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An Opportunity Zone Group Called Our Story About a Yacht Club Getting Tax Breaks “Lurid.” We Respond.

A think tank that pushes the big Trump tax break accused us of omissions. Its statement has some curious omissions of its own.

The superyacht marina in a West Palm Beach census tract that was included in the opportunity zone program after wealthy donors lobbied then-Gov. Rick Scott’s administration. (Saul Martinez for ProPublica)

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Last week, the Economic Innovation Group, a think tank dedicated in large part to supporting the tax break program known as opportunity zones, wrote an article questioning ProPublica’s recent story about how wealthy donors to then-Gov. Rick Scott got his administration to include their long-planned investment projects in the program in Florida.

In our story, we uncovered previously unreported state and local government documents that showed two sets of wealthy donors in West Palm Beach and Tampa lobbied Scott to have census tracts where they owned property and planned to build luxury developments included in the lucrative tax break that’s in President Donald Trump’s 2017 tax overhaul.

The post by EIG, whose founder and executive chairman is Sean Parker, the billionaire investor in companies such as Facebook, raises no factual objections to our story. Instead, it argues that we omitted important context about a West Palm Beach census tract that one wealthy donor requested the Scott administration include in the program. That West Palm Beach tract contains a long-planned luxury development around a superyacht marina owned by Wayne Huizenga Jr., son of the Waste Management and Blockbuster video billionaire Wayne Huizenga Sr.

The EIG post does not mention Tampa, where Scott picked an area where billionaire investor Jeff Vinik has been planning a massive redevelopment project that will include luxury residences, hotels and shops.

What our reporting on opportunity zones here, here and here — and that of others covering opportunity zones across the country — has shown is that wealthy and connected special interests were able to get their voices heard and interests looked after as governors were deciding how to hand out a lucrative tax break. ProPublica and others have found that wealthy developers lobbied government officials and got their long-planned investments included in the program, despite its avowed goal of attracting new investment into poor areas. That reporting has led to calls for investigations into the designation process, as well as proposed reforms to make the program more transparent and to eliminate potential abuses by investors.

EIG’s Claim:

“ProPublica’s readers are presented with a lurid narrative: the state of Florida chose an undeserving area purely to benefit a connected businessman at the expense of impoverished areas nearby.”

ProPublica’s Response:

In fact, we wrote that the census tract on which the superyacht marina lies met the criteria for inclusion. We never wrote or suggested that the area was “undeserving” or that Florida chose it “purely” to benefit Huizenga and his partners.

Claim:

“Like the article’s authors, we were not privy to the deliberations within the governor’s administration, and we have no particular interest in this tract or its circumstances.”

Response:

While we were not privy to all the deliberations, our story was based on internal documents and emails from state and local officials as they deliberated over the opportunity zone selections. Those records had not been published before. The records show the tract with the superyacht marina was not selected based on the state’s initial analysis of poverty indicators. Rather, the governor bestowed the tax break on it only after Huizenga’s request.

Claim:

EIG’s central premise is that the tract deserved to be included on its own merits, and that we failed to adequately address those merits by focusing on the donor and the superyacht marina. “ProPublica portrays it as ‘wealthier and whiter’ than two other areas under consideration, which, while technically accurate, is a rather twisted way to describe an area with a poverty rate of 23 percent and an MFI of merely $46,791 that happens to be 60 percent non-white (ProPublica doesn’t include these statistics in its story).”

Response:

Yes, the story is technically accurate. We based our analysis on 2011-15 census figures, the same ones used by the Treasury Department in administering the opportunity zones program. That year, the tract with the marina had a poverty rate of 23%, a median family income of $42,303 and was 60% nonwhite. The figures for the tracts next to it, which EIG didn’t include, are as follows: Census tract 23 had a poverty rate of 37%, a median family income of $24,353 and was 62% nonwhite. Census tract 24 had a poverty rate of 31%, a median family income of $30,556 and was 95% nonwhite.

As our story noted, the city of West Palm Beach initially included these tracts in its request to Scott’s office, and it did not include the tract with the superyacht marina, owned by a donor to Scott.

Two other Scott donors, both billionaires, also benefited from the inclusion: 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 the partner of Wayne Huizenga Jr.’s company Rybovich on the planned Marina Village development.

Curiously, for a post that claims to have found serious omissions in our piece, the EIG post itself omits any mention of Huizenga, Perez or Ross themselves, as well as the donations and the planned luxury development around the marina.

The post also doesn’t note that, while the point of the program EIG advocates for is to incentivize new investment, Huizenga’s own letter highlights an already-planned luxury development project around his marina as a reason to include the area in the program. The tax break is meant for new investment, not already-planned investments.

The post also doesn’t mention that the marina owner’s business partner, Related Group, has publicly spoken about how the tax incentive is going to boost its bottom line on a project that would have been profitable without the subsidy.

And it doesn’t address our reporting on Scott’s decision to include a far wealthier tract in Tampa in the program (one that qualified for inclusion but is in the top 0.5% of all opportunity zones in the nation by median family income), after a request by a billionaire donor with a long-planned high-end redevelopment project in the works for the area.

Claim:

“By any reasonable standard, [Census Tract 17] is a neighborhood in need of more investment and economic opportunities for its residents. … This local context was omitted from ProPublica’s story.”

Response:

As EIG’s piece discusses — and as we included in our article — the opportunity zone designation process was a zero-sum game: governors could only select a quarter of the eligible tracts in their state for the break. The marina tract that EIG goes to great lengths to defend was indeed qualified for the program and does include impoverished areas, and we included that in our story.

But we added this context: “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.”

Claim:

“ProPublica curiously minimizes the fact that at the time of nomination, Census Tract 17 was the focus of a major neighborhood revitalization effort involving the widely-respected national non-profit, Purpose Built Communities (PBC). The initiative concentrated on the area of West Palm Beach north of 36th Street, half of which falls within the boundaries of Census Tract 17. In fact, all of the census tracts that the Rybovich Marina’s owner recommended to the governor were aligned with the PBC initiative. Why? Perhaps because his firm is involved in supporting PBC’s efforts, as mentioned prominently in his letter, which also references the support of several major anchor institutions in the area.”

Response:

In fact, we mentioned the nonprofit and its efforts: “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.”

In the letter, Huizenga mentioned the marina development before he mentioned the Purpose Built Communities efforts.

The letter asked Scott to designate three census tracts as opportunity zones. The one with the superyacht marina was not included in the state’s original picks or the city’s. The other two were included in the state’s original picks, but not in the city’s. All three border one another. Scott selected all three as opportunity zones.

Claim:

“Even the article’s headline is misleading: ‘A Trump Tax Break To Help The Poor Went To a Rich GOP Donor’s Superyacht Marina.’ The marina isn’t eligible for tax benefits because it predates the passage of the law. Only new investments that meet specific criteria are eligible for the incentive. And by cleverly focusing the article — headline and all — on the marina, its authors obscure the fact that new investment in Tract 17 would, indeed, be going to an impoverished area with a widely-recognized need for revitalization.”

Response:

The census tract that was included after lobbying includes the superyacht marina. Studies suggest that developable properties in opportunity zones have increased in value, meaning owners of property generally benefit from merely being included.

In addition, Huizenga and his partners are planning to build a luxury residential development around the superyacht marina. This is not a new investment, which is the type of capital the opportunity zone tax break aspires to attract. Moreover, according to Huizenga’s partner, Pérez, the opportunity zone tax break will make his firm’s investment in that luxury development even more profitable. He boasted to Bloomberg this year: “It worked as a market-rate rental. Now, it works that much better as an opportunity zone.”

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Jeff Ernsthausen

Jeff Ernsthausen is a data reporter at ProPublica.

Portrait of Justin Elliott

Justin Elliott

Justin Elliott is a ProPublica reporter covering politics and government accountability. To securely send Justin documents or other files online, visit our SecureDrop page.

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