The Tax Cuts and Jobs Act of 2017 established an Opportunity Zones tax incentive, which provides a federal capital gains tax deferral and partial exemption for investments in designated Opportunity Zones. Governors in each state will select Opportunity Zones from an eligible group of low-income census tracts. Selections must be made by the third week of March 2018 (or third week of April 2018 if an extension is requested). Given the significant interest among many private investors, it is possible that Opportunity Funds will attract tens of billions of dollars in private capital, making this one of the largest economic development programs in U.S. history.
This policy brief puts forward four principles to guide the selection and development of Opportunity Zones. The principles are designed to enable the greatest job creation potential and the most significant advantages for lower income resident employment, both, inside and outside the eligible zones. Throughout the document we stress the use of data analytics, local knowledge, and the need to see these incentives as just one part of a broader economic development strategy.
* This policy brief was commissioned by The Governance Project, and prepared by New Localism Advisors, a firm co-founded by Bruce Katz and Jeremy Nowak. The Governance Project is a nonprofit organization supporting the work of a bipartisan group of high impact governors and mayors across a range social, economic and policy issues. Launching its first initiative in Spring 2018, TGP will offer state and local governments analytics, expertise and capital sources for policy initiatives. TGP will begin with a focus on economic opportunity strategies in distressed urban and rural communities and expand to initiatives in other policy areas including education, infrastructure, healthcare and more.