Enriching the rich: Trump’s opportunity zones

Another tax break for the wealthy sold as an economy-boosting innovation that will help the poor. We deserve better.


President Trump signs the Tax Cuts and Jobs Act, including Opportunity Zone provisions,            on Dec. 22, 2017

Stand in front of the vacant building at the corner of S.W. Pacific Hwy and Dartmouth St. in Tigard and you’ll be enveloped in activity.

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11688 Pacific Hwy, Tigard

The traffic is heavy and constant. Nearby businesses include Costco, a thriving Car Toys store, a bustling shopping center and numerous restaurants. It doesn’t look much like an under-invested, economically distressed area badly in need of economic development and job creation.

But the building on the corner, 11686 S.W. Pacific Hwy, is in one of Tigard’s three “opportunity zones.” All are tax-advantaged sites added to the tax code subsequent to President Trump signing the Tax Cuts and Jobs Act on December 22, 2017.


Tigard’s Opportunity Zones (in dark blue)

The idea, proposed by Sen. Tim Scott (R-SC), was that high-poverty areas/distressed communities would get a leg up with new investments if they were eligible for generous preferential tax treatment. The program was originally proposed in the Investing in Opportunity Act, which Sen. Scott co-sponsored with Sen. Cory Booker (D-NJ) earlier in 2017. The program allowed investors to reduce and defer paying capital-gains taxes if they invested in a qualified opportunity zone fund which invested in an opportunity zone.

“The rich will not be gaining at all with this plan,” the president told reporters prior to a Sept. 2017 White House meeting with the bipartisan Congressional Problem Solvers Caucus.

Areas can qualify as opportunity zones if they have been nominated for that designation by the state and certified by the Secretary of the U.S. Treasury via the Internal Revenue Service.

Investors in a zone earn a 10% tax discount on their gains after five years, then a 15% discount after seven years. If they keep their opportunity fund shares for 10 years, they can sell them without paying any taxes on the money they made from that investment.

But investors have to act fast because to get the greatest potential tax break they need to leave their money in a fund by the end of this year. Under the law, they can defer paying taxes on their initial investment only until 2026. That’s motivating many investments in projects planned well before opportunity zones were designated.

“With Opportunity Zones, we’re drawing investment into neglected and underserved communities of America so that all Americans, regardless of ZIP code, have access to the American dream,” Trump said on Dec. 12, 2018.

But things got off on the wrong foot when real estate experts got hold of the law.  “…what we were greeted with, and I don’t think it’s unfair for me to say this, were eight pages of the most poorly written statute that I’ve come across in my time covering tax policy,” said Tony Nitti, a CPA, currently a Tax Partner with RubinBrown in Aspen, CO. and a Senior Contributor to Forbes.

It took almost a year after the Tax Cuts and Jobs Act became law before the IRS published a lengthy list of proposed regulations on Oct. 19, 2018.

Then the IRS had to address more questions with a second set of 44 pages of proposed regulations on May 1, 2019.

Another problem that has emerged is that not all of the country’s 8,764 certified opportunity zones encompass just under-invested, economically distressed areas badly in need of economic development and job creation. Some also include areas of relative affluence that would be ripe for investment even without the new tax break.

As Samantha Jacoby, a Senior Tax Legal Analyst at the Center on Budget and Policy Policies, a progressive think tank,  has warned, the opportunity zone law is “fundamentally flawed” and the “… tax benefits will flow to wealthy investors with no guarantee that the zones will help distressed communities.”

Even the Wall Street Journal recently  highlighted this problem, noting that, “a tax benefit intended to help poor areas is channeling money to places that are already relatively well-off.”

One such place in a Tigard opportunity zone is raw land at the corner of SW Dartmouth St & SW 72nd Ave.  The 1.69 acres of commercial land in an already prosperous and heavily developed area is being offered for sale for $3,300,000 by the Real Estate Investment Group.


Because no structure is on the land to improve, it might seem like a speculator could buy this raw land, sit on it without adding anything and then sell the land after ten years tax-free.

But it’s not so simple. An owner must conduct a trade or businessand just holding raw land is not a trade or business. So the purchaser of raw land will also need to invest in substantial improvements on the property, though the owner would not be bound to as specific an amount of improvements..

It would also be quite a stretch to call 11646 S.W. Pacific Hwy, a 29,978 sq. ft. site with a vacant 11,260 sq. ft. building that’s for sale at the corner of S.W. Pacific Highway and Dartmouth St., “economically distressed.”

Marketing material for the site has highlighted that average household income was $71,601 within one mile and $89,792 within three miles in 2015. The material also points out that the site is in the middle of a bustling commercial area that includes retailers such as Costco, PetSmart. A Walmart Supercenter, WinCo Foods and Fred Meyer.

Some readers may remember when the building on the site was occupied by Magnolia Hi-Fi.  The building was constructed in 1996 and NTN Pacific, LLC bought the site from Toyama Hawaii Corp. for $3,100,000 on Jan. 7, 2004 It’s now being offered for lease or sale through Norris & Stevens, Inc.

The buyer of this property won’t automatically qualify for the opportunity zone tax benefits. Since the goal of the program is to improve distressed communities, substantial improvements will have to be made to the property within 30 months.

To be precise, the new owner will have to spend on improvements an amount at least equal to the purchase price of the building. If 60% ($1.5 million) of a $2.5 million purchase price is allocated to the building’s value and 40% ($1 million) to the land’s value, the purchaser will have to invest an additional $1.5 million on substantial improvements, such as redeveloping the building and building out spaces for incoming tenants.

One of Tigard’s stated objectives in creating opportunity zones was to spur the development of more affordable housing.  Tigard is considered a rent-burdened city with over 28 percent of residents spending over 50 percent of their income on rent/mortgages.

But it would be a mistake to assume new housing being built in Tigard’s opportunity zones will address this problem. For example, The 72nd, a 38-unit apartment building that’s under construction on S.W. 72ndAve. will be far from affordable housing.


The 72nd apartment complex under construction in a Tigard opportunity zone.

A 517 sq. ft. one-bathroom studio at The 72nd will start at $1263 a month; a 690 sq. ft. one-bedroom one-bathroom apartment at $1534 a month. And rents go as high as $1,776 a month for a one-bedroom one-bathroom apartment.

And then there’s the impact of the opportunity zone tax breaks on federal and state tax collections.

The new tax breaks will cost an estimated $1.6 billion in lost federal revenue over ten years, according to Congress’ Joint Committee on Taxation.

At the state level, all the tax breaks lower individuals’ and corporations’ “gross income,” as the Internal Revenue Code defines it. If states piggyback on that definition, as most do, the breaks will automatically flow through to state individual and corporate income taxes unless the state proactively “decouples” its law from the opportunity zone provisions. Without decoupling, states will miss out on collecting revenue needed to fund other priorities needed for healthy economy.

As the Oregon Center for Public Policy, a left-leaning think tank, put it, “Someone will have to pay for the subsidies going to the wealthy investors profiting from Opportunity Zones, and that someone will be schools and essential services.”

So it’s not cynicism to see the opportunity zone program as yet another misguided giveaway. As Caesar proclaims in David Staller’s adaptation of “Caesar and Cleopatra,”  “The power of accurate observation is commonly called cynicism by those who have not got it.”.

Welcome to opportunity zones — tax shelters for wealthy investors and real estate developers who can put their money to work in areas the least in need of assistance, reducing state and federal tax revenues and increasing already excessive federal deficits.

Another well-intentioned program gone awry.



A truly depressing visit to a Barnes & Noble store

In the 1998 movie “You’ve got mail”, Meg Ryan, the owner of a small, neighborly bookstore, feared the consequences of a new colossal and impersonal big box bookstore opened nearby by Tom Hanks.

Maybe she should have waited a decade.

Then she’d have seen a seen a seismic shift, with big-box book stores threatened on every front. That threat is vividly on display at the Barnes & Noble store at Bridgeport Village in Tigard, which seems to be giving up on the old-fashioned printed word.

On a recent visit to the store, I was first confronted with a brightly lit space featuring not newly-released print books, but the Nook eReader, released in the U.S. in the distant past of November 2009.

After passing through the Nook display, I anticipated racks of books that were there when the store was a Borders superstore. Instead, I encountered a large area that felt like I was back at Woolworth’s, a five-and-dime chain that flourished in the 1900s before succumbing to competition in 1997.

Spread around the space were displays for “greeting cards,” “stylish stationary and groovy gifts,” “quirky and cool gifts,” candles & scents,” and “lunch bags”. No print books in sight.

Surely there would be books around the corner, I thought. Nope. That space is occupied by the Barnes & Noble Café.  How about beyond that? No books there either. That’s occupied by racks of magazines, from Psychology Today, US and Vanity Fair to Comic Heroes, Buddhadharma and Clean Eating.

Rows of print books were only in the middle of the first floor, adjacent to an escalator with a “Temporarily out of order” sign. Prescient perhaps.

I took the elevator up to the second floor expecting an expansive area crammed with books. Again there were rows of print books in the middle of the floor, but also a large space featuring “Building,” “Learning” and “Arts & Crafts”. Filling the space were LEGO kits, kid’s toys, Sparkle Tattoos, Feather Fashions, a Perfume Science Kit and venerable games like Twister, Sorry and Clue.

All of this doesn’t bode well for Barnes & Noble’s once mighty print book and magazine retail stores.

Those stores, which have been generating most of the company’s profits, have been dealing with a slow decline for years. Revenue from retail stores in the third quarter ending Jan. 25, 2014, for example, fell 6 percent to $1.4 billion. Revenue in stores open at least one year, a key retail metric, fell 4.9 percent.

All this despite the bankruptcy of Barnes & Noble’s principal competitor, Borders, in 2011.

This is consistent with the numbers on printed book sales at retail stores across the country. Government statistics show that overall bookstore sales have been treading water since 2003, with printed book sales through retailers taking a big dip in 2011, 2012 and 2013.  Meanwhile, eBook sellers, which offer a wider selection and lower prices, continue to grow.  Even Barnes & Noble’s former CEO William Lynch told a Bloomberg reporter he read his books on a Nook. “I don’t really read physical books that much anymore,” he said.

The market for print magazines, the other big print section of the Barnes & Noble store, isn’t booming either. Single copy sales of print magazines dropped 11, 9, 8, 9 and  8 percent annually during 2008 – 2012.

The economic picture for print magazines is gloomy, too. Total ad pages for the 211 magazines tracked by the Publishers Information Bureau in 2012 fell 8.2 %, to 150,699 for the year – a substantially sharper drop than the 3.1% drop seen in 2011.

 Maybe it won’t be long before Barnes & Noble has to close the book on its retail print book and magazine stores.

Tigard man is enthralled by tin toy trucks

By Bill MacKenzie

It all started, as so many good things do, with his father.

John Venheim’s father, Georg, a decorated veteran of World War II, came to the United States from Norway in 1945 to marry his 17-year-old sweetheart from New York. When Venheim was in kindergarten, his father brought home a 1955 Tonka Metro van he’d bought at Goodwill. Venheim was hooked.

In 2010, the year his father passed away, Venheim bought his first Tonka tractor-trailer set on Craigslist, followed by the purchase of several collections of Tonka parts from which he crafted some trucks. When he sold an orange 1958 Tonka flatbed truck carrying a bulldozer for $300, he knew his hobby had taken a turn.

“I realized I had to get organized,” he said, “so I put together a complete shop in my garage in 2011.” The cluttered 480-square-foot garage is now packed with a raft of tin toy truck-making equipment, including a sandblaster, woodworking tools, a painting cube, a Thumler’s Tumbler machine that shines chromed parts in vibrating corn cob grit, a metal polisher and a wood jig used to make identical wooden stakes for a Tonka Farm Stake truck.

In a corner of the garage are 7-foot-tall wooden racks with shelving. One rack contains already painted projects, another a collection of parts, a third a jumble of supplies. A fourth rack is used to dry newly painted projects at a constant 80 degrees. In another corner is a large metal rack filled with old tin trucks and parts acquired over time.

On a shelf is a collection of original, colorful crate labels found on the Internet that he uses to adorn the sides of trucks. “Minton’s. Choice Bartlett Pears packed by C.D. Minton Inc., Forest Grove, Oregon, U.S.A.,” read one.

by: JONATHAN HOUSE - John Venheim refurbishes vintage pressed-steel toy trucks that he then sells through his Custom Tin Toy Trucks business.by: JONATHAN HOUSE – John Venheim refurbishes vintage pressed-steel toy trucks that he then sells through his Custom Tin Toy Trucks business.

For the past three years, Venheim has been busily building, repairing, buying and selling tin toy trucks and parts made not just by Tonka, but also by Buddy L. Wyandotte, Nylint, Structo and others. He said he spends about 10 hours a week in the garage immersed in his hobby, but with his non-stop enthusiasm, it’s probably much more as he builds his business, Custom Tin Toy Trucks.

He buys and sells on eBay and Craigslist and on specialized websites such as tonkapartsandsupply.com.

“You can buy just about anything connected with old Tonkas online,” he said, “including whole trucks, grills, hubcaps, headlights, truck tailgates, and tires, which are real expensive.”

His most recent acquisition, a red Texaco Fire Chief fire truck made by Buddy L. in the 1960s, was purchased on eBay for $40

Venheim also seeks out deals at garage sales. “Lots of people with tin toy trucks have no idea what they have,” he said. At a garage sale he encountered a woman selling a 1955 tin toy truck for $10. He told her the truck was worth much more and bought it for $80. After he fixed up and polished the truck, he sold it for $127.

Some online sellers buy old model trucks online, strip them down and sell all the parts individually. “Most people selling these old trucks don’t realize that if they took them apart and sold the parts, they could get three times as much,” he said.

The truck Venheim got the most for was a worn vintage unrestored Steelcraft Streamlined City Trucking Co. truck. What made it special is that it was designed by Viktor Schreckengost, a legendary American industrial designer often called “the American DaVinci.” Venheim sold the truck on eBay for $600.

by: JONATHAN HOUSE - Once finished, John Venheims custom tin trucks bring back the nostalgia of these old toys.by: JONATHAN HOUSE – Once finished, John Venheims custom tin trucks bring back the nostalgia of these old toys.

Some people only want to buy completely original vintage trucks, which tend to cost more. An original 1958 Big Mike dump truck with snow plow and dual hydraulic in mint condition with its original box can go for $1,000 or more. Other collectors are fine with new toy trucks. For them, there are companies like Smith-Miller Inc. of Lake Havasu City, Ari., which sells handmade scale trucks in miniature. A 41.5-inch-long, 21-pound Navajo Freight Lines Hauler is for sale on its website at $1,295.

Venheim’s trucks cost considerably less. That’s partly because he hasn’t built a solid reputation yet. It’s also because his creations often have added parts or parts that are different from the original. Once in a while, he even does whimsical add-ons such as a tiny spotted owl he placed on a logging truck.

As much as he’s able to make a little money from his tin trucks, he wants to keep it as a hobby and hold down a steady job for a while. “It’s an avocation now,” said Venheim, 55. “Hopefully, it’s going to be an established business when I retire.”

At that point, he expects to concentrate on mass-producing a highly sought after type of model gas turbine toy truck. “My intent is to get businesses like breweries to buy 10 or 15 of them, put their label on the side and then use them for promotional purposes,” he said. “That will be my bread and butter.”

In the long term, Venheim’s goal is to create a legacy. “My intent behind this company is that 50 years from now people will see one of my trucks and say, ‘Oh, wow, that’s a Custom Tin Toy Truck.”

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Dec. 5, 2013


View a video, Custom Tin Toy Trucks with John VenheimImage