Making Opportunity Zones Work for Your Community

An Opportunity Zone is a federally-designated area where investors may be able to defer or eliminate federal capital gains on new investments. The purpose of Opportunity Zones, created by the 2017 Tax Cuts and Jobs Act, is to promote “economic development and job creation in distressed communities” (IRS.gov). To qualify as an Opportunity Zone, an area needs to be nominated by the state and then certified by the Secretary of the U.S. Treasury.

There are 300 Opportunity Zones in the Commonwealth of Pennsylvania. The Pennsylvania Department of Community and Economic Development created an online interactive map with the location of each Opportunity Zone.

Opportunity Zones are still fairly new and their impact has not yet been realized. While many communities will thrive as a result of using this designation wisely, others will likely not benefit at all. There are several things that communities can do to increase the likelihood that this vehicle will be used and that it will result in significant positive changes.

First, recognize that there is not a one-size-fits-all approach to using Opportunity Zones to your advantage. Every community has unique needs and opportunities and thus your Opportunity Zone strategy needs to reflect your particular strengths, resources, and vision. A strategy that works well in Clinton County, for example, would not necessarily be applicable to the Lehigh Valley and vice versa.

Second, effectively promoting the use of Opportunity Zones requires an organized, collaborative effort. This includes municipal staff, private and nonprofit developers, tax and finance professionals, the real estate industry, and community and economic development organizations. By working together in a strategic and systematic way, each entity’s perspective, resources, and access to markets can be leveraged.

Third, to be successful, you need to have a strong understanding of the available properties in each Opportunity Zone and their challenges. Are there structural issues? Are there infrastructure needs? What would a developer or investor want to know before proceeding? Be ready to answer those questions.

Finally, the marketing of sites should be coordinated and cross-promoted. Marketing sites together, rather than independently, increases exposure and builds momentum. 

These are just a few things that communities can do to effectively take advantage of Opportunity Zones. If you’re seeking guidance and insight to develop and implement an Opportunity Zone strategy, give us a call!