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Monday, December 09, 2019 {{ new Date().getDay() }}

Reprinted with permission from ProPublica.

The Rybovich superyacht marina lies on the West Palm Beach, Florida, waterfront, a short drive north from Mar-a-Lago. Superyachts, floating mansions that can stretch more than 300 feet and cost over $100 million, are serviced at the marina, and their owners enjoy Rybovich’s luxury resort amenities. Its Instagram account offers a glimpse into the rarefied world of the global 0.1 percent — as one post puts it, “What’s better than owning a yacht, owning a yacht with a helicopter of course!”

Rybovich owner Wayne Huizenga Jr., son of the Waste Management and Blockbuster video billionaire Wayne Huizenga Sr., has long planned to build luxury apartment towers on the site, part of a development dubbed Marina Village.

Those planned towers, and the superyacht marina itself, are now in an area designated as an opportunity zone under President Donald Trump’s 2017 tax code overhaul, qualifying them for a tax break program that is supposed to help the poor.

Then-Florida Gov. Rick Scott bestowed the tax break on the marina after a direct appeal from Huizenga Jr., according to a 2018 letter Huizenga Jr. wrote that was obtained by ProPublica. Huizenga and his family have been major donors to Scott. Even though the opportunity zone program is supposed to subsidize only new investment, Huizenga cited the already-planned Marina Village in his appeal to Scott.

Noting the “significant private sector investment that is poised to take place,” Huizenga wrote, “This project has been planned for some time as part of the larger Marina Village initiative which incorporates the Rybovich working waterfront marina.”

The state of Florida, based on an analysis of unemployment and poverty rates, had not originally intended to pick the census tract containing the superyacht marina for the program. But those plans changed in response to Huizenga’s lobbying, according to documents from the Florida Department of Economic Opportunity obtained by ProPublica.

A little more than a week after the Huizenga letter, Scott announced his opportunity zone picks, which included the Rybovich marina area. At the same time, Scott rejected other, poorer tracts that the city of West Palm Beach had asked to be named opportunity zones.

Two other Scott donors, both billionaires, also benefit: Jorge Pérez, the Related Group chairman and CEO known as the condo king of South Florida; and Stephen Ross, a prominent Trump fundraiser, real estate magnate, and Miami Dolphins and Equinox gym part-owner. Ross’ Related Companies owns a quarter of Related Group, which is Rybovich’s partner on the planned Marina Village development.

It’s unclear how valuable the tax break could be, and the public may never know because the Trump law included no public reporting requirements. But Pérez recently boasted that the new subsidy would add jet fuel to the investment returns, telling Bloomberg this year: “It worked as a market-rate rental. Now, it works that much better as an opportunity zone.”

Huizenga and Pérez weren’t the only beneficiaries of Scott’s largesse. In a separate case in Tampa, the Florida documents show, Scott made a wealthy downtown area an opportunity zone at the request of a firm controlled by yet another billionaire donor, Tampa Bay Lightning owner Jeff Vinik. This, too, does not involve a new investment. Since as early as 2014, Vinik has been planning a massive redevelopment project in the area that will include luxury residences, hotels and shops.

Trump has hailed the opportunity zone program. Opportunity zones “are doing unbelievably well. And you’ll see that, and you’ve already seen it,” he said in August. “And the biggest beneficiary there is African Americans.”

But in Florida, the tract selections highlight one significant vulnerability in the opportunity zone process. The Trump tax law gave governors the authority to distribute valuable tax breaks, and they have wielded it to benefit the politically connected.

“That’s the real scary part of this program, that you give such incredible power to politicians to designate zones,” said Nathan Jensen, a professor at the University of Texas at Austin who studies economic development. “The fact that this process was not transparent in almost any state is shocking.”

Previous revelations about billionaires taking advantage of the opportunity zone program for already-planned developments in wealthy areas have spurred congressional scrutiny. Sen. Ron Wyden, D-Ore., introduced a bill to overhaul the program, while Sen. Bernie Sanders, I-Vt., has called for it to be abolished.

A spokesman for Scott, who is now one of Florida’s U.S. senators, declined to comment on the superyacht marina case but said in a statement: “Then-Governor Scott’s focus was on supporting job creation in low-income areas in the state, based on federal requirements and what would offer the best return on taxpayer dollars. That’s what guided every decision he made.”

In a statement, Rybovich President Carlos Vidueira denied the firm had sought the tax break for its own benefit. “The motivation to seek approval of an Opportunity Zone designation was to create incentives for redevelopment by third parties in the surrounding neighborhood. The letter was not motivated by an attempt to create incentives for Rybovich” or the Related Group. He pointed to the firm’s support of a nonprofit effort to revitalize the area called Purpose Built Communities, which aims to create affordable housing and jobs.

Vidueira added that “Rybovich has never planned the use of any Opportunity Zone tax deferment for its property.” He declined to comment on whether it might raise money from other investors taking advantage of the tax break, or on Related Group’s stated plans to use the tax break.

Related Group’s general counsel, Betsy McCoy, said the firm “had no involvement in former Governor Scott’s designation of Florida’s Opportunity Zones.” She added Related Group first learned of the tax break when the governor’s press release went out. A spokeswoman for Ross’ Related Companies did not respond to questions.

The opportunity zone tax break was pitched as the prime anti-poverty measure of Trump’s signature legislative achievement, the Tax Cuts and Jobs Act of 2017. An idea that drew bipartisan support — notably from Sen. Cory Booker, D-N.J. — the program is supposed to incentivize investors to direct their capital to needy areas. In exchange, they get a lucrative break on capital gains taxes.

After the new law passed, there was a brief, high-stakes window at the start of 2018 when decisions were made. First, the Treasury Department drew up a list of eligible census tracts based on income and poverty data. Then each governor selected a quarter of the tracts in their state for opportunity zone status. Finally, the Treasury OK’d those picks. The process gave enormous autonomy to the governors, especially because the Treasury applied little scrutiny to the selections before approving them.

In the newly designated opportunity zones, investors get a trio of subsidies. If investors take capital gains — generated, for example, by the sale of stock that has increased in value — and put it into a deal in one of the zones, they don’t have to pay capital gains tax up front. Later, their tax bills are trimmed. And, most important, any appreciation on the new investment in the opportunity zone is tax-free after a decade.

The designation was an immediate boon to owners of property within the selected areas. Values on development sites went up on the expectation that new investment could come in, studiessuggest.

When the Florida Department of Economic Opportunity created a statistical model incorporating unemployment rate, poverty and population density to come up with a list of opportunity zone picks, Huizenga’s superyacht tract was not included, according to the Florida agency’s internal documents.

City leaders identified three other tracts in the North End of West Palm Beach as their top picks to be opportunity zones. All three are poor. “The core tracts of the North End are racially and ethnically diverse, with a population of approximately 57,000 people, of which over 65 percent earn less than $15,000 per year,” according to a city memo. They were also attractive areas for growth. All “are rebounding from significant blight and are well positioned for new investment,” the memo said.

The tract with the superyacht marina was wealthier and whiter than the tracts identified by city leaders. Based on median income, it is hardly rich. But the area is testament to how the overall economic data of a single census tract can mask pockets of extreme wealth.

On North Flagler Drive along the Intracoastal Waterway, multimillion-dollar mansions dot the waterfront, obstructed from street view by walls and palm trees. Last year, Rybovich’s Huizenga bought a $5 million property from Rosie O’Donnell there, down the road from the superyacht marina.

Sylvia Moffett, a former West Palm Beach city commissioner, said in an interview there is little connection between the predominantly poor areas of the North End and the wealthy stretch of waterfront. “The houses along the Intracoastal get torn down and rebuilt a lot. Mansions go up,” she said.

In an April 2018 letter addressed to Scott, Huizenga made his pitch to the governor to add the superyacht tract and two others. He cited the Rybovich-Related Marina Village project: “Within these census tracts, The Related Group is planning to invest $120 million into the construction of a new rental residential building that is scheduled to break ground in the first quarter of 2019,” Huizenga wrote. He also noted Rybovich support for a “community based initiative that will be bringing hundreds of jobs” to the area.

Rybovich officials got the city of West Palm Beach to amend its initial requests to the state to add the superyacht tract, emails show. The city added the new areas because of “expressed interest by a major local employer,” a West Palm Beach official wrote to the state economic development agency. Huizenga’s letter was included in the city’s recommendations submitted to the state.

A Florida Department of Economic Opportunity document subsequently listed the superyacht tract under Rybovich’s name, marked as “Added From Request.” A week later, on April 19, Scott announced his selections for the opportunity zone tax break, the superyacht tract among them. In a press release about the West Palm Beach picks, a Florida official said the program “will continue our progress in revitalizing low-income and rural regions of the state.”

Two out of three of West Palm Beach’s original, poverty-stricken priority areas did not make Scott’s cut.

A Scott spokesman declined to comment on his specific decisions. West Palm Beach did not respond to requests for comment. A Florida Department of Economic Opportunity spokeswoman said in a statement that the agency “accepted input from communities across the state, including local government, business leaders, economic development organizations and investors. … Governor Scott ultimately made all decisions on which census tracts were nominated as opportunity zones.”

The plans for the Marina Village project have changed several times, and it has not started on schedule. But last year, the developers announced rents would be up to $3,000 a month for one-bedroom units and $4,500 for three-bedroom units, plus penthouses for an undisclosed sum. The project is physically oriented away from the poor parts of the census tract, where schools are struggling and the crime rate is high.

The chairman and founder of Related Companies, Ross, along with Pérez and Huizenga, are all donors to Scott. Collectively, they and their families have given at least $1 million to Scott and the Florida GOP in the last decade.

In 2013, Scott gave Wayne Huizenga Sr. a Great Floridian award, the state’s rough equivalent of the Presidential Medal of Freedom. He died last year.

Another politically connected developer successfully lobbied Scott for an opportunity zone, for yet another already-planned project, this time in Tampa.

As far back as 2014, Vinik, the Tampa Bay Lightning owner, has had his eye on redeveloping a swath of the city’s downtown surrounding his hockey team’s arena. In mid-2017, Strategic Property Partners, a joint venture between Vinik and Bill Gates’ Cascade Investment, announced a $3 billion redevelopment plan for the area. The project, Water Street Tampa, is slated to include luxury apartments, hotels, stores and restaurants catering to Tampa’s growing millennial population.

In early 2018, documents show that Vinik’s firm, along with the city of Tampa, requested that the area for the investment be made an opportunity zone. Vinik has given hundreds of thousands of dollars in campaign contributions to Scott in recent years. Scott picked the tract that contains most of the development for the tax break.

The tract has a median family income almost twice as high as the Tampa metro area, placing it among the top 0.5 percent of opportunity zones nationwide in terms of income.

In a statement, Strategic Property Partners defended the area’s designation, saying: “Downtown Tampa has long been a candidate for development and the establishment of Opportunity Zones has helped increase and accelerate investment. Water Street Tampa is transforming a vacant area of land in downtown Tampa into a new community within the city.”

While the law gave the Treasury the power to vet the selections of each governor, the agency appears to have simply rubber-stamped the picks, said Brett Theodos, a senior fellow at the Urban Institute who studies opportunity zones.

“Treasury appeared to elect for the lowest common denominator screening, to just make sure tracts were technically eligible,” Theodos said. “We have yet to hear that Treasury ever denied a nominated zone because it didn’t fit within the spirit of the objective of the program.”

In response to that criticism, a Treasury spokesman said that the opportunity zone provision of the tax law “gave governors the discretion to nominate areas for designation as Opportunity Zones. The Department had a limited role in the process.”


Poll: Most Parents Oppose Rapid School Reopening

Numerous local school systems around the country are plowing ahead with plans to resume in-person instruction despite growing evidence that children are just as capable of spreading the coronavirus as adults.

Classes were set to begin on Monday in Baker County, Florida. Masks for students will be optional, not required. "It looks like it's back to normal this morning, honestly," a local television reporter observed as parents dropped their kids off in the morning. Many students wore no face coverings.

The Trump administration and the GOP have pushed for full reopening of schools for months."Schools in our country should be opened ASAP," Donald Trump tweeted in May. "Much very good information now available."

"SCHOOLS MUST OPEN IN THE FALL!!!" he reiterated on July 6.

"The science and data is clear: children can be safe in schools this fall, and they must be in school this fall," demanded Rep. Andy Biggs (R-AZ) on Aug. 1.

"I believe our schools can, and should rise to the occasion of re-opening for in-person education this fall," agreed Rep. Andy Harris (R-MD) two days later.

"The CDC and Academy of Pediatrics agree: We can safely get students back in classrooms," tweeted House Minority Whip Steve Scalise (R-LA) last Tuesday.

But while Scalise, Mike Pence, and Secretary of Education Betsy DeVos have all cited the American Academy of Pediatrics in their arguments for reopening, a new study by the group and the Children's Hospital Association raises red flags about how safe that will be.

Their report found 338,982 reported coronavirus cases in children as of July 30 in the United States. Between July 16 and July 30, the nation saw a 40% increase — 97,078 new infected children.

Last week, a high school student in an Atlanta suburb posted a photo online showing few students wearing masks in a crowded school hallway. Since that time, at least six students and three adult employees in the school have reportedly contracted the coronavirus, and the school temporarily has switched to online classes.

Another Georgia school district has already seen at least 13 students and staff members test positive since reopening a week ago.

A recent study in South Korea found that children aged ten and older spread the coronavirus at the same rates adults do. A separate study in Chicago suggested young kids might also be effective spreaders.

These contradict the false claims made by Trump and his administration that kids have an "amazing" near immunity to COVID-19.

"If you look at children, children are almost — and I would almost say definitely, but almost immune from this disease, so few. They've got stronger, hard to believe, and I don't know how you feel about it, but they have much stronger immune systems than we do somehow for this," Trump told Fox News on Wednesday.

"You got to open the schools. They have a stronger immune system even than you have or I have," he told Barstool Sports on July 23. "It's amazing. You look at the percentage, it's a tiny percentage of one percent. And in that one case, I mean, I looked at a couple of cases. If you have diabetes, if you have, you know, problems with something, but the kids are in great shape." Children have made up nearly nine percent of all cases, even with schools mostly closed.

And DeVos incorrectly said in a July 16 interview, "More and more studies show that kids are actually stoppers of the disease and they don't get it and transmit it themselves."

In early July, the Centers for Disease Control and Prevention issued guidelines for how schools could operate more safely during the pandemic.

Trump publicly ridiculed the guidelines, dismissing them as "very tough & expensive" and "very impractical."

Published with permission of The American Independent Foundation.