Opportunity Zones: Luring Investors To Poor Neighborhoods In Exchange For Tax Breaks
Opportunity zones are an effort to bring investors to struggling neighborhoods in exchange for tax benefits. There are thousands across the country, including 18 in Dallas County, seven in Tarrant and three in Denton County.
Gerry Reihsen runs Coasis Coalition, a public benefit company working on these kind of investments.
“They are specially-designated census tracts throughout the country and our territories – comprising almost 9,000 of them – wherein you can invest through a fund and then the investors in that fund get tax incentives,” Reihsen says.
Interview Highlights: Gerry Reihsen on ...
Typical investments in opportunity zones: Investment in these zones can be everything from real estate development and renovation to businesses themselves. You can invest as a venture capitalist or just generally in business in these zones. ... What is currently typical is real-estate development. There is a whole industry that dedicates itself to real estate development in low-income communities. So they're ready to act on this right away.
As far as venture investment or investment in other tangible assets, there isn't an industry focused on that. So that part of the world is just starting become aware of it.
Ensuring whether investments in opportunity zones help residents: The aim of the opportunity zone program is to cause macro capital flows into these zones. It's not really to dictate necessarily what happens or what the outcomes are. It's really incumbent upon persons in those zones in the traditional players in the low-income community space to take charge and decide what they want.
Whether opportunity zones create jobs or gentrify neighborhoods and push out residents: [An opportunity zone] doesn't change anything about the on-the-ground dynamics, whether it be zoning, community approval of things or state-directed investment into these zones. ... Gentrification is actually obviously a good thing. We want value creation. The whole point is these communities are missing out on the value creation that occurs and the wealth creation occurs in other communities that if the persons in those communities aren't risen up with the values that are increased in these communities, they have a problem. And that's what's really valuable about the opportunity zone program. Since you can introduce investment in business, that's the kind of thing that raises up people's potential and their ability to do well. ... All this does is incent capital to look to these areas. So if the local community in the state or the city doesn't feel that this is a good thing, they have all the power. They've always had.
Whether opportunity zones are bipartisan: [It is] frankly the most bipartisan thing I've ever seen and that's really rare. ... [Sen.] Cory Booker is probably the greatest proponent of it in the Senate. Now that doesn't really say what the feet on the street would say about it. But I do see some resistance. But I think the resistance currently is mostly a legacy resistance to other programs that had a certain type of promise that didn't perform the way it was supposed to. As this has progressed, I'm seeing the traditional residents and the folks who support them start to say ‘wait a minute; we can use this to our ends.’ I think it's going to be embraced pretty thoroughly.
These interview highlights were edited lightly for clarity.