proposal to raise the tax rate on capital gains: It would make the opportunity zone subsidy even more valuable.
This article was provided by Bloomberg News.