President Trump describes the opportunity zone program as a prime example of how his administration has helped African Americans. This June, Trump claimed that since 2017 “countless jobs and $100 billion of new investment, not government investment, have poured into 9,000 of our most distressed neighborhoods anywhere in the country.” Opportunity zones have also been talked up by the few prominent African American Trump allies, including Sen. Tim Scott (one of the bill’s original co-sponsors) and HUD Secretary Ben Carson. Scott called opportunity zones “the first new, major effort to tackle poverty in a generation.”

Yet the program has been troubled since the beginning. Governors were permitted to select their state’s opportunity zones, with few criteria: 95 percent of the zones had to have a 20 percent poverty rate or a median income that is 80 percent or less of the metro area’s median income. Governors could also designate five percent of the zones in areas that are not low income. That latitude resulted in developments ranging from luxury apartment buildings to a ”superyacht” club being designated as eligible for opportunity zone tax breaks. Reporting from the New York Times, ProPublica and other news outlets revealed that friends and relatives of the president — including son-in-law Jared Kushner — stood to benefit from the opportunity zone tax break, and Treasury is already conducting a corruption investigation.

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Governors looking to tout the success of opportunity zones in their state had incentives to pick areas with development projects already planned or underway — such as areas adjacent to or including a college or university. Adam Looney, a senior fellow at the Brookings Institute, found 33 opportunity zones in areas where 85 percent or more of the population are enrolled in college. The zones meet the low-income threshold, but that’s because students don’t typically earn much while taking classes.

Designating these areas as opportunity zones because of students’ lack of income is a cynical use of an antipoverty program. Universities have been creating pockets of wealth near their campuses for decades, driving up rents without benefitting the long term residents who will remain long after each class graduates.

In West Philadelphia, for instance, real estate investment in areas near universities has already changed the face of the historically African American neighborhood. West Philly is home to the University of Pennsylvania and Drexel University. The University of Pennsylvania lured professors and students to the area with tactics that ranged from installing streetlights to offering low-interest loans to encourage faculty to buy in the area, and even created a new public elementary school to offer an option for an elite education in the neighborhood. Their tactics were so successful that the average selling price of a home rose from $78,500 in 1995 to half a million dollars by 2018. Drexel is now borrowing directly from Penn’s playbook, including building a new public middle school.

Drexel is just one of the 33 universities mentioned in the Brookings report. In the opportunity zone that includes Drexel, the poverty rate is 66 percent and 88 percent of residents are enrolled in college full time. Those statistics are reflected in college towns selected as opportunity zones across the country. The University of Southern California, surrounded by a historically low-income area of Los Angeles, is located in an opportunity zone with a poverty rate of 88 percent. A whopping 99 percent of residents, however, are full time college students. College students at small private universities (such as Liberty College) and behemoth public institutions alike (such as Texas A&M) are making their towns and neighborhoods eligible for a designation intended to help areas that have struggled with generational poverty.

Mantua and Drexel’s campus are in the same opportunity zone. A $43 million project dubbed the Village Square on Haverford got the go-ahead from the city in late 2019. It will bring 166 new apartments and townhomes to the opportunity zone in Mantua, with 80 units flagged as “workforce housing” with their selling price capped $230,000. That’s significantly higher than Philadelphia’s average home sale price of $188,000, and well out of reach for Mantua residents, whose income is less than half of the city’s median. The development will include 32 rental units of affordable housing, though there has been no word as yet about what definition of affordable the developers will use. The new development is located just a few blocks away from an off-campus housing complex marketed to students at Penn and Drexel.

Mantua residents have organized to have a say in how their neighborhood changes. They settled on a push to rezone most of the neighborhood as single-family housing, which they intended to prevent developers from buying up blocks of Mantua and converting the area into student housing for Drexel. They were successful, but the rezoning may not pay off in the long term. “It’s really a conundrum for the community to be in,” Wright said. “Multifamily [zoning] could potentially create naturally occurring affordable housing in the neighborhood because you can have apartments that might be available to lower-income or moderate-income people.” Focusing on protecting single-family homes means fewer available rentals — and higher rents.

That’s a problem, because people in the rental market may be the most vulnerable to changes in the housing market, according to sociologist Susan Clampet-Lundquist, professor at Philadelphia’s St. Joseph’s University and University City resident. Overall, changing neighborhoods are a mixed bag for longtime residents. The changes do bring more amenities to the area. The Village Square on Haverford, for instance, will include a supermarket and a coffee shop. Homeowners will likely see the values of their property go up. But the story is different for renters. When people leave a rental, they are unlikely to find another unit at a similar monthly cost and may have to leave the neighborhood, a process of indirect displacement.

“To me, the most important part is indirect displacement, a reduction in affordable housing,” said Clampet-Lundquist. “That creates the demographic change that you end up seeing.”

Mantua residents aren’t necessarily opposed to college students in the neighborhood, Wright said. They don’t begrudge the developers now showing up because they will turn a profit. They just want to make sure they can stay in their homes and enjoy the benefits of those changes, too.

Politicians ranging from Alexandra Ocasio-Cortez to Joe Biden have proposed changes to opportunity zones, from defunding the program (AOC) to reforming it (Biden). Biden’s reform plans don’t include specific housing protections for people in opportunity zones such as Mantua. And existing local and federal programs could help with this particular problem, including rent control, Section 8 housing vouchers, and assistance programs for long-term residents that subsidize the inevitable rise in property taxes, Clampet-Lundquist said.

Using these programs to help in cities where opportunity zones meet skyrocketing real estate prices could limit the damage to low-income areas. So would an acknowledgment that incentives designed to maximize return on investment for the wealthy may not be the best way to address poverty.

In the next couple of years, this stretch of northeastern Washington, D.C., will transform from a hole in the ground next to a church and down the road from a McDonald’s and a Sav-A-Lot into an Alamo Drafthouse Cinema, some luxury apartment buildings, and, rumor has it, a grocery store.

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And because the area has been designated an Opportunity Zone, investors will be able to reap hefty tax benefits for the money they put into these projects — which shows exactly how the Opportunity Zone program, created by the 2017 Trump tax cut law, has gone awry.

Opportunity Zones are intended to spur investment in low-income communities that aren’t traditionally targets for businessfolk or developers. In exchange for putting their money into areas usually starved of capital and leaving it there for a certain amount of time, investors will pay lower tax rates than they would otherwise. Leave an investment in an Opportunity Zone for 10 years, and the capital gains earned will be tax-free; returns to investors could be increased by up to 70 percent thanks to the program, according to one estimate.

More than 41,000 Census tracts nationwide were eligible to be designated as Opportunity Zones, and investors are already pushing for the upcoming 2020 Census to expand those areas.

On the surface, Washington D.C.’s Edgewood is a perfect fit. The poverty rate in the neighborhood is nearly 30 percent, and the median income is just $28,000, according to Census Bureau data, in a city where the median income is above $82,000.

But there are a couple of big problems. First, the developments that will receive tax benefits because of the Opportunity Zone were well underway before the bill creating Opportunity Zones even existed, thanks in part to a $24 million subsidy from the city itself. The lead development company, MRP, freely acknowledges that its project would have gone ahead without tax incentives.

“We were well underway, almost finalized with our development plans and our program and mix [before the Opportunity Zone designation],” John Begert, a vice-president at MRP, said at the project’s groundbreaking in July, according to WAMU. “We were able to take advantage of it, but it wasn’t an original thesis of the business plan and of the development.”

This is a problem endemic to both Opportunity Zones specifically and corporate tax incentives more broadly: They end up subsidizing companies for investments those companies would have made anyway. According to one study, up to 75 percent of tax incentives given to companies in order to locate somewhere specific actually had no bearing on that company’s decision.

All across D.C. the sort of development occurring in Edgewood has occurred without anything like an Opportunity Zone to incentivize it. A similar debate took place around the building of D.C.’s publicly-funded baseball stadium: Proponents like to point to the surrounding economic development as proof that the $750 million Nats Park was a good investment, but don’t really grapple with the fact that other neighborhoods across the breadth of D.C. developed in exactly the same way without a taxpayer-funded sports complex.

But there’s also another question worth asking: Even if the Opportunity Zone were driving actual investment in the neighborhood, would that investment help the people at whom it’s ostensibly aimed? Like much of D.C., Edgewood is gentrifying rapidly; it’s a historically black neighborhood with more and more white people (myself included) moving in and driving up real estate prices, as it’s one of the few pockets of the city where there is any chance of a young professional being able to purchase a house somewhat near the Metro system. For white households in the neighborhood, the poverty rate is 2 percent; for black households, it’s 31 percent, according to the Census.

Rent and home prices are inevitably on their way up; there are currently two homes within the Opportunity Zone that are on the market for around $950,000, per Redfin. This will all hurt current residents who can’t afford higher living expenses.

Those same residents threatened with displacement likely won’t be able to take advantage of the new housing being built either, because D.C.’s average rent for a two-bedroom apartment is $1,550, and many so-called luxury buildings charge much more. Future jobs at the movie theater or other retailers likely won’t pay enough to cover that amount, and just 116 of a total 1,450 units in the Bryant Street development will be designated as affordable housing under the city’s Inclusionary Zoning program, which allows for units to be set aside for families making 50, 60, or 80 percent of the area’s median income.

The new development is meant to entice new people, not aid the ones already there.

Small businesses are under pressure due to the increasing property costs. Our local dry cleaner recently closed after the owners’ landlord refused to renew their lease. It will be replaced by a condo building. In order to make way for the new development, a Big Lots store, a couple of fast food joints, an H&R Block, and a kind of strange drum shop were also all forced to close.

There are no requirements that investors even track whether members of the community are benefiting from the money and amenities Opportunity Zones bring in. D.C. received a grant from a private foundation that will enable it to do at least some data collection, but the zone is already here and the grant was just announced this week. So, the cart is very much before the horse.

As city councilmember Brianne Nadeau wrote last year, “Unfortunately, the design of the program has some serious flaws, and will likely accelerate the patterns of displacement caused by runaway capital that we’ve already seen for decades, but on a federally-subsidized scale.” Indeed, the developer who receives a tax break that had nothing to do with the decision to invest in Edgewood undeniably benefits from the Opportunity Zone. But after that, it’s unclear who else comes out as a winner. There will almost inevitably be displacement, and nothing is being done to help the folks affected by it, particularly those who aren’t homeowners.

My neighborhood certainly isn’t the only one in D.C. where projects that were already planned, surrounded by blocks that were gentrifying all on their own, received Opportunity Zone designations. Nor is this a situation unique to the capital city. But it’s a particularly egregious example of how the rhetoric around a program meant to help economically disadvantaged communities doesn’t come close to matching the reality.

To sum it up, that my neighborhood is an Opportunity Zone is patently absurd.

Instead of culminating in a celebration of the internet retail giant’s corporate citizenship, the yearlong search for HQ2, as it became known, turned into a PR disaster. First, activists and local politicians in New York City raised enough ire about their state’s $3 billion deal for a half-share of HQ2 that Amazon ultimately backed out.

Now activists in Northern Virginia, where Amazon decided to put the other half of its new headquarters, are also hoping to derail the company’s best-laid plans, or at the very least bring some much-needed attention to exactly what is being given away – all three quarters of a billion dollars of it –  to a mammoth company in the name of economic development.

“We’ve been door-knocking mostly in neighborhoods that are low-income neighborhoods, or immigrant as well,” said Danny Cendejas, an organizer with La Collectiva, which is part of a coalition called “For Us, Not Amazon” that is critical of Virginia’s deal with the company. “It ranges from people not knowing Amazon is coming here to not knowing about the incentives that are being offered, to not knowing the effects of Amazon coming here.”

A consistent critique of the Amazon deal, in fact, is that the company hasn’t engaged with the community. “There was not a lot of information being given out, was the sense that we got,” agreed Maha Hilal, co-director of the Justice for Muslims Collective, which is also part of the “For Us, Not Amazon” coalition. But of the people who were aware Amazon was coming, Hilal said, there were some major concerns.

“There is the issue of incentives. With the city granting Amazon incentives, [the residents] are basically paying their taxes to Amazon,” she said. “And the fear of displacement was a big concern. Even though it’s Crystal City where they’re slated to come, it’s going to impact many communities.”

On Saturday, Arlington County’s board will vote on a $23 million package of local tax incentives for Amazon, which would be in addition to the up to $750 million it will receive in incentives from Virginia at the state level. That’s on top of a favorable tax deal already offered to tech companies that relocate to Arlington’s “Technology Opportunity Zone.” Crucially, the proposed deal with Arlington did not include any pledge by the company to pay living wages or put money into affordable housing funds. Instead, Amazon simply has to meet office space occupancy goals.

Meanwhile, a recent study by the New Virginia Majority found that the new Amazon facility in Virginia will displace some 6,000 people, mostly from working-class families, as well as drive up housing costs and exacerbate existing traffic congestion woes.

“This issue with Amazon HQ2 coming here, it will disproportionately affect middle- and low-income people in many ways, in the short and long term. That’s just a fact,” said Julius Spain, president of the Arlington branch of the NAACP. “We have to be cognizant of the low-income communities who may be driven out. They can’t afford to live in a quote ‘revitalized neighborhood.’” The For Us, Not Amazon coalition has asked the Arlington board to formally delay its vote, but as of this writing, that seems unlikely.

So why does this happen? How does one of the richest companies on Earth talk a state and county into giving it hundreds of millions of dollars? Because it can, and politicians pay.

This is how big corporations operate in modern-day America: They pit cities and states against one another in a battle to see who can dish out the most tax breaks, incentives, land grants, and other giveaways to an already-mammoth money-making organization. Companies hold their workforces for ransom and threaten to effectively kill them off by moving somewhere else, and lawmakers cave and pay up. And almost no one follows up in subsequent years to see if anyone’s promises have been kept, perpetuating the cycle.

Estimates for how much state and local governments spend annually on corporate tax incentives vary, but everyone agrees it’s in the tens of billions of dollars annually. And that’s likely an undercount, because navigating subsidies requires keeping tabs on thousands upon thousands of government agencies, offices, and officials, many of whom don’t do an adequate job of tracking what they’re handing out, or intentionally hide their subsidies entirely. A 2017 survey found half of the nation’s 50 biggest cities and counties didn’t even disclose the names of incentive recipients.

Plenty of research has been done on the efficacy of corporate tax incentives, and the consensus is that they don’t have real economic effects. As the researcher Timothy Bartik put it in a 2017 analysis: “Incentives do not have a large correlation with a state’s current or past unemployment or income levels or with future economic growth.”

There are many reasons the effect is so minimal, but one of the big ones is that tax incentives wind up “incentivizing” moves that companies would have made even if they hadn’t received a dime, with companies creating or destroying jobs based on the same considerations that fostered the move, not any particular tax break.

Take the case of Toyota. The car-maker received $40 million from the Lone Star State to consolidate three offices from around the country into one headquarters in the Dallas suburbs in 2013. It was the largest corporate tax break Texas had dealt out in a decade. And Toyota said afterward that the move would have made sense for the company even if those public dollars weren’t on the table.

“That wasn’t one of the major reasons [in] deciding to go to Texas,” Toyota spokesperson Amanda Rice told the Houston Chronicle in the spring of 2014, referring to the subsidies. Instead, “company representatives referenced a host of other factors, including geography, time zone and quality of life.” Yet the company received a $40 million windfall anyway.

This exact critique applies to Amazon and HQ2. After receiving data from hundreds of cities, and spending months picking over the particulars of 20 “finalists,” the company wound up choosing the nation’s capital and the world capital of finance. There are good reasons for it to have an expanded presence in both places that have nothing to do with tax rates. It’s possible it even had them in mind from the very beginning.

In fact, if taxes were the overriding concern, Amazon would have gone to Newark, New Jersey, or Montgomery County, Maryland, both of which offered it much more money than did Virginia and New York.

Given the evidence, why do corporate tax incentives continue to be a plague on state and local budgets?

Because, for a lawmaker, the appearance of doing something to bring in jobs makes for good headlines,  and the cost can always be punted to the next person.

“Politicians really do need to get re-elected, so there really is a political value to issuing press releases and cutting ribbons and passing along the cost to your next three successors,” said Greg LeRoy, director of Good Jobs First, an organization that tracks corporate tax subsidies.

There’s also a collective action problem when it comes to specific subsidies: The company in pursuit of them has every interest in doing whatever it takes to secure its bounty, while opponents have diffuse interests, and may not be particularly harmed by any one deal in a way that necessitates mass resistance. Since the subsidies are bad for the public at large in the aggregate, but beneficial for one interest group in the specifically, organizing to fight back is made difficult.

Political scientist Nathan Jensen, currently at the University of Texas–Austin, has looked specifically at corporate tax incentives and found that their use has an explicit political benefit. “A governor reaps more reward for new investment in his or her state if his or her administration offered tax incentives,” he and three colleagues wrote in a 2013 study that looked at governors and whether their support was bolstered by the use of tax incentives to bring in new businesses. “In fact, a governor will be rewarded for offering tax incentives even if it does not succeed in luring the intended investment.”

And this is true not only at the state level. “In a study of local governments, we learned more about official use of business incentives for electoral gain. We found that directly elected mayors, as opposed to appointed city managers, offered larger incentives and engaged in much weaker oversight of business incentive programs. Elected mayors offered more money and conducted fewer and less rigorous cost-benefit analyses to investigate whether the incentives were economically useful,” Jensen wrote in 2016.  Electoral accountability really wasn’t anything of the sort.

Another factor playing into the politics of incentives is that Americans are starting fewer businesses than they used to. In the 2010s, new business start-ups activity hit rock bottom as the country emerged from the Great Recession, but that was only the culmination of a trend that has been occurring since the 1970s.  There are a lot of theories as to why this decline in America’s entrepreneurial spirit has occurred, including that it’s a result of the decrease in robust anti-trust enforcement, but it’s a certainty that it’s happening. And fewer new businesses means fewer ribbon-cutting opportunities for lawmakers, so they’re all fighting viciously over what’s left.

That effect is apparent even now, as New York Mayor Bill de Blasio and Gov. Andrew Cuomo, along with other New York lawmakers, are still trying to cajole Amazon into re-reversing its HQ2 decision. But for now, New York stands out as a rare victory for activists against the corporate greed machine.

“That was a victory for all communities of color, for all immigrant communities and low-income communities that are fighting daily against the threat of displacement,” said Cendejas. “Deals for economic growth shouldn’t be done on the backs of low-income communities and communities of color.”

“I’m happy that something happened up there in New York, where the people spoke and Amazon listened and they left,” Spain said. “That gave me some motivation to say, ‘listen, the same thing can happen in Arlington.’ Anything’s possible.”

This piece was adapted from “The Billionaire Boondoggle: How Politicians Let Corporations and Bigwigs Steal Our Money and Jobs” by Pat Garofalo, out now from Thomas Dunne Books.

The goal of boosting development in low-income areas is certainly laudable, but one major concern is that funds are going to be directed to places that are not really distressed: Take, for instance,  the area where Amazon’s HQ2 will land in Long Island City, the area around a Trump golf course, or the future home of the Las Vegas Raiders NFL franchise, all of which qualify for benefits. Ahead of a White House event on Wednesday about Opportunity Zones, reports emerged regarding how the Kushner family business stands to take advantage of the program, after Jared Kushner and Ivanka Trump pushed for its creation.

But high-profile, flashy examples of obvious Opportunity Zone boondoggles don’t highlight the full extent of the problem. For example, look at Rockville, Maryland.

The Rockville census tract below, outlined in dark green, fits within the definition of economically distressed for the Opportunity Zone program. For a census tract to be eligible, it must either have a poverty rate above 20 percent or median family income below 80 percent of the area median income.

While the Rockville tract has a poverty rate of 13 percent, well below the threshold, it is at 71.58 percent of area median family income. However, that is a reflection of the fact that Rockville is a suburb of Washington, D.C. that is well-off, with an overall median income of $100,436 in 2017, and that the median income of the tract in question is relatively smaller than that in the overall Rockville area.

It’s not that this census tract is distressed; it’s that it is relatively less well-off in a sea of wealth.

This census tract lies along a major highway, the Rockville Pike, which runs between the dark green and light green sections on the map. It is home to many strip malls. It is bordered to the west by the Woodmont Country Club, where the initiation fee is $80,000, and is also the location of new construction, especially around the Twinbrook Metro station, part of the D.C. subway system.

That’s not exactly the picture of a place that is going to have trouble attracting investment on its own. The Washington, D.C. region has the highest median income of any metropolitan area in the country, and while it certainly has pockets of deep poverty, this isn’t one where investment incentives are desperately needed.

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Due to the Opportunity Zone program, tracts like this that are already experiencing growth will get big benefits and investors will be able to accrue significant tax savings for plopping their money there, while not achieving the core aim of the program. Investors will reap benefits for investments they might have made anyway, when the program is meant to entice them into areas they wouldn’t otherwise be. And there’s an opportunity cost at work: Funding that will come to this tract could have gone to other Opportunity Zones in places that are actually in need of capital.

Just looking at how the program is being touted in the investment community shows how far away from the mission it is in practice. In outlining the top 10 Opportunity Zones, Fundrise — an online real estate investing service — uses home value increases as the metric for investment. It is therefore not surprising that the top four are all located in large urban metropolitan neighborhoods in California.

Other fund managers are looking for an internal rate of return of 12 percent, but do not have similar metrics pertaining to the individuals within those communities. To fit within the mission of the program, funds should be tracking metrics like the number of startups created by individuals in the community, number of living jobs created, or the number of affordable housing units created.

If the goal is to revitalize low-income communities, the best way is to develop the already existing resources, namely the people who live there. If policy drives investment in individuals in these communities through the development of small businesses, it can spur further investment and uplift distressed communities. Instead, we’re stuck with a program that creates mini tax havens for the wealthy, while leaving low-income communities behind.