19 Jul Opportunity Zones
2019 is the last year possible to see the maximum benefits of investing in an Opportunity Zone, a program that offers tax incentives for investments in low-income areas. And according to some, we will likely see an influx of investors trying to capitalize on that time left. After 2019 there is still the ability to enter into the Opportunity Zone program, but the benefits will decrease.
Before Investing in an Opportunity Zone
Before people rush to invest, people need to be aware of the program’s intent. The main purpose of creating Opportunity Zones is to bring capital to low-income neighborhoods –areas where investors would be slow to put their money– in order to help groups of people who are typically left behind by the larger economy. By seeing an increase in money flow in these zones, the hope is to improve the communities inside the designated areas.
“Improve” can be a murky word. The products generated by Opportunity Zones can either add value to the preexisting community or extract from it by taking advantage of this program. An Opportunity Zone could champion small businesses or affordable housing. Just as quickly it could turn into luxury condos driving up home values and pushing out families.
So how do we avoid our investments being extractive? The answer: socially minded leaders need to be at the wheel. People who are capable of hearing the voice of the community and creating profits that stay where they were made are the ones who will fulfill the intended goal of the Opportunity Zone Program. To be an additive investment the value created must be shared.
Will Opportunity Zones be Effective?
It’s hard to say if this program will work the way its creators envisioned. Investors want to see ROI and luxury hotels can provide that more easily than small businesses. However, it is possible to blend social responsibility with profitable investment, and that is a hope that should drive Opportunity Zone communities to push forward the leaders who will bring it to fruition.
This is just one aspect of the greater concept, but it is the driving force of the success of the Opportunity Zone program. We know we don’t have all the answers and would love to hear what you think. Or, if you live in an Opportunity Zone, we’d love to know your experience.