Brookhaven City Councilmember Joe Gebbia said he is speaking with the U.S. senator who authored the legislation creating the “Opportunity Zone” tax incentives about possible changes that he believes would allow for more affordable housing in the city.
“We don’t really have Opportunity Zones in Brookhaven,” Gebbia said. “But if we had the opportunity to take land, a specific plot where a workforce housing project wants to go in … that would really help.”
Gebbia said since last summer, he has had two conversations with U.S. Sen. Tim Scott (R-South Carolina) about those proposed changes, and has been in contact with Scott’s legislative director as well. Scott’s office did not respond to requests for comment.
Opportunity Zones are “economically distressed” areas where investors in developments can get capital-gains tax breaks. Scott pioneered the Opportunity Zones initiative, which was created under the federal Tax Cuts and Jobs Act of 2017.
For an area to be considered an Opportunity Zone, the state must nominate that area for the designation. The U.S. Secretary of the Treasury then has to certify the nomination “via his delegation of authority to the Internal Revenue Service,” according to the Georgia Department of Community Affairs website.
Gebbia’s suggested change would allow areas to be spot-zoned as Opportunity Zones instead of the state pre-designating them as such. Spot zoning is when a parcel of land is designated for a different use than its surrounding areas.
Gebbia said he would like to create Opportunity Zones for workforce and affordable housing around proposed bus hubs in the metro area. The city of Atlanta is making efforts to consolidate bus routes between multiple counties and expand MARTA bus and rail connections throughout the metro area. Expanded coverage would lead to new transit stations for those routes, some of which would be located in Brookhaven.
According to the U.S. Department of Housing and Urban Development (HUD), affordable housing is defined as “housing on which the occupant is paying no more than 30% of gross income for housing costs, including utilities.” Gebbia said affordable housing generally serves households earning less than 80% of the Area Median Income (AMI), or the midpoint of a region’s income distribution. He said workforce housing generally serves those earning less than 60% AMI.
Gebbia first presented the idea at the City Council’s Feb. 22 retreat, where he said if city-led tax abatements were used to secure the land needed to build those transit stations, then the city should be able to negotiate for the right to spot-zone and use a portion of that land to build workforce and affordable housing.
“Workforce housing or affordable housing has got to be predicated on the land being cost free, and controlled,” Gebbia said “As long as you can control the land, you control the rent.”
There has been skepticism surrounding Opportunity Zones and the ability of investment to reach low-income households and communities. A 2020 study from the Urban Institute — a Washington D.C. think tank which researches economic and social policy — found that Opportunity Zones might not help economically distressed communities as much as hoped. According to the study, while Opportunity Zones were designed to spur community development and small business growth, most of their capital flows towards large real estate projects. Those projects tend to be more attractive to investors, yielding higher returns than affordable housing or small businesses.
“Although there are compelling examples of community benefit, the incentive as a whole is not living up to its economic and community development goals,” the study concluded. “The incentive’s structure makes it harder to develop projects with community benefit in places with greatest need.”
Gebbia said he is working on finding impact investors — or investors who operate with the intention of generating beneficial economic or social change — who would be interested in investing in affordable housing.
“Usually an investor’s first criteria is, ‘What’s my return on investment?’” Gebbia said. “The first criteria for an impact investor is, ‘What can I do with my money that will have a positive social impact?’”
Gebbia also said he is interested in moving forward with another initiative related to community development in Brookhaven, namely a formal city policy to protect residents and business owners along Buford Highway in the event of redevelopment. During the council’s retreat, Gebbia suggested the creation of a city redevelopment authority, which would allow the city to buy and develop land for less money, which could lead to more affordable housing. He also put forth a 120-day rent protection period for those affected by redevelopment on Buford Highway, and suggested that any business in a building which is torn down be offered the chance to settle back into that new building under a five-year protected rent program.
Gebbia said he plans to take this initiative before the City Council, but did not specify a date.