The High Price of Opportunity Zones
A new study sheds light on the ineffectiveness of the program
March 10, 2021 | Andrew J. Nelson | Propmodo
In the current political climate, few policy initiatives can claim bipartisan support. But, the opportunity zones (OZ) program has enjoyed rare bipartisan support—especially unusual for a tax bill. The concept was pioneered by the Economic Innovation Group, a centrist advocacy group, which promoted the idea in a 2015 policy paper as a means to “unlock private capital to facilitate economic growth in distressed areas.” The legislation was co-sponsored by both Republican and Democratic lawmakers and championed by the Trump Administration, and ultimately was enacted as part of the Tax Cuts and Jobs Act (TCJA) of 2017.
The program was seen as an innovative new way to bring investment into underdeveloped neighborhoods. It became the Trump Administration’s signature place-based economic development policy and has been popular with real estate investors and developers as well as community groups, leading to a burst of investment funds targeting Opportunity Zones. An August 2020 report by Trump’s Council of Economic Advisers estimated that funds earmarked for opportunity zone investment “raised $75 billion in private capital by the end of 2019, most of which would not have entered OZs without the incentive.” However, Novogradac, a professional services firm focused on the real estate sector, places the total closer to $10 billion.
