Student Corner: Opportunity Zones at a Local Level

The Opportunity Zone (OZ) program was rolled out this year, creating a new community economic development tool. Prior posts on the CED blog have covered this topic — an overview of OZs can be found here and a discussion of North Carolina’s selection of zones here. This post will discuss how OZs relate to other community economic development tools and how different local contexts may affect OZ investment. This post will also include strategies for local government participation in concert with these programs to maximize the impact of OZ investment in communities to meet community development goals. Note: This analysis is based on current guidance available relating to Opportunity Zones. Additional guidance regarding OZ investment is expected from the IRS later this year and may affect strategies outlined in this post. It should be noted that the Opportunity Zone program is not technically a community development program like New Markets Tax Credits (NMTC), Low Income Housing Tax Credits (LIHTC), Historic Tax Credits (HTC), and others. The Opportunity Zone program is not really a program at all, but rather a tax benefit for private investors overseen by the IRS. OZs are not grants or loans or other injections of federal dollars into economic development initiatives. OZs are simply a mechanism to lower federal tax liability for investments made in particular areas for particular business activities with particular private funds. In part because of this distinction, there are not the same levels of administrative oversight to ensure OZ investments meet community development goals as is the case with NMTC, [...]