In a “roundtable” meeting beginning Monday morning, Mayor Frank Scott Jr., White House staffers and city officials discussed the future of Little Rock’s four opportunity zones and how investment in those areas could impact economic growth in the capital.
Little Rock’s opportunity zones are in East Little Rock — east of I-30 and north of I-440, including East Village and the Bill and Hillary Clinton National Airport — South Little Rock, which includes the Pettaway neighborhood, and the 12th Street corridor. The opportunity zones, which provide tax incentives for private investment in low-income areas, were selected by Governor Hutchinson last year as part of the 2017 Tax Cuts and Jobs Act.
Scott began his comments by emphasizing that as “chief growth officer” for Little Rock, it’s important for him to help the city “take advantage” of resources available to it, specifically with the city’s state and federal “partners.”
“The opportunity zone is a great example of that right now,” Scott said. “What we want to do is set the stage, share our vision for how we guide development. We don’t want to talk about gentrification. What we want to talk about is how we have mixed-use development in these very strategic areas that happen to be low income, distressed areas; or how do we move these low income, distressed areas from being surviving areas to thriving areas; [or] how we have more investment in this potential in our city as we move forward.”
U.S. Rep French Hill (R-Little Rock) also spoke of the importance of “taking advantage” of federal policy on a local level. He insisted that it’s not enough for state legislators to mirror the federal legislation that allowed for the creation of the opportunity zones; Hill said it’s up to them to “do more” to “make these enterprise zones the most attractive in the United States.”
Hill also addressed the board of directors and the mayor, saying they could make opportunity zones more appealing by removing restrictions or reducing “property tax assessments.”
“Don’t forget, this is not a dollar that’s being taken away from anybody, and it’s not a dollar that’s anywhere in existence,” Hill said. “There is no revenue loss here per say because there ain’t nothing going on in some of these places. This is about creating opportunity.”
Hill asked again that people “think broadly” about opportunity zones and not treat them as “static” investments.
“Arkansas has to do more, and I’ll tell you why: Because we’re not an NFL market,” Hill said. “Look at the job growth in this country since 1990. You take out the NFL cities, it’s not impressive. So we have to do more to make Little Rock, North Little Rock and the other counties that are designated as such, more attractive [as opportunity zones] than saying, ‘We’ve met the standard.'”
In a panel about opportunity zones, Ben Hobbs, a member of President Trump’s Domestic Policy Council, said there have been two rounds of proposed regulations for investors of opportunity zones. The first round “laid out” definitions for investors about the zones, and the second set of regulations “focused on businesses,” including requirements that 50 percent of hours from the workforce, 50 percent of employees for the business, and 50 percent of the income derived from the business be from the opportunity zone.
Hobbs said that while some of these rules may be tweaked a bit before they’re finalized, a clause was included in the proposed rules that allows businesses and investors to “go out and execute deals” according to the rules as they are now.
“You’ll be held accountable to those proposed rules if you execute deals now, not necessarily what will be in the final rules,” Hobbs said. “The light is green, and I encourage everyone in this room, if you’re an entrepreneur or business owner, if you’re an investor or developer, that you now have all the rules necessary to execute your deals.”
“Nobody’s going to pull the rug out from underneath you,” Hobbs added.
Chris Caldwell, co-chairman of Delta Regional Authority, an economic development agency, said opportunity zones in Little Rock are uniquely poised to “make a difference,” as compared to opportunity zones in other places that are “NFL cities” like “Brooklyn or Beverly Hills,” where sources for funding are “around the corner,” because the “barrier to entry” for investors is lower in Little Rock.
“I think that cities like Little Rock can play a bigger role in being an example, because there is a great connection between some of the more urban metropolitan hubs and the more rural [places]. I don’t see it so much as a competition,” Caldwell said. “The great equalizer in all this, and the genius in this legislation, is that the barrier to entry in [NFL cities] is also higher.”
Johnathan Holifield, executive director of the White House’s Initiative on Historically Black Colleges and Universities, said that like the HBCU initiative, opportunity zones are “conditions creators” to improve life in underserved areas and make them “more hospitable” environments for “private capital investment.”
Holifield said local involvement is hugely important to success of opportunity zones.
“We cannot lose sight of this: The game will be won in the states, cities and communities in which the zones are organized,” Holifield said. “Folks, this is a local game. It’s great to have us [federal partners] here [because] we can provide examples and ideas and concepts, but the game will be won on the ground in Little Rock and other communities across the United States.”
Holified also emphasized that it will take intentional, deliberate organizing to ensure the opportunity zones both flourish and benefit the communities in which they’re located.
“The absence of strategy is killing us,” Holifield said. “What are we trying to do? Are we just a collection of disparate efforts, or, perhaps led by the mayor in Little Rock, are we convening diversity and inclusive interests in groups to actually plan the development of these zones? The mayor mentioned gentrification. All gentrification is not bad; unplanned, unwanted gentrification, typically, is bad. The antidote to that is strategy and planning.”
Lisa Ferrell, CEO of Rockwater Village, a community development in North Little Rock, echoed Caldwell’s sentiments about the low barrier to entry for investment in Little Rock’s opportunity zones.
“What I would love to see in Arkansas is that Arkansas investors make it happen here in the state. The barrier to entry is very low,” Ferrell said. “People think about investors as being golden stags or large entities, but there’s no reason that a small investor can’t benefit from opportunity zones. [If] somebody has a $100,000 [or] $200,000 gain from the sale of a family farmland or something like that, there’s nothing that would stop them from doing an urban infield project in one of the opportunity zones and investing in low income housing. And it would be a wonderful chance for them to reduce their tax burden and make a contribution to their community. … I am very bullish on opportunity zones.”
Hobbs listed several ways that federal and state agencies incentivize businesses and individuals to invest in opportunity zones, including one such incentive from the U.S. Department of Education that gives “preference” to charter school projects who apply for grant money to open in opportunity zones.
“If you’re an investor and you’re investing in a charter school, if you use opportunity zone financing, you now have a preference to get that federal matching grant,” Hobb explained.
In a panel moderated by Scott about how opportunity zones can benefit Little Rock businesses and investors, the mayor emphasized the importance of tailoring opportunity zone investments to the city’s existing strengths in order to “cash this vision.”
Scott listed the airport, the Port Authority and travel as major “assets” of the city’s economic “ecosystem,” saying that Little Rock sits at the intersection of I-40 and I-30, which Scott described as “two of the most traveled interstates in the nation.”
Bryan Malinowski, interim executive director of the Clinton National Airport, said the airport has 270,000 square feet of available building space and 11 acres of ramp space available for investment.
Scott said health care is also a “key” strength of Little Rock, saying “health care” makes up 20 percent of the state’s gross domestic product spending and the “majority” of that spending on health care takes place in Little Rock.
“We have all the ingredients in the pot,” Scott said. “We’ve just gotta start stirring with the true deployment of capital to connect these dots.”
Scott also said his goal is for Little Rock to grow at a “manageable and rapid” pace, saying he “firmly believes” that if the city “does certain things,” it can go from a population of about 198,000 people to “somewhere between” 250,000 to 275,000 “in the next 10 years.”
During the question and answer portion of the meeting, Reginald Hampton — whom Scott described as a “storied developer” in the South End community — said he had concerns about how the opportunity zones will actually impact their residents.
“You’d be surprised what’s being said right now,” Hampton said. “I married a girl from East End, I know a lot of East End people. … But I’m hearing them say over and over again that the white man is doing to us what the white man did to the Indians. They’re taking our property, they’re developing our property, but we’re not a part of that development. And that bothers me. … What I see right now, I’m concerned about. I’m seeing the rich get richer, and I’m seeing the poor get poorer.”
“This is a great movement, a great opportunity, but I don’t see black folk at this time being able to take real advantage of what we’re talking about here today,” Hampton added.
Scott called on certain Little Rock investors and business leaders who were in attendance, including Will Rockefeller, who said the city needs to act as a “clearing house” for the investors, funds and specific projects in the opportunity zones. Rockefeller also addressed Hampton’s comments, saying that if Little Rock wants “sustained, organic growth” in the city, it will need to involve the communities in the opportunity zones.
“If I come in and invest, I’m only benefiting myself,” Rockefeller said. “I’m not helping the larger community. I’m not getting the buy in from the larger community. That is going to take the larger community being invested in some way, either sweat equity or financial equity. For them to have a seat at the table, and really be a part of this, otherwise you’re just getting outsiders coming in, they’re reaping all the benefits, and the community at large is either pushed out or has no stake in the game, so long term, it’s going to fail.”
Following the two panels and a bus tour of the opportunity zones, Scott spoke at a press conference at the Dunbar Community Center. He said he would announce the full Opportunity Zone Task Force later this week, but said several of the people who stood behind him during his comments were part of the task force, including Virgil Miller of Arvest Bank, Rockefeller, Ferrell and Leslie Lane, senior vice president of he Arkansas Capital Corporation, who also spoke on the Opportunity Act panel.