The new term amongst American investors is the opportunity zone. In 2017, the federal government created this classification to increase investment in troubled urban and rural neighborhoods. Private investors were encouraged with tax incentives. By the end of 2019, $75 billion has been raised.
A lot of promises were made by the government and industry. It would add affordable housing, boost small businesses, and bring jobs to underserved areas.
What about the communities though? Private investment in struggling neighborhoods usually means gentrification. That can mean big changes to the current population, not all of them good. Although crime falls, rents rise significantly. Trendy stores and restaurants move in and the original people, in the end, are displaced.
There are a number of ways to prevent that from happening and for the program to make the community a part of the opportunity zone. It will take action by institutions, investors, and residents to make their neighborhood a win-win situation.
One OZ in Riverside county had a nonprofit professional connect with various organizations such as the African American Chamber, USA Vets, Habitat for Humanity, and Small Business Majority. She met with them individually and outlined how OZ investments or aligned grants could help them.
Another OZ created a competition with Mastercard Possible. There were cash prizes for businesses willing to launch or relocate to the OZ. They also created a questionnaire to generate feedback.
There can be contentious relations between investors and residents. This is why some OZs created a community benefits agreement. They require the developer to provide specific things. For example, some OZs want to guarantee food accessibility, which means a certain number of grocery stores. Others might desire job training or financial literacy.
OZ development is a complex process that involves many people. This includes community residents and their leaders, government officials, investors, developers, banks, and various professionals. This is why some OZs have educational events. They bring everyone together and make people feel included.
Assisting small businesses in an OZ can also help inclusion. An OZ investor group often has more resources and can help mom-and-pop shops identify state and federal resources such as credits, low-cost loans, and grants. There are 300 federal programs that give priority consideration if the business is linked to an OZ. Additionally, there’s an overlap with HUBZones, which gives priority consideration for government contracts.
Will Opportunity Zones be a success? Time will tell. For communities though, there are multiple strategies that could be used to boost inclusion.