(September 14, 2020 Delaware Business Times) Wilmingon DE – After hosting U.S. Attorney General William Barr and U.S. Department of Housing and Urban Development Secretary Ben Carson in a Monday visit highlighting the impact of the Trump administration’s Opportunity Zones program, Second Chances Farm (SCF) founder Ajit George had one more card up his sleeve.
George, who has long touted that the hydroponic farm model could be replicated elsewhere, announced that he has reached an agreement to bring SCF to North Philadelphia. The operation, which grows organic herbs and exclusively hires those leaving prison, only began in late 2019, but has quickly blossomed into one of HUD’s most frequently cited success stories on Opportunity Zones, a redevelopment program that focuses on underserved communities through tax-deferred investments. Located in the Riverside community in Wilmington’s northeast, SCF is located in an Opportunity Zone, which has helped it attract investors.
“Opportunity Zones are serving their purpose: Empowering the private sector to find new solutions to elevate America’s forgotten people, who live in places that have simply been economically neglected and where people don’t really see a reason to invest,” said Carson, whose department oversees the program.
George announced that he has reached a deal with Philadelphia developer Michael Bailkin, who will invest the capital needed to open a 30,000-square-foot farm – roughly 10 times larger than SCF’s current operation – with enough space to eventually expand to 100,000 square feet. The farm will be part of the North Station redevelopment of several million square feet of vacant buildings and land near the Temple University campus being led by Bailkin’s Arete Group.
George said that SCF would not be putting capital into the project but was considered a minority partner because staff from the Wilmington operation will be sent to Philadelphia to help get the new farm up and running. The new farm is slated to open in 2021, he added.
Bailkin said that he intends to use Philadelphia as a headquarters site, while opening satellite farms in “older industrial cities” throughout Pennsylvania.
“I’ve always had a romance for those cities, but I could never figure out a way to do economic development there because essentially the market has collapsed and the industries have left,” he said. “I think what the Second Chances operation does is provide a very interesting business that can help recreate that market catalyst and relevant activities in those areas.”
The new expansion continues a string of rapid growth for the startup company managed by George, a well-known fundraiser and marketer, and Jon Brilliant, an experienced entrepreneur who co-developed two health care technology companies. Earlier this year, SCF obtained $1.5 million in investor funding toward its 350-module Farm 2, which will create a 700% increase in yield for the company and an expectation to harvest a total of about 4.4 million plantings a year. The operation grows varieties of kale, lettuce, and arugula; basil, bok choy, Swiss chard, cilantro, dill, parsley, sorrel, and leaf broccoli.
For those who tend to the plantings, SCF is a way to restart their lives after incarceration. Several of the employees shared their life experiences with Barr and Carson, noting that the family-like atmosphere at SCF helped them break a cycle of recidivism that often plagues those trying to return to society.
Kalief Ringgold told the Cabinet chiefs Monday that he had just received a text notifying him that a friend was shot and killed in Wilmington last night.
“If I wasn’t here, I [would have been] there,” he said. “Everybody I know dies from gunshots and overdoses, and that could be my life … I’m just grateful to be here.”
After the presentation, Barr said that he was impressed by the way SCF has integrated with the larger Riverside community, with housing, employment and social services becoming available for residents, calling it a “recipe for success.”
“What we need is training and programs in prisons to prepare people, but we also need places outside of prison willing to hire them,” he said, commending SCF for doing so.
Although the federal officials’ visit highlighted the success of an Opportunity Zone investment, the program has drawn its criticisms, including a June report by the Urban Institute that found many of the program’s investments have flowed to real estate projects rather than operations like SCF. Part of the larger Tax Cuts and Jobs Act of 2017, Congress did not require robust public reporting for the program.
Carson touted the program’s investments reported this summer by the White House Council of Economic Advisers, including that $75 billion has been invested into qualified funds in two years while the original expectation was $100 billion in 10 years. Those funds have the potential to lift 1 million people out of poverty, he noted, adding that designation of a zone also increases property values there by 1.1% on average.
Last month, President Donald Trump signed an executive order instructing the General Services Administration to prioritize Opportunity Zones when considering the relocation or opening of federal offices. When asked by Delaware Business Times whether GSA had identified any potential projects under that order, Carson didn’t answer, but noted that other initiatives have helped get investments to projects in underserved communities.
Carson noted that the first round of the U.S. Small Business Administration’s Paycheck Protection Program didn’t reach many minority-owned businesses because large banks used up the majority of the billions in funds. The second round of funds had more earmarked for credit unions and small lenders that many minority-owned businesses utilize.
The secretary also noted that federal funds were being dedicated for the expansion of broadband internet in or near Opportunity Zones, which could in turn attract investments.
By Jacob Owens