opportunity zones

GAO: Opportunity Zone program lacks oversight, accountability

Criticism of the federal Opportunity Zone program has been directed at individual examples of questionable tracts for inclusion, the process for selecting tracts in each state, and the merits of some of the development projects underway. For example, some question inclusion of lowlands subject to flooding as sea levels rise with climate change and subsidence, while others raise eyebrows at inclusion of greenfield freeway interchanges or tracts already undergoing gentrification in fast growing cities. Complaints have been raised about projects where the end use (e.g.

Opportunity Zone incentives yield mixed results

A new report by the Urban Institute indicates that the Opportunity Zone (OZ) tax incentive program has had varied success throughout the country. An Early Assessment of Opportunity Zones for Equitable Development Projects assesses the effects that OZs have had within low-income communities while also reviewing the types of developments that have benefited most from the incentive.

State actions in 2019: Opportunity Zones

In 2019, the administrations and legislatures in many states grappled with if and how to adjust state economic development initiatives to leverage the federal Opportunity Zone (OZ) program. The actions of 12 states that implemented new activities are described below.

SSTI, economic development peers submit OZ letter to EDA

SSTI and five peer, economic development-focused organizations submitted a letter to assistant secretary for economic development, John Fleming, in response to a request for information about incorporating Opportunity Zones (OZs) into existing EDA practices. The letter encourages the agency to be cautious in its approach, pointing out that OZ’s impacts are not yet understood.

Opportunity Zones: A potential boost or bust for inner-city economic development?

Ensuring the success of the 8,700 Opportunity Zones created in low-income, communities across the country will take “intentional, collective action from everyone involved,” according to the President’s Council on Impact Investing, a philanthropic leadership group that is part of the U.S. Impact Investing Alliance. Without a coordinated effort that includes policymakers, investors, fund managers and philanthropists, Council members are concerned the residents of the Opportunity Zones won’t have a voice, could be displaced if their neighborhoods become gentrified and “are at risk of losing out and falling further behind, while Zones in already-gentrifying parts of urban areas like New York City or Washington, D.C., continue to draw the lion's share of development capital,” according to a press release the group issued.

Opportunity Zones begin to be put to work

After 18 months, some communities are starting to see Opportunity Zones (OZ) investments. LISC, a community development entity with a long track record of project finance, has published a new guide to help communities plan to capitalize on the investment. These activities remain heavily focused on real estate projects but may still be informative for groups looking to bolster their regional innovation economy.

Three channels for Opportunity Zones input now open

As covered recently in the SSTI Weekly Digest, the IRS has released its second round of guidance related to Opportunity Zones. At the same time, the agency announced its intention to release a request for information (RFI) around program reporting. Days earlier, the Department of Housing and Urban Development (HUD) released an RFI for ways to adjust programs to better-support the zones.

New proposed Opportunity Zones rules, RFI released by IRS

The IRS released its long-anticipated second tranche of rules on Wednesday, and the regulations provide some clarity around using Opportunity Zones to invest in businesses. Specific examples include details on defining a business’ operations within a zone and funds’ ability to reinvest proceeds. However, further clarification is needed, including around investors’ treatment of interim sales, and additional changes are forthcoming.

Kresge encourages OZ reporting with further investor incentives

Many people have noticed that the Opportunity Zones tax incentive, intended to encourage investments in economically-distressed areas, lacks the type of reporting requirements that could help determine the real impacts of the incentive. Kresge Foundation is one organization that has been concerned by this information gap and has been working to implement solutions. The ultimate impact of Kresge’s latest effort is to provide further investor incentives in exchange for reporting compliance.

Maryland Gov. proposes $56 million for Opportunity Zone programs

Maryland Governor Larry Hogan’s FY 2020 budget proposal includes $56.5 million in new funding to attract businesses to Opportunity Zones. Other new innovation funding would support manufacturer hiring credits and a seed fund for minority entrepreneurs. Under the governor’s proposal, TEDCO, the state’s primary innovation agency, would see its spending increase from $27 million to $45 million.

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