[Electronic-lan] Fwd: Why were the East Lawrence, Brook Creek Neighborhoods, and part of the Barker neighborhood turned into an "Opportunity Zone" with no involvement by homeowners or neighborhood groups, and without advance notice?

Thu Jan 10 05:47:57 CST 2019

Hi fellow LAN reps, I meant to include the LAN on this conversation from
the beginning, but misaddressed my email message.

Regards, Eric
785-550-3408

>
>
>>
>> *From:* Eric Kirkendall <kirkendall1 at gmail.com>
>> *Sent:* Monday, January 7, 2019 7:17 PM
>> *To:* Lisa Larsen <llarsen at lawrenceks.org>; Matthew Herbert <
>> matthewjherbert at gmail.com>; Jennifer Ananda <jananda at lawrenceks.org>;
>> Leslie Soden <lsoden at lawrenceks.org>; Stuart Boley <sboley at lawrenceks.org
>> >
>> *Cc:* Bobbie Walthall <bjwalthall at lawrenceks.org>; Diane Stoddard <
>> dstoddard at lawrenceks.org>; electronic-lan-request at lists.ku.edu; Chad
>> Lawhorn <clawhorn at ljworld.com>; Rochelle Valverde <rvalverde at ljworld.com>;
>> Phil Collison <phil at collison.com>; Michael Almon <paradigm at sunflower.com>;
>> keith.d.muller81 at gmail.com; East Lawrence Neighborhood Association <
>> eastlawrence at yahoo.com>; jesse at calledtogreatness.com; Daniel Poull <
>> danielppoull at gmail.com>; Phil Minkin <pminkin at juno.com>
>> *Subject:* Why were the East Lawrence, Brook Creek Neighborhoods, and
>> part of the Barker neighborhood turned into an "Opportunity Zone" with no
>> involvement by homeowners or neighborhood groups, and without advance
>> notice?
>>
>>
>>
>> Dear City Commissioners,
>>
>>
>>
>> I am writing on behalf of myself only.
>>
>>
>>
>> I recently read an article about opportunity zones that claims they are
>> very dangerous for communities:
>>
>> But these misguided policies have lasting consequences. For one, there is
>> no way to ensure that investors who were already planning to put money into
>> housing or infrastructure don’t just decide to do it in opportunity zones
>> to reap the tax benefits. Second, *the zones typically allow investors
>> to retain complete control <jesse at calledtogreatness.com> *over their
>> projects. *After state governments designate the areas, local
>> communities get no say over what is invested in and by whom.* Don’t like
>> the new toll road in your town financed by a hedge fund? You may have no
>> way to vote it down or give input into how it’s implemented.  (Trump’s
>> Gentrification Scheme to Enrich Real Estate Developers
>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fnewrepublic.com%2Farticle%2F152670%2Ftrumps-gentrification-scheme-enrich-real-estate-developers&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161668963&sdata=pjrYWM%2FFS8jdgR1%2F6h8c0fy4%2BtxNo0OmeTQ%2BEhcQ9vs%3D&reserved=0>
>> *)*
>>
>> Then, while checking to see where Opportunity Zones are located in
>> Kansas, I found a *City of Lawrence web page
>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Flawrenceks.org%2Fed%2Fopportunity-zones%2F&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161668963&sdata=BBDlx%2BsOPluSn7IJy2lo5%2FRLMwolaxI6Qb4ar9boKVs%3D&reserved=0>* that says there are two
>> in Lawrence, including one encompassing the East Lawrence, Brook Creek
>> neighborhoods, part of the Barker neighborhood, and more.
>>
>>
>>
>> More digging revealed this *memo
>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F03-06-18%2Fcmreport-markus-ltr-governor-coyler-submittal-tracts-eligible-census-tracts-opportunity-zones-executed.pdf&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161668963&sdata=6kWpgdse1j9IoexLwOBZzIM5MVjLpM513vfsW%2BbLrWA%3D&reserved=0>
>> from the City Manager to the Governor, stating that the City of Lawrence
>> requested that these Opportunity Zones be formed
>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F03-06-18%2Fcmreport-markus-ltr-governor-coyler-submittal-tracts-eligible-census-tracts-opportunity-zones-executed.pdf&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161668963&sdata=6kWpgdse1j9IoexLwOBZzIM5MVjLpM513vfsW%2BbLrWA%3D&reserved=0>*,
>> and this *memo from the Governor to the City Manager
>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcdn.lawrenceks.org%2Fwp-content%2Fuploads%2F2018%2F06%2Foz-governor-designation-letter.pdf&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161668963&sdata=LLr94MvXteBLmcWmflqT81SJKqL2np4M%2Bgum%2FwILdk4%3D&reserved=0>*,
>> which indicates that the opportunity zone recommendation was accepted.
>>
>>
>>
>> A few calls revealed that the involved neighborhood associations were not
>> briefed on the ramifications of this designation, or invited to be part of
>> the decisionmaking process before the Opportunity Zones were formed.
>>
>>
>>
>> I am sure you agree that good governance requires public involvement in
>> decisionmaking. I am very unhappy that neither homeowners like my wife and
>> I nor neighborhood organizations representing the residents were notified
>> in advance or given the opportunity to be involved in making this decision.
>>
>>
>>
>> Three questions:
>>
>>
>>
>> 1. Why and how was this very important decision made without notification
>> to and involvement of homeowers, residents, and neighborhood groups?
>>
>>
>>
>> 2. What deliberations were held before this governance decision was made,
>> who was involved, and was there a discussion of the pros and cons, and
>> possible impacts on homeowners, businesses, and residents?
>>
>>
>>
>> 3. Can you please have an informed discussion of this matter with
>> property owners, residents, and businesses in the affected neighborhoods so
>> we can determine what if anything can and should be done to protect
>> homeowners, residents, and neighborhoods from negative consequences of this
>> action?
>>
>>
>>
>> Thank you,
>>
>>
>>
>> Eric Kirkendall
>>
>> 785-550-3408
>>
>> ---------------------
>>
>>
>> On Tue, Jan 8, 2019 at 12:12 PM Diane Stoddard <dstoddard at lawrenceks.org>
>> wrote:
>>
>>> HI Eric,
>>>
>>> Thank you for your email.
>>>
>>>
>>>
>>> Let me first address the history of how the two opportunity zones were
>>> designated in Lawrence.  As you may know, Opportunity Zones were created as
>>> part of the 2017 Federal Tax Cuts and Jobs Act.  So, this is a federal
>>> incentive program. This legislation set forth a process for Governors in
>>> each state to designate zones within their states and only a certain number
>>> of zones were able to be designated state-wide.  On February 20, 2018. The
>>> City received a request for nominations from local communities
>>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F03-06-18%2Fcmreport-oz-call-for-designations.pdf&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=5P09%2BVK%2Bl3sfaPIUXrdSD4lykrv0zhApXBr34BSzVC8%3D&reserved=0> from
>>> the State of Kansas.  The deadline for nominations was March 1, 2018.
>>> There was not time to have this issue before the City Commission as an
>>> agenda item.  However, staff followed the criteria outlined in the call for
>>> designation requests from the State of Kansas, which specified the local
>>> communities provide tracts that not only met the low-income census tract
>>> definition, but also an identification of at least one project that could
>>> be ready to go.  The rationale for the particular tract that includes the
>>> east Lawrence area is that tract includes the proposed grocery store
>>> project site and also encompassed Lawrence VenturePark and East Hills
>>> Business Park (it is a very large tract).  Additional investment is
>>> certainly desired by the community within these existing business parks,
>>> which is the reason for their creation.  Again, the grocery project that
>>> has been pending, was an active potential project that we were able to
>>> point to related to the census tract.  Given the extremely short timeframe
>>> provided by the State of Kansas, and also the federal government request to
>>> the State (states had to make their nominations by March 21, 2018), the
>>> City did the best it could to position the City to take advantage of these
>>> new tools and be transparent about its submittals.  An opportunity zone
>>> section of the City’s website is quite prominent on our economic
>>> development page.   At the end of this email, I provide links to the
>>> specific updates provided to the City Commission on this topic.
>>>
>>>
>>>
>>> Secondly, I would like to address the premise of the article that you
>>> cite in your email.  While there are certainly numerous opinions about
>>> whether Opportunity Zones will do what is intended- which is to create
>>> investment opportunities in low income areas, a community definitely would
>>> not be able to take advantage of the opportunity for additional investment
>>> if a tract is not designated.  There may be specific investors that may
>>> target capital to projects for these zones.  In that sense, we are
>>> competing with all of the other designated opportunity zones and also have
>>> an investment opportunity that other areas that aren’t designated zones do
>>> not have.  Will there potentially be projects that would have been
>>> undertaken anyway in these areas?  Certainly.  However, I would point out
>>> that this is how numerous federal tax credit programs operate.  Take the
>>> low-income housing tax credit (LIHTC) program or the federal historic tax
>>> credit as examples.  Projects are automatically eligible for participation
>>> in these programs if they meet the criteria outlined by the program.  The
>>> same is true with Opportunity Zones.  I would also point out that these are
>>> federal tax benefits, not local tax benefits.  Additionally, the article
>>> makes it appear that the local government has absolutely no control over
>>> projects that are undertaken within Opportunity Zones.  I suppose the
>>> author could have meant that we have no authority over whether a project is
>>> eligible to utilize the Opportunity Zone benefits, which is accurate.
>>> However, the City still maintains all of its land use, zoning and other
>>> controls over a project.
>>>
>>>
>>>
>>> Now, to your specific questions:
>>>
>>> 1. Why and how was this very important decision made without
>>> notification to and involvement of homeowers, residents, and neighborhood
>>> groups?
>>>
>>> *I have explained the very unique circumstances with the deadlines on
>>> this program.   Despite this, the City has tried to be as transparent as
>>> possible about the process, and our communications, and the decision of the
>>> Governor’s office regarding our nominated tracts.  I suppose that with the
>>> March 6 City Manager’s report item that if there was community concern,
>>> those concerns could have been voiced and the City could have amended the
>>> letter.  I would concur that it would have been appropriate to have public
>>> input, discussion and City Commission action on this item had time
>>> allowed.  However, it was our opinion that enabling the community access to
>>> this important economic development tool was worth moving forward.  Only 74
>>> tracts in Kansas were designated by the Governor and the City of Lawrence
>>> has two of them.  There are numerous communities that did not act swiftly
>>> and provide a response and they are left behind regarding the opportunity. *
>>>
>>> 2. What deliberations were held before this governance decision was
>>> made, who was involved, and was there a discussion of the pros and cons,
>>> and possible impacts on homeowners, businesses, and residents?
>>>
>>> *Again, related to the timeframe we were working within, City staff and
>>> our economic development partners were involved in the discussion leading
>>> to the correspondence on the original suggested tracts. *
>>>
>>> 3. Can you please have an informed discussion of this matter with
>>> property owners, residents, and businesses in the affected neighborhoods so
>>> we can determine what if anything can and should be done to protect
>>> homeowners, residents, and neighborhoods from negative consequences of this
>>> action?
>>>
>>> *Federal IRS guidelines on opportunity zones were just released in late
>>> October 2018.  We have been learning about this guidance.  Your question is
>>> timely in that we have just set a date for an information session to be
>>> held in the community.  The session will be held the afternoon of February
>>> 12.  We will be sure to include invitations to the neighborhood
>>> associations which intersect with the opportunity zones.  Additionally, we
>>> will let you know about these details which should be coming soon.  There
>>> will be a city manager’s report item, news release and social medial
>>> promotion about this event as well. *
>>>
>>>
>>>
>>> March 6 CM report:
>>>
>>> *Opportunity Zone Designation Request Submitted*
>>>
>>> The new Tax Cuts and Jobs Act of 2017 calls for the designation of
>>> Opportunity Zones, which are qualifying low-income census tracts within
>>> communities.  The Opportunity Zone designation provides a tax incentive for
>>> the reinvestment of unrealized capital gains into investments into the
>>> area.  The program enables deferral and reduction of capital gains taxes
>>> when the gain is invested in these areas.  The Governor of the State of
>>> Kansas has the opportunity to only designate 70 census tracts within the
>>> entire state.  A call for designation requests
>>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F03-06-18%2Fcmreport-oz-call-for-designations.pdf&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=5P09%2BVK%2Bl3sfaPIUXrdSD4lykrv0zhApXBr34BSzVC8%3D&reserved=0> was
>>> sent out by the Governor’s office February 20, with a deadline of March 1.
>>> This timeframe did not allow formal consideration of submitted tracts by
>>> the City Commission.  Staff submitted 4 tracts for consideration, with the
>>> top priority being the large tract that encompasses the east portion of the
>>> downtown area and Lawrence VenturePark and East Hills Business Park.
>>> Tracts with projects that are pending will be more favorably considered,
>>> which was the rationale for the prioritization submitted.  Attached
>>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F03-06-18%2Fcmreport-markus-ltr-governor-coyler-submittal-tracts-eligible-census-tracts-opportunity-zones-executed.pdf&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=apEumxRuO6XS6aG%2FmbHCNiOR5hKweueaCEve4r9p7iA%3D&reserved=0> is
>>> the letter submitted by the City for designation consideration.
>>> Information about the census tracts can be found at this online map, by
>>> searching Lawrence, Kansas:
>>> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.novoco.com%2Fresource-centers%2Fnew-markets-tax-credits%2Fdata-tools%2Fnmtc-mapping-tool&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=McC3de1Gmso38NLHeiRtkClLzhHDbksHCXmayNkTEB4%3D&reserved=0
>>> .
>>>
>>>
>>>
>>>
>>> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F03-06-18%2Fcmreport.html&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=6RnvoLOLrBeT6OpFXsRSQMozxHwbEwJvmFf%2BgdCZdnk%3D&reserved=0
>>>
>>>
>>>
>>> May 15 CM Report:
>>>
>>> *Two Opportunity Zones Designated in Lawrence*
>>>
>>> Governor Colyer has announced two Opportunity Zones have been designated
>>> in Lawrence.  The new Tax Cuts and Jobs Act of 2017 calls for the
>>> designation of Opportunity Zones, which are qualifying low-income census
>>> tracts within communities.  The Opportunity Zone designation provides a tax
>>> incentive for the reinvestment of unrealized capital gains into investments
>>> into a qualified Opportunity Fund, relating to investment within the
>>> Opportunity Zone areas.  The Governor had the opportunity to only designate
>>> 70 census tracts within the entire state and two tracts were chosen for
>>> designation within Lawrence.  The first tract is located on the east side
>>> of Massachusetts Street and includes the East Lawrence Neighborhood, Brook
>>> Creek Neighborhood, portions of the Barker Neighborhood, Lawrence Venture
>>> Park and East Hills Business Park.  The second tract includes the
>>> University of Kansas campus and West campus.   Attached
>>> <https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F05-15-18%2Fcmreport-opportunity-zones-ltr.pdf&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=otOVfycD3brnMS2EdzaDIwzZ0%2BMOHVxh71a%2FAE6iBvk%3D&reserved=0> is
>>> the letter submitted by the City for designation consideration with a more
>>> in depth description of the tracts.  Information about the census tracts
>>> can be found at this online map, by searching Lawrence, Kansas:
>>> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.novoco.com%2Fresource-centers%2Fnew-markets-tax-credits%2Fdata-tools%2Fnmtc-mapping-tool&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=McC3de1Gmso38NLHeiRtkClLzhHDbksHCXmayNkTEB4%3D&reserved=0
>>> .
>>>
>>>
>>>
>>>
>>> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.lawrenceks.org%2Fassets%2Fagendas%2Fcc%2F2018%2F05-15-18%2Fcmreport.html&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=ast2XS4X9HVE1r2A2SA8Xl18D3WYGvLYWtYAlY4j5B4%3D&reserved=0
>>>
>>>
>>>
>>>
>>>
>>> *Thanks, Diane*
>>>
>>>
>>>
>>> *[image: signature]*
>>>
>>>
>>>
>>> *Diane Stoddard*, Assistant City Manager – dstoddard at lawrenceks.org
>>>
>>> City Manager’s Office | City of Lawrence, KS
>>> <https://na01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.lawrenceks.org%2F&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=yOtcK6mt3lZH6y9NDKt3Ym7NRE0Q07cjRb1iY%2B%2FLlIA%3D&reserved=0>
>>>
>>> P.O Box 708, Lawrence, KS 66044
>>>
>>> office (785) 832-3413| fax (785) 832-3405
>>>
>>
*From:* Eric Kirkendall <kirkendall1 at gmail.com>
*Sent:* Wednesday, January 9, 2019 5:07:03 AM
*To:* Diane Stoddard
*Cc:* Lisa Larsen; Matthew Herbert; Jennifer Ananda; Leslie Soden; Stuart
Boley; Bobbie Walthall; electronic-lan-request at lists.ku.edu; Chad Lawhorn;
Rochelle Valverde; Phil Collison; Michael Almon; keith.d.muller81 at gmail.com;
East Lawrence Neighborhood Association; jesse at calledtogreatness.com; Daniel
Poull; Phil Minkin
*Subject:* Re: Why were the East Lawrence, Brook Creek Neighborhoods, and
part of the Barker neighborhood turned into an "Opportunity Zone" with no
involvement by homeowners or neighborhood groups, and without advance
notice?

Hi Diane,

Thank you for addressing my questions so quickly, for scheduling an
information session, and for the background information. I very much
appreciate your responsiveness, and have blocked out the afternoon of
February 12 for this meeting.

I am glad to hear that the author of Trump’s Gentrification Scheme to
Enrich Real Estate Developers
<https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fnewrepublic.com%2Farticle%2F152670%2Ftrumps-gentrification-scheme-enrich-real-estate-developers&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C1%7C636827177161678967&sdata=XQG8PXVYVaexTJ6kJPofYOGOW7PCH5weyZM6QiSne3Y%3D&reserved=0>
was
incorrect when she concluded that developers will have railroad-like
exemptions to local land use controls.

That said, as a guy who has known about this city decision for just two
days, so doesn't know much, I remain concerned, and suggest that our City
Commissioners and neighborhood organizations get deeply involved as soon as
possible.

An illustration of why I think we should be very concerned -  a post made
just yesterday by the very mainstream Tax Foundation, *Opportunity Zones:
What We Know and What We Don’t
<https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Ftaxfoundation.org%2Fopportunity-zones-what-we-know-and-what-we-dont%2F&data=02%7C01%7Celectronic-lan%40lists.ku.edu%7C47f8ef5926a94d4485fe08d676f18cdd%7C3c176536afe643f5b96636feabbe3c1a%7C0%7C0%7C636827177161678967&sdata=7eh3UyMJhN1v%2FodsWqXBNPKrv8x0iL6bfWWtASVqsL8%3D&reserved=0>,
*includes
the following findings (emphasis mine):

   - Research suggests place-based incentive programs redistribute rather
   than generate new economic activity, subsidize investments that would have
   occurred anyway, and *displace low-income residents *by increasing
   property values and encouraging higher skilled workers to relocate to the
   area.

   - While opportunity zones present certain budgetary and economic costs,
   it is unclear whether opportunity zone tax preferences used to attract
   investment will actually benefit distressed communities.

Regards,

Eric Kirkendall
785-550-3408
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