What you didn’t know about Valentine’s Day… It wasn’t always hearts and love songs.
On February 14th around the year 278 A.D., a Roman priest by the name of Valentine was executed. This event occurred under the reign of Emperor Claudius II, also known as Claudius the Cruel, who banned all marriages and engagements in Rome due to his difficulty in recruiting soldiers to join the military. Claudius believed that Roman men were unwilling to join the military because they were too attached to their wives and families. Valentine, being a holy priest, continued to perform marriages in secret. Upon discovery of this, Claudius ordered Valentine to be condemned to death by clubbing and execution. In honor of his service, Valentine was named a saint after his death.
Policy Brief: Impacts on Los Angeles County from Commercial Property Tax Reform, by The California Community Foundation (December 2018)
“How to Raise Billions for Schools and Services by Reforming the Commercial Property Tax System”
Commercial Property Tax Reform Exposes Underutilized and Underassessed Land
The most significant property tax reform in forty years is coming to the November 2020 ballot in California. The reform measure involves Proposition 13, the commercial property tax system in place since 1978, and is expected to generate new revenue for cities, counties, schools, and special districts. Proposition 13 reform calls for the market-value reassessment of commercial and industrial properties on underutilized land, but does not impact residential property taxes. Revenues are expected to amount to more than $3.6 million in Los Angeles County alone, composing 32% of predicted statewide revenues. As evidenced in a multi-year study carried out by the University of Southern California’s Program for Environmental and Regional Equity (USC/PERE), revenues are predicted to total nearly twice the amount received from current property taxes on such properties. Funds will be allocated for local purposes including infrastructure, public safety, parks, libraries, affordable housing, health care, and homelessness services. The study executed by USC/PERE shows wide disparities of assessed land values in LA County; land assessments vary from company to company as well as within a single company. For example, in Carson, CA, two major commercial property owners’ plots are currently assessed at $1 per square foot (fair market value from 1975), while new commercial owners’ properties are assessed at $46 per square foot. Therefore, it is clear that the underassessment of properties results in a large loss on land value, not to mention property tax revenue that could be benefiting local communities. The majority of revenues from land reassessment will come from long-held properties, including some dating back to 1975. Commercial property tax reform will lead to more efficient land use where it is currently vacant or in low-level uses, higher density housing around commercial strips and transit lines, and significant revenue to be allocated for local purposes, critically including low-incoming housing and homelessness services.
2. New Market Tax Credit Drama in Oregon
There is controversy surrounding the Oregon-based nonprofit, Ecotrust, and how it secured a new market tax credit for the failed reopening of a small-town sawmill. Ecotrust sought a new market tax credit to reopen a sawmill called Rough & Ready Lumber in Cave Junction, Oregon, promising the revival of the town’s single largest employer. Less than twenty months after Ecotrust received the investment to reopen from the state agency, Business Oregon, the sawmill business and all the promised jobs were gone. According to the Oregonian, Ecotrust inflated the value of the project by $5 million. After the failed reopening, owners of the sawmill essentially sold the property to themselves—they composed 99% of the owners of the corporation to which it was sold. This “sale” was counted as an investment in the property, making the project large enough to justify the new market tax credits investment. If the sawmill had reopened appropriately and successfully created jobs for the town, perhaps the creative financing might not have been pointed out by Business Oregon. However, in August 2018, Business Oregon issued a memorandum detailing the ways Ecotrust had misrepresented the deal and called for $1.3 million to be reinvested in another project or simply returned to the state. Ecotrust just last week agreed to reinvest the money in a new project involving the purchase of a warehouse in a low-income area of Portland. Although the investment of the $1.3 million into this new project yields far fewer jobs than what was intended with the sawmill reopening, there is much less risk involved in this project than in the sawmill project. Overall, Ecotrust has publicly defended the sawmill investment and its use of new market tax credits, as seen in detail on its website. Ecotrust heralds itself as a “catalyst for radical, practical change”, and what is worthy to take into account is how much risk is tied to its undertakings, along with how much accountability nonprofits have when projects using tax credits are unsuccessful. To what extent should nonprofits be held accountable for failed endeavors, especially when owners are skirting rules meant to benefit low income communities?
3. Senator Wyden Blocks Nomination of Elizabeth Darling; Citing Discriminatory Policy
Originally nominated in March 2018 to a commissioner role in the U.S. Department of Health and Human Services (HHS), Elizabeth Darling now faces a roadblock to becoming the commissioner of the Administration of Children, Youth and Families (ACYF) at HHS. This hurdle comes from Senator Ron Wyden (D-Oregon), a member of the Senate Finance Committee who moved to block the nomination of Darling to the ACYF commissioner role. Darling, CEO of OneStar, an Austin, Texas-based nonprofit that works to promote partnerships, philanthropy, volunteerism and service to drive innovative community solutions, did not comment on the hindrance to her nomination and the fact that it has yet to make it to the Senate floor after being nominated and re-nominated just last month. A contentious debate has ensued over Darling’s nomination and the policies she would oversee as a federal commissioner. The Trump administration granted a waiver of federal rules to South Carolina foster care agencies, allowing agencies to place children only with Christian families. This agency and others affected by the change in federal rules continue to receive federal funds to place children in South Carolina only in Christian households. Senator Wyden has spoken out about his critique of the change in policy, saying this policy is discriminatory and will deny adults the opportunity to foster children on religious grounds, making them victims of another discriminatory policy set up by the Trump administration. Darling holds a legacy in the nonprofit and community service sector, elected as one of the charitable sector’s Power & Influence Top 50 in 2014, 2015, 2016. As Darling attempts to move her position in the nonprofit world into the governmental sector, it will be crucial to pay close attention to her transition and how it aligns with discriminatory changes to federal policies, as well as the vocal resistance to such policies made by Wyden and other members of Congress.
4. Immigrant Worker Co-op Franchise Model Grows Despite Challenges
Worker cooperatives have been booming in recent years with public and philanthropic support directed towards the funding and legislation of co-ops. Worker co-ops are valuable for those who are commonly exploited by the mainstream economy, since the cooperatives pay higher wages and tend to generate higher profits via increased productivity. Additionally, co-ops are credited with building community wealth and political power, in addition to fostering broader movement building. Since many cleaners work in exploitative home service industries, there is a compelling need to scale cleaning and other domestic worker co-ops. Araceli Dominguez, resident of Staten Island, New York, is the founder of Brightly®, a worker-owned cleaning cooperative. Brightly® was developed by the Center for Family Life (CFL), a Brooklyn-based social service program that has been developing worker cooperatives since 2006. Since then, CFL has developed twenty-one worker cooperatives, where 87% of co-op member owners are immigrants and 85% are women. CFL brings together franchising and worker co-ops to create a new nonprofit cooperative franchisor called Coopportunity, which has begun licensing co-op franchises in the cleaning industry under the trademark Brightly®. Coopportunity aims to connect well-developed worker co-ops to new areas through collaborations with local partners. Brightly has the goal of launching at least one Brightly co-op franchise in each state, with experienced members training and developing the new co-ops. Currently, there are twenty states in the United States without a single worker cooperative. There are reasons that worker cooperatives are not the dominant business model—difficulties attracting capital, the unknown of what a worker co-op constitutes, and as noted by Emma Yorra, author of this article; “any business model built on guaranteeing living wages already faces an uphill battle.” Brand recognition was also noted as a challenge that co-op models face in initiating and sustaining development, not to mention thin margins of profit in domestic work industries. Nevertheless, worker cooperatives and the franchising of these businesses are on the rise, and in September 2018, Brightly® was approved as a franchise in the state of New York state, becoming the first U.S. worker co-op to be so recognized.
5. New Startups Strive to Expand Benefits for Gig Economy Workers
The gig economy is rapidly expanding as startups such as Icon, Steady, GreenLight, and Trupo are developing financial, retirement, and benefit products for gig economy workers. These startups are exposing how it may be less costly to provide gig workers with benefits through startups than traditional benefits given through standard employment. For example, Laurie Rowley is developing the Icon Savings Plan to enable gig economy workers to build retirement accounts as they move among jobs and employers. Rowley is piecing together a retirement plan for the modern mobile workforce that is “radically less expensive than a 401k plan, and much easier to use.” Steady, founded in 2017, offers a range of ideas to gig economy workers regarding income supplement activities, aiming to provide support for people pulling together different sources of income through the gig economy. GreenLight is a new company that helps employers working in the gig economy by assisting them with managing tax and regulatory compliances as well as onboarding and payroll for independent contractors. Greenlight also hopes to expand medical insurance coverage to gig economy workers, while Trupo, launched in 2018, offers short term disability insurance to freelance workers. Prominent gig economy businesses Lyft, Airbnb, and Uber are developing education, workforce, and ownership opportunities for their workers. These efforts are driven by entrepreneurs who firmly believe their products will strengthen the gig economy workforce structure. Although these programs are fairly new with some still navigating through development stages, these efforts show how rapidly the gig economy is developing on its own through private sector entrepreneurs and gig economy firms, which provide exciting opportunities for gig workers as their economy is transitioning to benefit and sustain the workers themselves, and not just users and consumers of the gig economy.