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Gentrification is a myth, said one of York City's top economic development officials.

Blanda Nace's assertion came earlier this month in an interview about the city's five opportunity zones and led to Mayor Michael Helfrich criticizing Nace's viewpoint and defending the districts as a way to aid blighted neighborhoods.

“That’s what people don’t understand about gentrification," Nace said. "And it’s really annoying when people try to make it a plane crash of a story because it’s not a real thing. If you’re improving a neighborhood, you’re typically starting with a neighborhood that needs improvement …”

The comment was in response to a question about whether opportunity zones shove poor and minority residents out of neighborhoods as wealthy investors seek to benefit from tax breaks. 

More: Closer Look: Are opportunity zones economic development or subsidized gentrification?

More: Closer Look: York Exponential may be first in York to reap opportunity zone benefits

Helfrich, visibly flustered, promptly cut Nace off.

“Blanda, just stop," Helfrich said sternly. "Stop. What you’re saying is not coming out of this office. Because what you’re saying is incorrect. There’s absolutely times — the question is will people in a place be moved out because of improvement. And that does happen. Let’s not pretend it doesn’t happen."

Nace's appointment to the post of chief opportunity development officer earlier this year — a position tasked with handling opportunity zones — faced backlash because of what some residents saw as a lack of transparency.

Fears of gentrification also were ripe then, coming on the heels of a failed city effort in 2018 to outsource economic development to the York County Economic Alliance, which employed Nace at the time.

Many experts agree with Helfrich's concerns about gentrification, enabled through wealthy investors dumping money into federally designated opportunity zones.

States have tinkered with initiatives similar to opportunity zones before. At the federal level, such zones were created by the Tax Cuts and Jobs Act of 2017 that was signed by President Donald Trump.

There are two main benefits associated with opportunity zones.

First, grant applications that would benefit neighborhoods in such areas are given priority consideration. Second, investors wanting to put money into those areas receive capital gains deferrals and tax breaks.

More: York City schedules opportunity zone town hall

The latter is what has raised red flags, with some dubbing it state-subsidized gentrification.

"The largest tax benefit is based around appreciation," said Brady Meixell, research analyst at the Urban Institute. "The more appreciation you have, the more capital gains taxes are avoided. If you're purely profit motivated, the highest benefit on real estate is in areas on the verge of rapid gentrification."

Other potential problems arise through loopholes in the 2017 law.

There is no language in it that requires investors to detail what benefits their investments will bring to the neighborhoods. They also aren't required to report on any tangible benefits from their investments during or after projects take place.

As a result, some experts say, the law provides ripe opportunities for self-enriching practices that don't benefit poor communities.

Nace's remarks dismissing the possibility of gentrification weren't the first time economic development talks in the city have been touchy. 

Residents blasted Nace's appointment earlier this year largely because the York City Council did not confirm it. The fact that the position was only advertised for a week didn't sit well, either.

During several City Council meetings in 2018, residents of color said outsourcing economic development to the majority-white YCEA would gentrify the city. The criticism ultimately killed the deal.  

— Logan Hullinger can be reached at lhullinger@yorkdispatch.com or via Twitter at @LoganHullYD.

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