The Local Solutions in Action series highlights strategies for expanding housing options and increasing housing affordability. The focus is on land use, zoning, financial and other regulatory tools that are available to cities, counties and towns that can be used to meet the housing needs of their residents and workforce.
The Opportunity Zone program was created as part of the Tax Cuts and Jobs Act of 2017 to encourage investment in low-income neighborhoods. Each state (often in collaboration with local municipalities) defined Opportunity Zones based on socioeconomic characteristics of Census tracts. A list and map of currently defined Opportunity Zones is available from the U.S. Department of Treasury. The Opportunity Zones program provides a tax incentive for investors to re-invest unrealized capital gains into Opportunity Funds that are dedicated to investing into these Opportunity Zones.
More information about how the Opportunity Zone program and the Opportunity Funds will work is available from the Economic Innovation Group and Enterprise Community Partners.
In late October, the U.S. Treasury Department and Internal Revenue Service issued proposed regulations and other guidancefor the Opportunity Zone tax incentive.
Because the regulations are not final, there is still some uncertainty about how the Opportunity Funds will work and what projects will be funded. However, there is growing interest in how the Opportunity Zone program could bring additional resources for the development and preservation of affordable housing. The question is what should communities be doing to best position themselves to benefit from the Opportunity Zone program?
A good example of a community working proactively on Opportunity Zones is the City of Norfolk, Virginia. The City includes 16 Opportunity Zone tracts and City officials have done a tremendous amount to educate stakeholders about the program, align existing planning and policy initiatives to be consistent with the goals of the Opportunity Zone program, and actively bring together key development and financial partners.
In July, the City held an Opportunity Zones Day, which included presentations about the defined Opportunity Zones in the City, as well as key information presented by Enterprise Community Partners and Novogradac & Company LLP. At this event, the City was a leader in bringing together a wide range of stakeholders to learn about the opportunities in the City and to begin to facilitate key partnerships.
In addition, the City has posted detailed information about its Opportunity Zones along with links to the existing Master Plansassociated with each community.
The City is intentionally aligning its planning efforts and public investments to make sure Opportunity Zone funding has an impact in its neighborhoods. This move to explicitly align community planning efforts with the Opportunity Zone program and to proactively outreach to developers, banks, foundations and others is putting Norfolk in a good position to attract investment to its distressed neighborhoods. Other communitiesare also taking a proactive approach even as the specific policy regulations get ironed out.
Let us know if we can help your community think through how to align broader planning goals with the Opportunity Zone program.