Retail giant Amazon has selected an upscale slice of the waterfront area in New York’s Long Island City to house one of its two new secondary headquarters, with the other location set for Arlington County’s Crystal City. This is one of the largest economic development projects in recent history. Amazon may cause home prices to rise in Long Island city where black people have the second lowest homeownership rate , like they did in Seattle.
The Breakdown You Need to Know
Long Island city in Queens has a 10% black population and there are more than 20,000 less black homeowners in 2017 than there were in 2005, according to the 2017 Housing and Vacancy Survey for New York City. For the city’s part it gave Amazon up to $1.7 billion in state economic incentives to help secure the location in Queen’s. The company’s decision was based on several factors, including state tax incentives along with its ability to attract top talent, but making sure housing is available may prove challenging as Amazon looks to increase diversity within the organization.
Black home buyers in New York city have faced soaring prices and a tight lending environment. In 2017, this resulted in only 881 home purchase loan originations to black households in Queens, compared with 1,742 in 2007, the survey found. Current New York City black homeowners have been subject to a combination of high foreclosures rates and a scarcity of home repair or refinance lending. Not to mention, only 40% of black refinance applicants in Queens received loans last year.
Amazon plans to evenly split the operations between Crystal City and Long Island City, with as many as 25,000 employees in each place. Long Island City’s HQ2 however, will definitely attract developers to help create more homes and perhaps spur further gentrification in the area.
Opportunity Zone Mindfulness
The reason developers and businesses are interested in the area is primarily due to the fact that many sections of Long Island City have been designated as federal “Opportunity Zones.” CultureBanx previously reported these were originally described as a benefit for distressed communities. In actuality they are really just the latest push for ultra-high net worth individuals to keep all of their coins while pretending to do charity work, as they exploit yet another tax loophole at the expense of urban communities.
Last month the Treasury Department designed the rules for the program to give businesses enough flexibility and certainty to start making major investments. Amazon itself may easily benefit from having its HQ2 in a designated Opportunity Zone. The New York Times reported the company could start an opportunity fund to buy real estate in the zones surrounding the office.
Billionaires and investment funds can reap extensive benefits including the ability to defer paying capital gains tax through 2026, if they invest in these Opportunity Zones. Additionally, taxes on capital gains from investments in zones can be avoided, if the investments are held for at least 10 years. There are 8,700 Opportunity Zones low-income census tracts and 56% of area residents are minorities. The agreement between Amazon and New York City state officials does not mention the Opportunity Zone designation.
Let’s consider other factors at play that may weigh on black home ownership in the area. Property taxes are adjusted periodically based on the assessed value of a home, which will probably increase once Amazon rolls into town. It’s unlikely for higher property taxes alone to force a homeowner out of their home, they may not be able to handle the increase in other costs of living items like food or gas in the area.
Originally Published on November 20, 2018 at 11:04AM
Article published originally via opportunity zones – Google News https://www.forbes.com/sites/korihale/2018/11/20/housing-consequences-for-amazons-hq2/