The Redwood City Council is concerned that a new federal tax benefit designed to boost investment in low-income communities will actually displace local residents.
After two census tracks including portions of Friendly Acres, Redwood Village, Stambaugh-Heller and North Fair Oaks were designated as “opportunity zones,” the council voted at a meeting April 9 to send a letter to Gov. Jerry Brown requesting those parcels be removed from consideration.
The federal tax bill that passed in December requires governors to nominate up to 25 percent of census tracks for opportunity zone designation. Those census tracks must have 20 percent poverty rates or median family incomes of no more than 80 percent of statewide or metropolitan area family income, according to a staff report.
Under the law, individuals or corporations who invest in opportunity zones would qualify for capital gains tax breaks, which grow the longer an investment is held and can be fully waived if an investment is held longer than 10 years, according to the report.
Opportunity zones could lead to higher rents, housing costs or leases and ultimately displacement, according to the report.
Should the governor deny the council’s request, the letter also calls for developments in opportunity zones that generate federal tax deferrals to include 20 percent affordable housing and to provide relocation benefits for any displaced residents.
Councilman Jeff Gee said the city could bump the affordable housing requirement up to 40 percent through an ordinance if the governor doesn’t remove Redwood City parcels from the list of opportunity zones. He also said the council should enact neighborhood protections, and Mayor Ian Bain suggested working with the Stambaugh-Heller neighborhood association if their request isn’t granted.
The governor has until April 22 to submit a revised list of opportunity zones to the U.S. Department of Treasury.
(650) 344-5200 ex. 102