HUD Secretary Ben Carson Celebrates First Business Campus In Los Angeles Catering To QOZBs
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During a stop in Los Angeles on Wednesday, Housing and Urban Development Secretary Ben Carson praised opportunity zone business campus The Beehive as a trailblazer.
The Beehive campus at 950 East 60th St. will total about 200K SF of office space and sits in the former Goodyear Tract Industrial Planning District in Los Angeles. It will offer coworking space, creative offices and shared amenities to innovative entrepreneurs and social enterprises, officials said.
“This is exactly what should be going on in America,” Carson said. “Opportunity zones is not just a fast-acting program, they are designed to promote long-lasting solutions. We have to think collectively to improve the quality of life of those impacted in those zones.”
A Los Angeles-based affordable housing developer, SoLa Impact has raised nearly $100M for opportunity zone investments, SoLa Impact founder and CEO Martin Muoto said.
The company has so far deployed $30M, $14M of which was for the acquisition of the six warehouses that make up The Beehive, Muoto told Bisnow after the event. Muoto plans to invest another $10M to renovate the properties. This is the company's first development outside of affordable housing.
Carson’s visit to the Beehive Wednesday is part of the Trump administration’s effort to promote and celebrate the opportunity zone program, which was passed at the end of 2017 as part of President Donald Trump’s Tax Cuts and Jobs Acts.
The federal program aims to spur economic development in low-income census tracts by allowing an investor through a special fund to invest long-term in any of the designated 8,700 opportunity zones nationwide in exchange for a tax benefit. The 18-month-old program has generated as much excitement for its tax benefits from wealthy investors as it has concerns about the possible displacement of low-income residents and gentrification.
Carson, who chairs the White House Opportunity and Revitalization Council, said there are 35 million Americans who live in opportunity zones and that the South LA development could become a “life-changing program” for its residents. Scott Turner, executive director for Opportunity and Revitalization Council, encouraged the crowd to invest in opportunity zones.
“In South LA, we are witnessing the incredible growth and development taking place in the name of collective impact,” Carson said. “This is what happens when a community can come together.”
South Los Angeles has some of the largest opportunity zone areas in Los Angeles, Los Angeles City Councilman Curran Price said at the event.
But the old red brick warehouses that used to manufacture Goodyear tires during World War II are also located at ground zero for the Los Angeles crack epidemic in the 1980s and 1990s, where Ricky Donnell Ross, better known as "Freeway Rick," established a drug empire.
It's also just a few blocks away from where Reginald Denny was pulled out of his truck and beaten in 1992, sparking the Los Angeles riots, Muoto said. “We do not want to dwell on the problems of the past but the solutions of the future,” Muoto said.
Former NBA player Baron Davis, who is investing in Muoto’s opportunity zone projects, said he grew up in South Los Angeles, on Manchester Boulevard and San Pedro Street.
When you tell them you grew up here, Davis said, “It means you grew up with your parents on crack, your cousins in gangs, your uncle selling crack to Freeway Rick … We didn’t have the opportunity or the resources.”
After Davis retired from the NBA, he returned to Los Angeles to give back to his community and the opportunity zones program is one way he is doing it, he said.
“Being from South Central LA, there has never been anything like this,” Davis said of The Beehive. “It’s clean. It’s beautiful and inside of that, it’s an opportunity.”
Muoto said the opportunity zone program is a way to uplift the neighborhood without displacing residents.
“We’re not giving the community a handout, we’re giving them a hand up,” Muoto said. “It’s about helping them become more self-sustainable, picking them up and also not uprooting.”
Muoto said he has already spoken to at least six startups to set up as qualified opportunity zone businesses and locate at The Beehive. Along with being tenants, he’s asking businesses to hire locals in positions of power, “where we can finally break the cycle of poverty in the community.”
The first building at The Beehive is slated to open sometime early next year, officials said.
Price, the city councilman whose district includes South Los Angeles, said he hopes The Beehive could be a catalyst for more opportunity zone investments in South Los Angeles. The city, he said, is planning to rezone the area around the Goodyear Tract as multifamily and there is a 7-acre, city-owned opportunity zone property ready for development.
This is not just economic development, but community economic development, Price said.
“We are experiencing something unique, something very special and something that will set the tone for these types of investments not just in this community or the state but around the country,” Price said. “The Beehive is open and it’s all the buzz.”