Guest post by Demisse Selassie. Demisse Selassie, 27, is a Prince George’s County, Maryland native. He is currently a first-year student at the University of Pennsylvania Law School. Demisse’s interests lie at the intersection of law, policy, and community economic development. He previously served as an intern in the Obama White House. 

“Please don’t die over the neighborhood that your momma rentin’. Take your drug money and buy the neighborhood. That’s how you rinse it.” Shawn ‘Jay-Z’ Carter’s The Story of O.J. uncovers a blueprint on redirecting the trajectory of an underserved community from economic subjugation to independence and prosperity. Nipsey Hussle took notice of this blueprint and brought it to South Central Los Angeles.

Ermias Asghedom, better known as Nipsey Hussle, a Los Angeles-born rapper was murdered on March 31, 2019 in front of his own store where he employed members of his community. Hussle recognized that equitable development is more likely to occur when community residents with access to capital invest in their communities. Why? Property taxes. Many neighborhoods’ property values balloon as a result of inequitable commercial development, and this repeatedly leads to the isolation and exclusion of low-income homeowners. However, by creating a community-centered economic growth model – focused on raising the financial well-being of a larger and more local population – homeowners and residents can experience the benefits of more equitable development.

Once large corporations have maxed out potential revenue growth in more affluent neighborhoods, they begin developing in low-income neighborhoods, often referred to as “up-and-coming” markets. The introduction of mega-chains like Whole Foods and Starbucks into these markets leads to increases in property value in surrounding areas. This new development and tax increase forces low-income homeowners to relinquish their homes – often passed down from previous generations – as they no longer become affordable because of the rising property taxes. Established communities begin to lose their residents, character, and a chance to absorb the benefits from new development: a common genesis of gentrification.

Unlike small business owners, multinational corporations are faced with the urgency to scale, leaving the taxpayer footing the bill. Former Governor Scott Walker and the Wisconsin legislature agreed to provide an enormous $4.8 billion tax benefit to FoxConn, the Apple product manufacturer, in exchange for 13,000 Wisconsin jobs. When proposed, FoxConn projected that 9,817 of the 13,000 jobs would be held by “hourly operators and techs.” But a year later, the workforce vision had shifted. FoxConn projected that only one-third of these 13,000 employees would be assembly line workers and two-thirds would be “knowledge workers.” FoxConn’s own growth projections depict an astonishing 25-year wait for a return on investment for Wisconsinites. And the jobs? FoxConn failed to meet its 2018 hiring commitment for 260 full-time employees. To the dismay of the Wisconsin taxpayers, a report indicated that FoxConn even considered transferring engineers from China instead of hiring local engineers for positions at their Wisconsin facility. Unlike multinational corporations, small businesses can deploy targeted economic development within their localities to avoid leakage; the intimate nature of small businesses inherently keeps their operation local.

Ill-advised tax subsidies and corrupt practices are a few examples of how large corporations fail local communities. Perhaps more roguish is the Dark Store Theory – a tax strategy for massive commercial corporations to lower their property tax value. Corporations sometimes successfully argue in court that their property value should be assessed in comparison to nearby vacant buildings, or “dark stores.” When the corporation’s litigation efforts are successful, local governments must then reallocate the tax burden away from large corporations. In order to recoup the reduced revenue, municipalities are forced to divert tax responsibility to its citizens or make significant cuts to local services. The effects of Dark Store Theory have catastrophic consequences for funding essential local services; public school funding being one of those services.

The modern funding structure of public education designates local governments to use local property taxes to subsidize their school system budgets. Reliance on these property taxes has created massive inequalities between low-income neighborhoods and more affluent areas because of the widening gap in property tax revenues. The inequalities derived from using property taxes to fund schools stand as an eerie remnant of history.

In 1890, Louisiana passed the Separate Car Act allowing for separate railways cars for blacks and whites. Homer Plessy, a mixed-race man, challenged that state law under the Fourteenth Amendment for its discriminatory practices. Plessy upheld segregation so long as it was “separate but equal.” Brown v. Board of Education found segregation in public facilities unconstitutional but failed to set a definitive timeline for integration. A year later, Brown II came before the Court in an effort to have segregated school districts swiftly adhere to the earlier ruling. The Court ruled that compliance with desegregation should happen “with all deliberate speed.” Schools would later integrate but the equality Brown sought is arguably still being pursued.

The use of property taxes to fund local school districts continues to enable the same inequalities argued in Brown I six decades ago. Studies show that there is a causal relationship between educational resources and students’ performance. The extraordinary deprivation of resources for students in low-income neighborhoods begs the question of whether their fundamental rights under the Fourteenth Amendment are being withheld. If so, this is our generation’s Brown v. Board.

Imagine that an egregiously underinvested neighborhood cautiously welcomes a mega-chain. If you reside in a state with a property tax cap, challenges arise to accumulate enough revenue adequate to fund local services. California’s Proposition 13 has left local governments and school districts yearning for funding and ultimately California too reliant on a fickle income tax revenue system.

If your state has not adopted such a referendum, property taxes can rapidly increase on local homeowners. Some homeowners are driven out of their communities because they can no longer afford these taxes. Mega-chains appeal their property taxes using Dark Store Theory – forcing cities to decide between conceding to large corporations and losing invaluable tax revenue or facing litigation from well-funded attorneys. The property taxes for massive corporations are then lowered, the residents have left, and critical resources necessary for a sufficient education have been depleted. Research shows that the lack of education is a significant contributor to poverty and life expectancy. Sadly, the process repeats.

Hussle became aware of this phenomenon and decided to suppress the cycle by incrementally investing in these highly susceptible communities as opposed to leaving the void for hasty expansion from outside firms. He recognized that, as a small business owner, he would have the unique opportunity to prioritize employing members of his local community, to create progressive economic growth, and to responsibly generate tax revenue for his neighborhood’s local government. Hussle was, as many now have understood, “buying back his hood” – prudently redistributing wealth through job creation before speculative and irresponsibly profit-driven outsiders could arrive.

Jay-Z’s directive of buying back the hood is perhaps somewhat unfair, myopically discounting the complexities of both the issues and solutions. We have encountered a few examples of cooperatives housing programs, community land trusts, and individuals buying back and reinventing their neighborhood. But we cannot rely solely on these few examples. We cannot rely solely on individuals, like Hussle, to fix a system which by purposeful design created inequitable and unbalanced outcomes. There are too many underinvested neighborhoods and not enough eligible and willing individuals with access to capital to revive their communities. There needs to be a larger policy discussion for the advancement of communities centered on equality and equity. The responsibility should not lie at the feet of Hussle; rather, the responsibility looms over policy makers, academics, residents, and activists. Nipsey Hussle needed help; for the sake of his legacy, we should help.