Accelerate innovative and inclusive investment in 500 Opportunity Zones through a community-driven, evidence-based approach to drive equitable economic growth, job creation, and poverty reduction.
Project Locations
Current
Lead Organization
Local Initiatives Support Corporation
New York, New York, United States
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Project Summary
The Tax Cut and Jobs Act (2017) created the largest market-based incentive ever attempted for turning around distressed communities in America. The Treasury Department designated 8,760 low-income areas as Opportunity Zones (OZs) to drive long-term investment into communities and tap into $6.1 trillion of unrealized capital gains. Capital gains taxes are deferred and reduced over time if reinvested into OZs. However, no organized process exists to aggregate, guide, inform and connect this massive investment potential toward community-driven needs in OZs. This project presents an inclusive, community-led economic change model powered by Innovation Challenges seeking poverty-reducing innovations from technology centers, entrepreneurs, educators and social change agents. Proposed solutions are evaluated on technical, economic, and community merit. Winning solutions will be deployed in 500 OZs benefiting 1.8 million residents. An independent evaluator will monitor progress and measure impact on poverty rates, jobs, incomes and quality of life metrics to advance evidence-based learning.
Problem Statement
The Tax Cut and Jobs Act of 2017 provides incentives for taxpayers to reinvest capital gains into newly established Opportunity Zones, with the potential to direct up to $6.1 trillion to historically under-invested neighborhoods. The 31 million residents living in these areas have higher needs across virtually every socio-economic metric. Poverty rates are double the national average and the median family income is only 60% of the area's mediuan income. Challenges in these communities include lack of access to quality job opportunities, workforce skills training, low-cost capital and financial services, affordable housing, and safe places to live, work and play. The OZ incentive today is an unguided vehicle. While the open-ended legislation may encourage innovation and a diversity of investors and projects, the OZ ecosystem is highly disaggregated, which can make ensuring positive community outcomes especially difficult. No framework exists for defining community needs in OZs, matching needs to solutions, delivering technical assistance, aligning resources and measuring outcomes. Mechanisms for qualifying assets and reporting are lacking. Without clarity on OZ structures and requirements, this well-intentioned initiative is likely to fall well short of delivering “revitalization.” A major concern is that the incentive will be an extractive proposition for investors, primarily in real estate, with few projects benefiting individuals residing in the zones and more likely leading to accelerated gentrification and displacement. Without careful planning and coordination, this initiative could generate little meaningful, inclusive economic activity in the communities targeted and benefit mostly investors with capital gains.
Solution Overview
This project will deploy high impact innovations in low-income communities with the goal of neighborhood revitalization and poverty reduction. Our deep expertise ensures feasibility, durability, and scalability of this work, as well as continuous learning. Major solution components are:1. LISC Regional Hubs and OZ Coordinators will convene community roundtables encompassing 500 OZs and define needs in three economic change fundamentals: 1) human (i.e. workforce skills, education, health); 2) infrastructure (water, energy, transportation, broadband, public safety, environmental resilience); and 3) investment (small business, affordable housing, entrepreneurship, real estate). 2. Needs will be aggregated into OZ Innovation Challenges—like X-Prizes. Challenges will be disseminated by Innovation Advocates to seek solutions from technology clusters, universities, community colleges, incubators, accelerators, federal laboratories and entrepreneurs. A web-based platform will facilitate 25 Challenges over five years. 3. Proposed solutions will be ranked on technical, economic, and community merit. An OZ Expert Network will be available to review and optimize solutions. 4. Qualified solutions will be presented to Opportunity Funds for investment and integrated with related government, foundation and non-profit programs. Regional Deployment Specialists will assist in implementation. 5. OZ Reporting Framework, managed by an independent evaluator, will track progress, investments, and outcomes including solutions deployed, start-up businesses, investment leveraged, jobs created, wage rates increased, infrastructure improvements, workforce diversification, real estate value-add, poverty reduced, and quality of life attributes enhanced. 6. Solutions with proven outcomes will be adopted as best practices and transitioned to scale to all OZs.
The Tax Cut and Jobs Act (2017) created the largest market-based incentive ever attempted for turning around distressed communities in America. The Treasury Department designated 8,760 low-income areas as Opportunity Zones (OZs) to drive long-term investment into communities and tap into $6.1 trillion of unrealized capital gains. Capital gains taxes are deferred and reduced over time if reinvested into OZs. However, no organized process exists to aggregate, guide, inform and connect this massive investment potential toward community-driven needs in OZs. This project presents an inclusive, community-led economic change model powered by Innovation Challenges seeking poverty-reducing innovations from technology centers, entrepreneurs, educators and social change agents. Proposed solutions are evaluated on technical, economic, and community merit. Winning solutions will be deployed in 500 OZs benefiting 1.8 million residents. An independent evaluator will monitor progress and measure impact on poverty rates, jobs, incomes and quality of life metrics to advance evidence-based learning.
Problem Statement
The Tax Cut and Jobs Act of 2017 provides incentives for taxpayers to reinvest capital gains into newly established Opportunity Zones, with the potential to direct up to $6.1 trillion to historically under-invested neighborhoods. The 31 million residents living in these areas have higher needs across virtually every socio-economic metric. Poverty rates are double the national average and the median family income is only 60% of the area's mediuan income. Challenges in these communities include lack of access to quality job opportunities, workforce skills training, low-cost capital and financial services, affordable housing, and safe places to live, work and play. The OZ incentive today is an unguided vehicle. While the open-ended legislation may encourage innovation and a diversity of investors and projects, the OZ ecosystem is highly disaggregated, which can make ensuring positive community outcomes especially difficult. No framework exists for defining community needs in OZs, matching needs to solutions, delivering technical assistance, aligning resources and measuring outcomes. Mechanisms for qualifying assets and reporting are lacking. Without clarity on OZ structures and requirements, this well-intentioned initiative is likely to fall well short of delivering “revitalization.” A major concern is that the incentive will be an extractive proposition for investors, primarily in real estate, with few projects benefiting individuals residing in the zones and more likely leading to accelerated gentrification and displacement. Without careful planning and coordination, this initiative could generate little meaningful, inclusive economic activity in the communities targeted and benefit mostly investors with capital gains.
Solution Overview
This project will deploy high impact innovations in low-income communities with the goal of neighborhood revitalization and poverty reduction. Our deep expertise ensures feasibility, durability, and scalability of this work, as well as continuous learning. Major solution components are:1. LISC Regional Hubs and OZ Coordinators will convene community roundtables encompassing 500 OZs and define needs in three economic change fundamentals: 1) human (i.e. workforce skills, education, health); 2) infrastructure (water, energy, transportation, broadband, public safety, environmental resilience); and 3) investment (small business, affordable housing, entrepreneurship, real estate). 2. Needs will be aggregated into OZ Innovation Challenges—like X-Prizes. Challenges will be disseminated by Innovation Advocates to seek solutions from technology clusters, universities, community colleges, incubators, accelerators, federal laboratories and entrepreneurs. A web-based platform will facilitate 25 Challenges over five years. 3. Proposed solutions will be ranked on technical, economic, and community merit. An OZ Expert Network will be available to review and optimize solutions. 4. Qualified solutions will be presented to Opportunity Funds for investment and integrated with related government, foundation and non-profit programs. Regional Deployment Specialists will assist in implementation. 5. OZ Reporting Framework, managed by an independent evaluator, will track progress, investments, and outcomes including solutions deployed, start-up businesses, investment leveraged, jobs created, wage rates increased, infrastructure improvements, workforce diversification, real estate value-add, poverty reduced, and quality of life attributes enhanced. 6. Solutions with proven outcomes will be adopted as best practices and transitioned to scale to all OZs.
Project Funders
-
The Rockefeller Foundation
1989 - 2018
-
Ford Foundation
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