A hard look at Somerville’s “economic development” zones
Somerville has two of the state’s 138 “Opportunity Zones,” areas where investors can get a tax break if they invest their money in development or job creation.
Part of the 2017 federal tax reform, they were designated to “spur economic development and job creation in distressed communities,” according to the IRS.
Will the designation offer opportunities to residents and neighbors hoping for a better quality of life? Opportunities for locally owned businesses? Or to chain stores?
Will they drive up housing prices? Encourage start-ups?
These are some of the questions community groups, city officials, and others are trying to answer as they seek input and convene meetings.
Somerville’s Two “Opportunity Zones”
The city has two Opportunity Zones: one in Assembly Square, and the other between Union Square and the eastern border of the city, comprising the neighborhoods of Brickbottom, Boynton Yards and the Inner Belt. An investor in these areas would get a break on their federal taxes as part of an effort to promote economic development and job creation.
Somerville’s Opportunity Zones were nominated by City Hall, based on eligibility criteria set by the federal government and on information from the 2010 Census. The state then picked the final list of zones, which were later approved by the Secretary of the US Treasury through the IRS.
According to Thomas Galligani, director of economic development for Somerville, the areas nominated by the city were very much in accordance with SomerVision 2030, the city’s comprehensive plan for growth and redevelopment.
“These are areas that almost exactly correspond to areas in SomerVision that the community identify as areas that should have growth,” Galligani said in an interview at City Hall on Nov 26. “They are areas where we wanted more investment, areas in our community plan that we’ve targeted for more investment. It seemed to make logical sense.”
But not all agree the Opportunity Zone scheme will bring only benefits and economic growth.
In an analysis piece published in 2018, Adam Looney, a scholar at the Urban-Brookings Tax Policy Center think tank, warned that Opportunity Zones “could also serve as a subsidy for displacing local residents in favor of higher-income professionals and the businesses that cater to them—a subsidy for gentrification.”
Looney also noted that basing Opportunity Zones on outdated census data could open the door for investors to make profits in “hotspots” that have “already gentrified over the last several years.”
While Galligani supports Opportunity Zone designations in Somerville, he noted that the city “is not starving for outside capital.”
“There is a lot of development activity because of the strength of the market in Greater Boston and the fact that we’re making investments like transit that are attracting,” Galligani said. “And because the city has been doing some thoughtful planning over the last 10 to 15 years, it has made it attractive for people to invest here already.”
Opportunities for All?
Because of the tax break incentives and the MBTA Green Line extension, Somerville’s two “Opportunity Zone” areas will likely soon see new, transformative development.
Although no investments or plans have been announced to date for the Union Square/East Somerville tract, located next to a new Green Line stop, community groups are already bracing for impact.
After several internal discussions during the summer, Union United, along with the Somerville Community Corporation and with financial support from the Local Initiatives Support Corporation (LISC Boston), took the lead in forming an “Opportunity Zone Steering Committee” in September. The group now has around 10 members, representing neighborhood associations and local organizations and also including Galligani and Ward 3 City Councilor Ben Ewen-Campen. The committee hosted public meetings on Nov 2 and Nov 16 at the City Club to help residents understand the potential impact of Opportunity Zones and to discuss the type of development they would want to see.
“We want to talk to the residents and figure out what are some of the development standards that we want to set for this area before all that investment comes into our community,” René Mardones, lead organizer at the Somerville Community Corporation and a member of the steering committee, explained in an interview at the Nov 16 meeting.
About two dozen residents attended the sessions. During roundtable discussions, participants came up with preliminary lists of things they want to see as the city continues to develop. They called for more affordable housing, protection for existing residents against displacement, net-zero construction, and more green and walkable spaces.
Union Square resident Laurie Goldman, who is also a senior lecturer in social policy and public and nonprofit management in Tufts University’s Department of Urban and Environmental Policy and Planning, attended the Nov 16 meeting. She expressed wariness because, she said, the Opportunity Zone process lacks transparency.
“For me, what is really critical is that community members have a voice in shaping the direction of what gets developed in our underdeveloped areas of Somerville,” Goldman said in an interview. “We have so little land in Somerville for development. We need to view that developable land as a precious commodity that should really serve those who still want to be part of what makes Somerville great and not only the newcomers who are more affluent.”
Some attendees emphasized the need to find ways to compel developers to standards that residents might want. Because projects are negotiated and approved by the city’s planning board, Councilor Ewen-Campen explained at the meeting, one of the ways to influence the process is to make sure community demands enter these critical negotiations.
“A lot of the things that the community desperately is pushing for—things like affordable childcare facilities; things like support for elderly residents, neighborhood groceries stores, libraries, parks … A lot of these things don’t directly generate money for developers,” Ewen-Campen said. “And so, that’s why we don’t see developers just kind of providing these things of their own goodwill. You often need to push them.”
According to Galligani, City Hall already does inclusive and comprehensive planning that takes into consideration the input it gets from the public.
“The community over the last seven, eight years has come together to advocate for things like affordable housing linkage and jobs linkage,” Galligani said.
But would those achievements have come without community pressure? Speaking at the Nov 16 meeting, Goldman, the Tufts professor, stressed the importance of grassroots involvement in order to assure that an “opportunity” does not become “a threat.”
“If there is this thing called an ‘Opportunity Zone,’ that others have called a ‘Threat Zone,’” she said, “there should be an opportunity for the community to get around what it is that they share in terms of the vision for that zone and the city as a whole.
“There has to be a mechanism for expressing that with force, thoughtfully and purposefully.”
Story published in collaboration with Somerville Neighborhood News.