A decade from now, how will we know if Opportunity Zones actually helped people?
That question is on the minds of community leaders and investors nationwide, from Alabama to the corridors of power in Washington and across the pages of business journals (including ImpactAlpha’s in-depth coverage).
Even if new private investments flow to Opportunity Zones and result in significant positive impact for those communities, if we don’t measure it, we’ll never know for sure. The good news is we already have the tools to measure and analyze the impact of Opportunity Zone investments.
When the Opportunity Zone incentives became federal law as part of the December 2017 tax reform package, impact tracking requirements were omitted. This differed from the conference report, as well as the original Investing in Opportunity Act, which recommended that the Department of Treasury submit annual outcomes reports to Congress.
One of the original cosponsors of the act, New Jersey Sen. Cory Booker, wrote to the Secretary of Treasury: “If the Treasury Department’s regulations are not thoughtfully and properly designed, the program could be twisted to provide little more than a tax shelter for areas or projects that the legislation was not meant to support.” Booker suggested “guardrails” to prevent abuse. “The Treasury Department should consider developing a rigorous list of positive and measurable community-development outcomes to evaluate Opportunity Funds’ performance.”
Communities across the country haven’t waited. Local priorities have been brought to the forefront of the debate by economic development leaders in Birmingham, Lafayette, and Erie, the mayors involved with Accelerator for America, and the industry-wide U.S. Impact Investing Alliance.