New NYPD Unit Will Crack Down on Drivers Who Fail to Yield — But Nearly Half of Those Tickets Are Still Tossed Out

NYCDOT, Flickr

The city’s Zero Street Team in the Bronx in 2019. (Credit: NYCDOT, Flickr)

During the annual State of the City speech last week, Mayor Bill de Blasio detailed plans for his remaining months in office, including the creation of a new NYPD unit to specifically enforce traffic safety violations. His announcement follows a disappointing year for Vision Zero in 2019, when overall city traffic deaths rose from the year before for the first time since 2013, including an alarming spike in cyclist fatalities. 

The new “Vision Zero Unit” will consist of 100 NYPD members tasked with enforcement against drivers who commit “the most dangerous behaviors” behind the wheel, including speeding, running red lights and failing to yield to pedestrians, according to the mayor’s plan.

Failure to yield can be particularly dangerous, safety advocates say: For the month of December, it was the third most common contributing factor in crashes that caused fatalities or serious injury, according to the NYPD’s most recent monthly traffic report. Six years ago, lawmakers passed a bill to toughen penalties for drivers who fail to yield to pedestrians or cyclists, particularly if they kill or injure them in the process — behavior that would previously warrant little, if any, consequences. 

Administrative Code 19-190, otherwise known as the the Right of Way Law, created new civil and criminal penalties for drivers who fail to yield. Under one provision of the law, drivers who physically injure a pedestrian or cyclist while doing so could be subject to a misdemeanor charge and up to 30 days in jail under the law. In addition to or as an alternative to that, police have the option of issuing a civil summons — to be heard in the city’s administrative courts — with a fine of up to $250. 

But in the years since the law was passed, street safety advocates say it’s fallen far short of its purpose. City Limits reported last year that the law had thus far largely been carried out through the issuance of civil summonses rather than criminal penalties, and the majority of those summonses issued under AC 19-190 ended up being dismissed after a city administrative hearing, with the drivers facing no fines. 

Recent numbers show a similar pattern: Since June 1, when City Limits last reported on the issue, police issued 2,181 summonses to drivers under AC 19-190 where failure to yield was the top charge, according to city data. Of those, nearly half — 1,075 tickets — were dismissed following a hearing with the city’s Office of Administrative Trials and Hearings (OATH). Those dismissals include 898 incidents where the driver struck and physically injured a pedestrian or cyclist, city data shows. 

Of the total summonses issued during the full year of 2019 where 19-190 was the top charge, 56 percent were dismissed, the numbers show.

The city says this rate of dismissal is comparable to the overall dismissal rate at OATH, which adjudicates summonses issued by more than a dozen city agencies. And while summonses can get tossed out for a number of reasons, street safety advocates say one factor is that police officers are not required to attend OATH summons hearings, and the victims involved in a crash are not typically notified or involved in the hearing, either. That means decisions are often rendered based on a driver’s own testimony and what little information an officer included on the written ticket. Summonses can also get dismissed if an officer filled out a ticket incorrectly, or failed to include the right information on it. 

“No tribunal could ever adjudicate these charges meaningfully without the cops showing up,” Steve Vaccaro, a personal injury lawyer who helped advocate for 19-190’s passage, told City Limits last year.

Recently dismissed 19-190 summonses include one issued to the driver of a car that struck a man in a Brooklyn crosswalk in September. The victim was taken to the hospital — written as “KCH” on the summons, presumably Kings County Hospital — with “injury to head/body.” Two months later, that summons was dismissed at an OATH hearing based on the “credible testimony,” given by the driver, who said the victim was not seriously injured and had been crossing against the light at the time of crash so did not have the right of way, OATH documents show.

In another case, a bicyclist riding in Bushwick in October told police he “hit into” a car whose driver failed to yield while turning; the cyclist was taken to Brookdale Hospital with “pain to body,” according to the issued summons. At an OATH hearing for the ticket in December, the driver told an administrative judge that a truck was blocking his view of the cyclist as he turned, and that the cyclist “was riding a motorized bike and going very fast.” While the OATH judge did “not find respondent’s testimony entirely credible,” the ticket was tossed out anyway because the NYPD failed to properly complete the proof of service paperwork, according to OATH documents.

Another dismissed 19-190 case, which took place in Queens in September, involved a driver who struck a man as he was crossing the street while holding his one-year-old daughter. The man suffered minor lacerations to his leg, and while the baby’s “head grazed the pavement” she was not injured, according to the summons. The ticket was ultimately tossed because the officer who filled it out left part of it blank, failing to include the maximum monetary penalty the driver could face, according to OATH. 

In a statement, a spokeswoman for the mayor’s office said that the NYPD “will continue to train officers to ensure that the facts surrounding each incident are accurately presented to the court.”

“The NYPD has created a new Vision Zero unit to double down on our efforts to ensure our streets are safe for pedestrians, cyclists and drivers alike,” spokeswoman Laura Feyer said. “If a New Yorker receives a summons, they always have the opportunity to contest charges that have been filed against them at OATH, as due process requires. But we will never stop focusing our efforts on making the streets safer for all.”

Though many 19-190 summonses are still getting dismissed, the NYPD has increased its overall use of the law in the last few years, both criminally and civilly: The number of tickets doled out with failure to yield as the top charge rose nearly 15 percent in 2019 compared to the year before, according to city data.

Last year, police made 49 arrests under the law, compared to 33 in 2018 and 28 in 2017, NYC Open Data shows. Numbers retrieved through the city database, however, can be imprecise — they can change over time, and they also differ from the number of summonses and arrests reported in the mayor’s most recent Vision Zero report, as well as to arrest numbers previously provided by the NYPD.

So far this year as of Feb. 2, there have been six Failure to Yield arrests, compared to five during the same period the year before, an NYPD spokeswoman said.

Lawmakers are also pursuing other avenues to curb dangerous road behavior. On Tuesday, the City Council passed the “Reckless Driver Accountability Act,” a bill introduced by Councilman Brad Lander, which would require drivers who rack up a certain number of red light and speed camera violations in a year to take a safe driving course, or risk having their car impounded.

New NYPD Unit Will Crack Down on Drivers Who Fail to Yield — But Nearly Half of Those Tickets Are Still Tossed Out

NYCDOT, Flickr

The city’s Zero Street Team in the Bronx in 2019. (Credit: NYCDOT, Flickr)

During the annual State of the City speech last week, Mayor Bill de Blasio detailed plans for his remaining months in office, including the creation of a new NYPD unit to specifically enforce traffic safety violations. His announcement follows a disappointing year for Vision Zero in 2019, when overall city traffic deaths rose from the year before for the first time since 2013, including an alarming spike in cyclist fatalities. 

The new “Vision Zero Unit” will consist of 100 NYPD members tasked with enforcement against drivers who commit “the most dangerous behaviors” behind the wheel, including speeding, running red lights and failing to yield to pedestrians, according to the mayor’s plan.

Failure to yield can be particularly dangerous, safety advocates say: For the month of December, it was the third most common contributing factor in crashes that caused fatalities or serious injury, according to the NYPD’s most recent monthly traffic report. Six years ago, lawmakers passed a bill to toughen penalties for drivers who fail to yield to pedestrians or cyclists, particularly if they kill or injure them in the process — behavior that would previously warrant little, if any, consequences. 

Administrative Code 19-190, otherwise known as the the Right of Way Law, created new civil and criminal penalties for drivers who fail to yield. Under one provision of the law, drivers who physically injure a pedestrian or cyclist while doing so could be subject to a misdemeanor charge and up to 30 days in jail under the law. In addition to or as an alternative to that, police have the option of issuing a civil summons — to be heard in the city’s administrative courts — with a fine of up to $250. 

But in the years since the law was passed, street safety advocates say it’s fallen far short of its purpose. City Limits reported last year that the law had thus far largely been carried out through the issuance of civil summonses rather than criminal penalties, and the majority of those summonses issued under AC 19-190 ended up being dismissed after a city administrative hearing, with the drivers facing no fines. 

Recent numbers show a similar pattern: Since June 1, when City Limits last reported on the issue, police issued 2,181 summonses to drivers under AC 19-190 where failure to yield was the top charge, according to city data. Of those, nearly half — 1,075 tickets — were dismissed following a hearing with the city’s Office of Administrative Trials and Hearings (OATH). Those dismissals include 898 incidents where the driver struck and physically injured a pedestrian or cyclist, city data shows. 

Of the total summonses issued during the full year of 2019 where 19-190 was the top charge, 56 percent were dismissed, the numbers show.

The city says this rate of dismissal is comparable to the overall dismissal rate at OATH, which adjudicates summonses issued by more than a dozen city agencies. And while summonses can get tossed out for a number of reasons, street safety advocates say one factor is that police officers are not required to attend OATH summons hearings, and the victims involved in a crash are not typically notified or involved in the hearing, either. That means decisions are often rendered based on a driver’s own testimony and what little information an officer included on the written ticket. Summonses can also get dismissed if an officer filled out a ticket incorrectly, or failed to include the right information on it. 

“No tribunal could ever adjudicate these charges meaningfully without the cops showing up,” Steve Vaccaro, a personal injury lawyer who helped advocate for 19-190’s passage, told City Limits last year.

Recently dismissed 19-190 summonses include one issued to the driver of a car that struck a man in a Brooklyn crosswalk in September. The victim was taken to the hospital — written as “KCH” on the summons, presumably Kings County Hospital — with “injury to head/body.” Two months later, that summons was dismissed at an OATH hearing based on the “credible testimony,” given by the driver, who said the victim was not seriously injured and had been crossing against the light at the time of crash so did not have the right of way, OATH documents show.

In another case, a bicyclist riding in Bushwick in October told police he “hit into” a car whose driver failed to yield while turning; the cyclist was taken to Brookdale Hospital with “pain to body,” according to the issued summons. At an OATH hearing for the ticket in December, the driver told an administrative judge that a truck was blocking his view of the cyclist as he turned, and that the cyclist “was riding a motorized bike and going very fast.” While the OATH judge did “not find respondent’s testimony entirely credible,” the ticket was tossed out anyway because the NYPD failed to properly complete the proof of service paperwork, according to OATH documents.

Another dismissed 19-190 case, which took place in Queens in September, involved a driver who struck a man as he was crossing the street while holding his one-year-old daughter. The man suffered minor lacerations to his leg, and while the baby’s “head grazed the pavement” she was not injured, according to the summons. The ticket was ultimately tossed because the officer who filled it out left part of it blank, failing to include the maximum monetary penalty the driver could face, according to OATH. 

In a statement, a spokeswoman for the mayor’s office said that the NYPD “will continue to train officers to ensure that the facts surrounding each incident are accurately presented to the court.”

“The NYPD has created a new Vision Zero unit to double down on our efforts to ensure our streets are safe for pedestrians, cyclists and drivers alike,” spokeswoman Laura Feyer said. “If a New Yorker receives a summons, they always have the opportunity to contest charges that have been filed against them at OATH, as due process requires. But we will never stop focusing our efforts on making the streets safer for all.”

Though many 19-190 summonses are still getting dismissed, the NYPD has increased its overall use of the law in the last few years, both criminally and civilly: The number of tickets doled out with failure to yield as the top charge rose nearly 15 percent in 2019 compared to the year before, according to city data.

Last year, police made 49 arrests under the law, compared to 33 in 2018 and 28 in 2017, NYC Open Data shows. Numbers retrieved through the city database, however, can be imprecise — they can change over time, and they also differ from the number of summonses and arrests reported in the mayor’s most recent Vision Zero report, as well as to arrest numbers previously provided by the NYPD.

So far this year as of Feb. 2, there have been six Failure to Yield arrests, compared to five during the same period the year before, an NYPD spokeswoman said.

Lawmakers are also pursuing other avenues to curb dangerous road behavior. On Tuesday, the City Council passed the “Reckless Driver Accountability Act,” a bill introduced by Councilman Brad Lander, which would require drivers who rack up a certain number of red light and speed camera violations in a year to take a safe driving course, or risk having their car impounded.

The post New NYPD Unit Will Crack Down on Drivers Who Fail to Yield — But Nearly Half of Those Tickets Are Still Tossed Out appeared first on City Limits.

New NYPD Unit Will Crack Down on Drivers Who Fail to Yield — But Nearly Half of Those Tickets Are Still Tossed Out

NYCDOT, Flickr

The city’s Zero Street Team in the Bronx in 2019. (Credit: NYCDOT, Flickr)

During the annual State of the City speech last week, Mayor Bill de Blasio detailed plans for his remaining months in office, including the creation of a new NYPD unit to specifically enforce traffic safety violations. His announcement follows a disappointing year for Vision Zero in 2019, when overall city traffic deaths rose from the year before for the first time since 2013, including an alarming spike in cyclist fatalities. 

The new “Vision Zero Unit” will consist of 100 NYPD members tasked with enforcement against drivers who commit “the most dangerous behaviors” behind the wheel, including speeding, running red lights and failing to yield to pedestrians, according to the mayor’s plan.

Failure to yield can be particularly dangerous, safety advocates say: For the month of December, it was the third most common contributing factor in crashes that caused fatalities or serious injury, according to the NYPD’s most recent monthly traffic report. Six years ago, lawmakers passed a bill to toughen penalties for drivers who fail to yield to pedestrians or cyclists, particularly if they kill or injure them in the process — behavior that would previously warrant little, if any, consequences. 

Administrative Code 19-190, otherwise known as the the Right of Way Law, created new civil and criminal penalties for drivers who fail to yield. Under one provision of the law, drivers who physically injure a pedestrian or cyclist while doing so could be subject to a misdemeanor charge and up to 30 days in jail under the law. In addition to or as an alternative to that, police have the option of issuing a civil summons — to be heard in the city’s administrative courts — with a fine of up to $250. 

But in the years since the law was passed, street safety advocates say it’s fallen far short of its purpose. City Limits reported last year that the law had thus far largely been carried out through the issuance of civil summonses rather than criminal penalties, and the majority of those summonses issued under AC 19-190 ended up being dismissed after a city administrative hearing, with the drivers facing no fines. 

Recent numbers show a similar pattern: Since June 1, when City Limits last reported on the issue, police issued 2,181 summonses to drivers under AC 19-190 where failure to yield was the top charge, according to city data. Of those, nearly half — 1,075 tickets — were dismissed following a hearing with the city’s Office of Administrative Trials and Hearings (OATH). Those dismissals include 898 incidents where the driver struck and physically injured a pedestrian or cyclist, city data shows. 

Of the total summonses issued during the full year of 2019 where 19-190 was the top charge, 56 percent were dismissed, the numbers show.

The city says this rate of dismissal is comparable to the overall dismissal rate at OATH, which adjudicates summonses issued by more than a dozen city agencies. And while summonses can get tossed out for a number of reasons, street safety advocates say one factor is that police officers are not required to attend OATH summons hearings, and the victims involved in a crash are not typically notified or involved in the hearing, either. That means decisions are often rendered based on a driver’s own testimony and what little information an officer included on the written ticket. Summonses can also get dismissed if an officer filled out a ticket incorrectly, or failed to include the right information on it. 

“No tribunal could ever adjudicate these charges meaningfully without the cops showing up,” Steve Vaccaro, a personal injury lawyer who helped advocate for 19-190’s passage, told City Limits last year.

Recently dismissed 19-190 summonses include one issued to the driver of a car that struck a man in a Brooklyn crosswalk in September. The victim was taken to the hospital — written as “KCH” on the summons, presumably Kings County Hospital — with “injury to head/body.” Two months later, that summons was dismissed at an OATH hearing based on the “credible testimony,” given by the driver, who said the victim was not seriously injured and had been crossing against the light at the time of crash so did not have the right of way, OATH documents show.

In another case, a bicyclist riding in Bushwick in October told police he “hit into” a car whose driver failed to yield while turning; the cyclist was taken to Brookdale Hospital with “pain to body,” according to the issued summons. At an OATH hearing for the ticket in December, the driver told an administrative judge that a truck was blocking his view of the cyclist as he turned, and that the cyclist “was riding a motorized bike and going very fast.” While the OATH judge did “not find respondent’s testimony entirely credible,” the ticket was tossed out anyway because the NYPD failed to properly complete the proof of service paperwork, according to OATH documents.

Another dismissed 19-190 case, which took place in Queens in September, involved a driver who struck a man as he was crossing the street while holding his one-year-old daughter. The man suffered minor lacerations to his leg, and while the baby’s “head grazed the pavement” she was not injured, according to the summons. The ticket was ultimately tossed because the officer who filled it out left part of it blank, failing to include the maximum monetary penalty the driver could face, according to OATH. 

In a statement, a spokeswoman for the mayor’s office said that the NYPD “will continue to train officers to ensure that the facts surrounding each incident are accurately presented to the court.”

“The NYPD has created a new Vision Zero unit to double down on our efforts to ensure our streets are safe for pedestrians, cyclists and drivers alike,” spokeswoman Laura Feyer said. “If a New Yorker receives a summons, they always have the opportunity to contest charges that have been filed against them at OATH, as due process requires. But we will never stop focusing our efforts on making the streets safer for all.”

Though many 19-190 summonses are still getting dismissed, the NYPD has increased its overall use of the law in the last few years, both criminally and civilly: The number of tickets doled out with failure to yield as the top charge rose nearly 15 percent in 2019 compared to the year before, according to city data.

Last year, police made 49 arrests under the law, compared to 33 in 2018 and 28 in 2017, NYC Open Data shows. Numbers retrieved through the city database, however, can be imprecise — they can change over time, and they also differ from the number of summonses and arrests reported in the mayor’s most recent Vision Zero report, as well as to arrest numbers previously provided by the NYPD.

So far this year as of Feb. 2, there have been six Failure to Yield arrests, compared to five during the same period the year before, an NYPD spokeswoman said.

Lawmakers are also pursuing other avenues to curb dangerous road behavior. On Tuesday, the City Council passed the “Reckless Driver Accountability Act,” a bill introduced by Councilman Brad Lander, which would require drivers who rack up a certain number of red light and speed camera violations in a year to take a safe driving course, or risk having their car impounded.

The post New NYPD Unit Will Crack Down on Drivers Who Fail to Yield — But Nearly Half of Those Tickets Are Still Tossed Out appeared first on City Limits.

Opportunity Zones Show Scant Impact in the Bronx as Key Deadline Passes

The area around 425 Westchester Avenue, site of a soon-to-be charter school and office building in the South Bronx. Developer AB Capstone funded the project primarily through opportunity zone capital from Starwood Opportunity Zone Fund.

In November 2018, Marlene Cintron, the Bronx’s head of economic development, stood up in front of a crowd of mostly developers and lawyers, as they sipped pitorro at the Port Morris Distillery. She was there to champion a federal tax break that promised to revitalize the borough.

“We have always been the most ignored,” Cintron said to her audience. “These opportunity zones are here for you to take advantage of them.”

This time last year, anticipation for the Trump tax policy was high in the Bronx, one of the poorest districts in the nation. The tax incentive, introduced in the Tax Cuts and Jobs Act of 2017, allows investors who fund business ventures or develop real estate in a designated low-income census tract called an opportunity zone to defer capital gains taxes on profits earned elsewhere and, in some cases, completely eliminate them on the new investment.

The Bronx has 74 of these zones. And brokers predicted that the kind of investments the tax incentive could attract would create an entirely new borough. But a year later, Cintron has all but soured on the program. 

“It didn’t happen,” she says now. 

The fervor around opportunity zones in the Bronx has shrunk from a clap to a whisper. In 2018, several high profile developers, including Brookfield Properties, Somerset Partners and Starwood Capital, set out to raise millions in their own respective Qualified Opportunity Zone Funds to invest in the Bronx. But if they invested that money in 2019, they did it quietly. 

The end of last year marked a major deadline for the program. Those who invested funds into a project by 2019, wouldn’t be taxed at all for their capital gains on that investment if they waited until 2029 to sell. But the New Year came and went, and there are only two known development projects fully or partially funded by opportunity zone capital in the Bronx.

Enthusiasm around the federal program has fizzled, perhaps because of a lingering stigma against the Bronx, a shortage of available property, or treasury guidelines that are vague and uncertain. 

“It’s not something a lot of people talk about,” Cintron said. “It’s not a sexy subject for anybody because it’s not necessarily working.” 

The Bronx’s development isn’t slowing down, as investment continues to grow, but Cintron and several brokers all said the same thing: the investment hasn’t been accelerated by opportunity zones. The Bronx’s biggest projects were set in motion long before the federal program started.

A slow year

In 2018, Ariel Property Advisors’ Year-End Sales Report in the Bronx touted the benefits of the federal program, crediting the OZ tax policy for a huge increase (114 percent) in private and institutional investors. But in Ariel Property’s mid-year report for 2019, opportunity zones weren’t mentioned at all, even though investment in residential and commercial real estate continued to rise.

“We were surprised, even as brokers,” said Jason Gold, an Ariel Property broker. “There are more development sites being traded in the Bronx in the past two years than anytime before, but it’s not as much as we expected.”

It’s hard to actually attribute an uptick in investment to OZ capital. Because the federal policy has no reporting requirements, it’s difficult to track exactly where opportunity fund capital is going.

This is a problem with the policy that’s not limited to the Bronx, according to Scott O’Sullivan, a partner at accounting and advisory firm Margolin, Winer & Evens (MWE). At the beginning of 2020, MWE conducted a poll of real estate professionals who attended a panel discussion the firm held on Jan.15 in Manhattan. Over 75 percent of attendees said they had not yet invested in a Qualified Opportunity Zone Fund, although 39 percent said they plan to invest in the next six months. 

There’s a lot of uncertainty around OZs, O’Sullivan says, particularly for a smaller investor. There’s a lack of transparency in how many qualified opportunity zone funds are out there and which ones are smartest to invest. 

“It’s not like shopping for a car, where there are dealerships all along the street ready to tell you what to buy,” O’Sullivan says. “For the big players, the RXR Realty’s of the world, they have the in-house attorneys and the in-house tax people, but for the mom and pops, there’s still a lot of uncertainty to how Qualified Opportunity Zone Funds work.”

The tax policy is best suited for large investors with millions in capital gains, which there’s no shortage of as the stock market reaches all-time-highs. But as the New York Times pointed out, this means investment in opportunity zones is going to be aimed at projects that will reap the greatest returns, largely high-rise, market rate apartments. 

Opportunity Zones across the nation have raised more than $6.7 billion since the program started, according to most recent Novogradac Opportunity Funds listing. But there has been some hesitation in investing that money, O’Sullivan says, because there’s no certainty that the program will still exist in 2029, when investors have to pay taxes on the money they’ve invested, or that the capital gains taxes in New York and on a federal level won’t have risen substantially. This is a particularly slow investment period, as investors are waiting to see what happens in the 2020 presidential election, O’Sullivan says. 

There’s still positive buzz around the program though. At the start of February, the New York Post ran a story singing a similar tune to what was written a year before. “New York City may be on the cusp of a new multibillion-dollar investment boom.” The Post interviewed an investor out of Arizona who said he planned to allocate $250 million of new investments in areas including New York. RXR Realty also launched an opportunity zone fund aiming to raise $500 million to funnel into redevelopment of the Brooklyn Navy Yard and a project in New Rochelle.  

In the Bronx, Brookfield Properties’ four-acre, $950-million development project that broke ground in December did use some investment from Brookfield’s opportunity fund, according to spokesman Andrew Brent.

“With the help of the Opportunity Zone program, Brookfield is cleaning acres of contaminated waterfront in Mott Haven and transforming land that has sat idle for decades into much needed housing,” Brent said.

But the massive waterfront project was set in motion nearly three years ago, before the land was designated an opportunity zone.

Most of the development that has already happened under OZ capital likely would have happened anyway in the Bronx, and Cintron said it was designed that way.

Nearly all of the Bronx qualifies to be an opportunity zone, as it’s one of the poorest counties in the nation. 

“All they had to do was throw a couple of darts at a map and they would have been good,” Cintron said of the Empire State Development Corporation. 

Instead, the Bronx EDC and the and the state ESD worked together in deciding where an opportunity zone would be the most valuable in the borough, Cintron said. Cintron said that the EDC looked at where projects were already starting and designated those areas as opportunity zones, so folks already investing in the borough could tap into opportunity fund capital. 

The state’s ESD says it weighed input from Regional Economic Development Councils and local elected officials when deciding where to designate opportunity zones, but wouldn’t comment specifically on what Cintron said.  

The Benedetto family, titans in New York City’s recycling industry, were able to lease their 250,000-square-foot tract of land in Port Morris to the highest bidder this year because the land’s position in an opportunity zone made the sale more attractive. But the family always had an intention to lease their property, according to their broker Randy Modell. He said the timing of the sale had nothing to do with opportunity zones.

“It was just a happy coincidence,” Modell said.

The most forthright example of Opportunity Zone investment in the Bronx in 2019 was Starwood Capital Qualified Opportunity Zone Fund’s investment in office space for a number of businesses in the South Bronx, as well as a charter school. While the money was useful for all parties, Ron Solarz, the broker who helped developer AB Capstone secure the equity from Starwood, said the project was already in motion before opportunity zones existed.

“The opportunity zone has nothing to do with what a developer decides to build.” Solarz said. “It was just the cherry on top.  He wouldn’t have changed his plan at all.”

Gold also agrees that the existence of the opportunity zone policy doesn’t change much about whether the Bronx sees investment.

“People aren’t buying property in the Bronx because it’s in an opportunity zone,” Gold says. “The opportunity zone just adds to the story a little bit.”

No land

To be sure, the policy is new. And despite a passed deadline, there are still nine more years for investment to take hold. Gold said 2019 saw fewer development projects because of the new rent laws out of Albany, and trade war turmoil, but he expects to see many more developers take advantage of opportunity zone capital in 2020.

Developers might have nowhere to build, though. While the Bronx is known for having more available space than other boroughs, Cintron says, on top of many property owners being reluctant to sell, most of the available land in desirable neighborhoods like Hunts Point, Mott Haven or Port Morris is owned by the city.

About 1.4 square miles of city owned land in the Bronx is vacant. But Cintron says it’s been hard to negotiate with city officials to sell.

“There might be open space left, but it’s not for sale,” Cintron said. “In Hunts Point, the city of New York owns quite a bit of lots, but they want them for the garbage trucks, they want it for their stuff.”

Cintron’s space challenge tracks with the Bronx’s economic growth in 2019. The borough’s investment sales market increased 22 percent in the first half of 2019, but the volume of property sold decreased by 25 percent, according to Ariel Property Advisors’ 2019 Mid-Year Sales Report. But Gold says this has more to do with the cost of steel and other building materials going up because of international trade wars.

He says he still sees a lot of untapped resources in the Bronx. The problem, instead, is that long term investment in the borough is a bit of a gamble.

Shaking off the Bronx’s reputation

For many, the benefits of investing in the Bronx are still unknown, particularly investing opportunity zone capital. For an investor to benefit as much as they can from the tax policy, a project must have at least a nine-year longevity, and it must be able to turn a significant profit by 2029. In Brooklyn or Manhattan, a developer largely knows what kind of return they’ll get on their investment. In the Bronx, the waters are murky.

“I think it’s a big bet, because the Bronx still isn’t proven,” Gold said. “Businesses are thriving and more businesses are coming to the area, but can you still achieve the numbers you need to survive?”

As for opportunity zones bringing the essentials to low-income neighborhoods like Mott Haven, which proponents of the policy have promised, Cintron says she doesn’t see it.  Developers want to look for the biggest projects, with the biggest long term gains.

“I don’t see it as a grocery store kind of policy. I’m quite frankly surprised someone was able to use it for a school,” Cintron says. “It was supposed to predominantly be about commercial development.  It was a gift to the President’s Wall Street friends, one that we were willing to entertain as long as the community benefited.”

For residents of the South Bronx, barriers to development are welcomed. Cintron said that Brookfield deciding to develop in the neighborhood “was huge,” but community members like Welcome2TheBronx Editor-in-Chief Ed Conde don’t see it that way. 

“There’s absolutely nothing positive about Brookfield,” Conde said. “Putting luxury housing in an area still puts pressure on the existing housing stock. It’s displacing people.” 

Conde says he is starting to see a slow-down of building in the area, which might mean the neighborhood isn’t destined to be the next Williamsburg or Long Island City. But he still views gentrification of the South Bronx as inevitable, and opportunity zones will only continue to attract the wrong kind of development. Even the kind of development that the best side of the policy offers, Conde finds demeaning. 

“Is that what we’re worth? A supermarket or menial retail jobs? Why do we have to wait for a developer to come in to get a school?” Conde says. 

In the end, the policy hasn’t yielded what it promised for the borough. But if investors aren’t drawn to the borough, even with the tax incentives, Cintron says good riddance.

“We’re okay with them not coming if it’s not going to benefit our community,” she says. 

The post Opportunity Zones Show Scant Impact in the Bronx as Key Deadline Passes appeared first on City Limits.

Opportunity Zones Show Scant Impact in the Bronx as Key Deadline Passes

The area around 425 Westchester Avenue, site of a soon-to-be charter school and office building in the South Bronx. Developer AB Capstone funded the project primarily through opportunity zone capital from Starwood Opportunity Zone Fund.

In November 2018, Marlene Cintron, the Bronx’s head of economic development, stood up in front of a crowd of mostly developers and lawyers, as they sipped pitorro at the Port Morris Distillery. She was there to champion a federal tax break that promised to revitalize the borough.

“We have always been the most ignored,” Cintron said to her audience. “These opportunity zones are here for you to take advantage of them.”

This time last year, anticipation for the Trump tax policy was high in the Bronx, one of the poorest districts in the nation. The tax incentive, introduced in the Tax Cuts and Jobs Act of 2017, allows investors who fund business ventures or develop real estate in a designated low-income census tract called an opportunity zone to defer capital gains taxes on profits earned elsewhere and, in some cases, completely eliminate them on the new investment.

The Bronx has 74 of these zones. And brokers predicted that the kind of investments the tax incentive could attract would create an entirely new borough. But a year later, Cintron has all but soured on the program. 

“It didn’t happen,” she says now. 

The fervor around opportunity zones in the Bronx has shrunk from a clap to a whisper. In 2018, several high profile developers, including Brookfield Properties, Somerset Partners and Starwood Capital, set out to raise millions in their own respective Qualified Opportunity Zone Funds to invest in the Bronx. But if they invested that money in 2019, they did it quietly. 

The end of last year marked a major deadline for the program. Those who invested funds into a project by 2019, wouldn’t be taxed at all for their capital gains on that investment if they waited until 2029 to sell. But the New Year came and went, and there are only two known development projects fully or partially funded by opportunity zone capital in the Bronx.

Enthusiasm around the federal program has fizzled, perhaps because of a lingering stigma against the Bronx, a shortage of available property, or treasury guidelines that are vague and uncertain. 

“It’s not something a lot of people talk about,” Cintron said. “It’s not a sexy subject for anybody because it’s not necessarily working.” 

The Bronx’s development isn’t slowing down, as investment continues to grow, but Cintron and several brokers all said the same thing: the investment hasn’t been accelerated by opportunity zones. The Bronx’s biggest projects were set in motion long before the federal program started.

A slow year

In 2018, Ariel Property Advisors’ Year-End Sales Report in the Bronx touted the benefits of the federal program, crediting the OZ tax policy for a huge increase (114 percent) in private and institutional investors. But in Ariel Property’s mid-year report for 2019, opportunity zones weren’t mentioned at all, even though investment in residential and commercial real estate continued to rise.

“We were surprised, even as brokers,” said Jason Gold, an Ariel Property broker. “There are more development sites being traded in the Bronx in the past two years than anytime before, but it’s not as much as we expected.”

It’s hard to actually attribute an uptick in investment to OZ capital. Because the federal policy has no reporting requirements, it’s difficult to track exactly where opportunity fund capital is going.

This is a problem with the policy that’s not limited to the Bronx, according to Scott O’Sullivan, a partner at accounting and advisory firm Margolin, Winer & Evens (MWE). At the beginning of 2020, MWE conducted a poll of real estate professionals who attended a panel discussion the firm held on Jan.15 in Manhattan. Over 75 percent of attendees said they had not yet invested in a Qualified Opportunity Zone Fund, although 39 percent said they plan to invest in the next six months. 

There’s a lot of uncertainty around OZs, O’Sullivan says, particularly for a smaller investor. There’s a lack of transparency in how many qualified opportunity zone funds are out there and which ones are smartest to invest. 

“It’s not like shopping for a car, where there are dealerships all along the street ready to tell you what to buy,” O’Sullivan says. “For the big players, the RXR Realty’s of the world, they have the in-house attorneys and the in-house tax people, but for the mom and pops, there’s still a lot of uncertainty to how Qualified Opportunity Zone Funds work.”

The tax policy is best suited for large investors with millions in capital gains, which there’s no shortage of as the stock market reaches all-time-highs. But as the New York Times pointed out, this means investment in opportunity zones is going to be aimed at projects that will reap the greatest returns, largely high-rise, market rate apartments. 

Opportunity Zones across the nation have raised more than $6.7 billion since the program started, according to most recent Novogradac Opportunity Funds listing. But there has been some hesitation in investing that money, O’Sullivan says, because there’s no certainty that the program will still exist in 2029, when investors have to pay taxes on the money they’ve invested, or that the capital gains taxes in New York and on a federal level won’t have risen substantially. This is a particularly slow investment period, as investors are waiting to see what happens in the 2020 presidential election, O’Sullivan says. 

There’s still positive buzz around the program though. At the start of February, the New York Post ran a story singing a similar tune to what was written a year before. “New York City may be on the cusp of a new multibillion-dollar investment boom.” The Post interviewed an investor out of Arizona who said he planned to allocate $250 million of new investments in areas including New York. RXR Realty also launched an opportunity zone fund aiming to raise $500 million to funnel into redevelopment of the Brooklyn Navy Yard and a project in New Rochelle.  

In the Bronx, Brookfield Properties’ four-acre, $950-million development project that broke ground in December did use some investment from Brookfield’s opportunity fund, according to spokesman Andrew Brent.

“With the help of the Opportunity Zone program, Brookfield is cleaning acres of contaminated waterfront in Mott Haven and transforming land that has sat idle for decades into much needed housing,” Brent said.

But the massive waterfront project was set in motion nearly three years ago, before the land was designated an opportunity zone.

Most of the development that has already happened under OZ capital likely would have happened anyway in the Bronx, and Cintron said it was designed that way.

Nearly all of the Bronx qualifies to be an opportunity zone, as it’s one of the poorest counties in the nation. 

“All they had to do was throw a couple of darts at a map and they would have been good,” Cintron said of the Empire State Development Corporation. 

Instead, the Bronx EDC and the and the state ESD worked together in deciding where an opportunity zone would be the most valuable in the borough, Cintron said. Cintron said that the EDC looked at where projects were already starting and designated those areas as opportunity zones, so folks already investing in the borough could tap into opportunity fund capital. 

The state’s ESD says it weighed input from Regional Economic Development Councils and local elected officials when deciding where to designate opportunity zones, but wouldn’t comment specifically on what Cintron said.  

The Benedetto family, titans in New York City’s recycling industry, were able to lease their 250,000-square-foot tract of land in Port Morris to the highest bidder this year because the land’s position in an opportunity zone made the sale more attractive. But the family always had an intention to lease their property, according to their broker Randy Modell. He said the timing of the sale had nothing to do with opportunity zones.

“It was just a happy coincidence,” Modell said.

The most forthright example of Opportunity Zone investment in the Bronx in 2019 was Starwood Capital Qualified Opportunity Zone Fund’s investment in office space for a number of businesses in the South Bronx, as well as a charter school. While the money was useful for all parties, Ron Solarz, the broker who helped developer AB Capstone secure the equity from Starwood, said the project was already in motion before opportunity zones existed.

“The opportunity zone has nothing to do with what a developer decides to build.” Solarz said. “It was just the cherry on top.  He wouldn’t have changed his plan at all.”

Gold also agrees that the existence of the opportunity zone policy doesn’t change much about whether the Bronx sees investment.

“People aren’t buying property in the Bronx because it’s in an opportunity zone,” Gold says. “The opportunity zone just adds to the story a little bit.”

No land

To be sure, the policy is new. And despite a passed deadline, there are still nine more years for investment to take hold. Gold said 2019 saw fewer development projects because of the new rent laws out of Albany, and trade war turmoil, but he expects to see many more developers take advantage of opportunity zone capital in 2020.

Developers might have nowhere to build, though. While the Bronx is known for having more available space than other boroughs, Cintron says, on top of many property owners being reluctant to sell, most of the available land in desirable neighborhoods like Hunts Point, Mott Haven or Port Morris is owned by the city.

About 1.4 square miles of city owned land in the Bronx is vacant. But Cintron says it’s been hard to negotiate with city officials to sell.

“There might be open space left, but it’s not for sale,” Cintron said. “In Hunts Point, the city of New York owns quite a bit of lots, but they want them for the garbage trucks, they want it for their stuff.”

Cintron’s space challenge tracks with the Bronx’s economic growth in 2019. The borough’s investment sales market increased 22 percent in the first half of 2019, but the volume of property sold decreased by 25 percent, according to Ariel Property Advisors’ 2019 Mid-Year Sales Report. But Gold says this has more to do with the cost of steel and other building materials going up because of international trade wars.

He says he still sees a lot of untapped resources in the Bronx. The problem, instead, is that long term investment in the borough is a bit of a gamble.

Shaking off the Bronx’s reputation

For many, the benefits of investing in the Bronx are still unknown, particularly investing opportunity zone capital. For an investor to benefit as much as they can from the tax policy, a project must have at least a nine-year longevity, and it must be able to turn a significant profit by 2029. In Brooklyn or Manhattan, a developer largely knows what kind of return they’ll get on their investment. In the Bronx, the waters are murky.

“I think it’s a big bet, because the Bronx still isn’t proven,” Gold said. “Businesses are thriving and more businesses are coming to the area, but can you still achieve the numbers you need to survive?”

As for opportunity zones bringing the essentials to low-income neighborhoods like Mott Haven, which proponents of the policy have promised, Cintron says she doesn’t see it.  Developers want to look for the biggest projects, with the biggest long term gains.

“I don’t see it as a grocery store kind of policy. I’m quite frankly surprised someone was able to use it for a school,” Cintron says. “It was supposed to predominantly be about commercial development.  It was a gift to the President’s Wall Street friends, one that we were willing to entertain as long as the community benefited.”

For residents of the South Bronx, barriers to development are welcomed. Cintron said that Brookfield deciding to develop in the neighborhood “was huge,” but community members like Welcome2TheBronx Editor-in-Chief Ed Conde don’t see it that way. 

“There’s absolutely nothing positive about Brookfield,” Conde said. “Putting luxury housing in an area still puts pressure on the existing housing stock. It’s displacing people.” 

Conde says he is starting to see a slow-down of building in the area, which might mean the neighborhood isn’t destined to be the next Williamsburg or Long Island City. But he still views gentrification of the South Bronx as inevitable, and opportunity zones will only continue to attract the wrong kind of development. Even the kind of development that the best side of the policy offers, Conde finds demeaning. 

“Is that what we’re worth? A supermarket or menial retail jobs? Why do we have to wait for a developer to come in to get a school?” Conde says. 

In the end, the policy hasn’t yielded what it promised for the borough. But if investors aren’t drawn to the borough, even with the tax incentives, Cintron says good riddance.

“We’re okay with them not coming if it’s not going to benefit our community,” she says. 

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