There's A $6 Trillion Potential In Opportunity Zones — But Who Will Benefit?

For The First Time, Opportunity Zone Investors Can Understand The Goals, Values, And Behaviors Of The Residents In Opportunity Zone Communities

 

The Opportunity Zones (OZ) incentive is a new community investment tool established by Congress in the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income urban and rural communities nationwide. We believe the emerging OZ market has real potential to create access to capital and increased economic opportunity in struggling communities, but it could also just become merely a results-blind tax haven, which does not take into account the impacts on or priorities of the community.

What we do now can make a real difference.

To ensure OZs work for those who deserve a hand up in our communities, we need to create market-driven incentives for funds, businesses, and local governments to invest in community-focused initiatives and direct resources in ways that reflect OZ community needs. By doing so, we expect to create greater value for investors who understand these communities more fully, because we believe that aligning investor and community interests will yield better results.

Tools to Empower Communities and Support Investors

Public Democracy decided to act on building this understanding while the OZ market and program was still taking shape by committing significant resources to OZ communities. We are leveraging all three of our product lines and using our unique dataset to provide insight and analysis for LPs, funds, mayors, foundations, economic development officials, and other community and business leaders interested in OZs. These resources will (for the first time) provide investors, government, and communities with uniquely valuable and robust OZ market analysis that is contextualized nationwide and gives insight about local priorities on a census tract by census tract basis.

Our Insight-Connect-Engage tools allow us to create a detailed market and understand maps of designated zones while providing a voice and agency to local residents. The data, insight, and relationships from these tools allow businesses and funds to improve ROI and reduce risk by investing in ways that meet local needs.

Nationwide Insights

In the past six months, we have gained deep insights into what people in OZs nationwide say, not what investors think they want. Specifically, we sent two emails to 27 million people who live in OZs in December 2018 with a survey that asked questions such as, “What is the greatest strength of your neighborhood/local region?” and “What economic development opportunity should your elected officials prioritize?” A remarkable four out of five of those who opened the first email also opened the second (despite it being sent over a holiday break).

As a result of this work, we have begun to develop a robust resource at every level  — not only for investors and fund managers, but also for economic development organizations, city officials, and other local leaders. Because our data is based on values, we understand the importance of a value-oriented investment approach. We want the original spirit of the OZ law to prevail, transforming these communities for the better, so we are being selective about who we work with during the early days of OZ market development. We want investors who care about community priorities and intentionally pursue impact to outperform those who do not.

For less than 1/1000th of the cost of traditional engagement programs, we have developed an approach where leaders can directly communicate with an overwhelming majority of the population in OZ census tracts in the moments when residents are most interested in engaging, map business interests and public space usage in these zones, and better understand community priorities through direct survey response and analysis of resident behavior in the digital and physical space.

Local & National Partnerships

We are refining these tools and insights through a partnership with the City of Birmingham’s BIG program to engage and map community interest as part of Birmingham’s national leadership in this area. Already, our program has enabled BIG to communicate with over half its OZ residents, generated over a thousand survey responses, mapped community behavior and priorities in the digital and physical space, and opened up communication lines that provide government and investors with greater understanding and residents with greater agency.

Public Democracy is also an official partner with the White House, the US Census, and Housing and Urban Development for the Opportunity Project's opportunity zones sprint, which was launched in summer 2019 to ensure tech innovation for social impact. During an Opportunity Project sprint, technology companies, universities, and non-profits build products using open data from federal agencies and other sources. Data and policy experts from federal, state and local government, advocacy organizations, and product specialists participate to share their expertise and provide feedback during the sprint.

HUD Secretary Ben Carson explained the mission of this partnership: "Working together, we collaborate with the private sector to solve some of the most pressing issues facing Americans in economically distressed areas. This project will help ensure that Opportunity Zone stakeholders have access to the best data, innovation, and expertise as investment continues to flow into these underserved areas."  

During the 12-week partnership sprint, Public Democracy joined Citi Ventures, Amazon, Redfin, the Center on Rural Innovation, Solve, Proximate, and MIT's Computer Science and Artificial Intelligence Laboratory as the tech partners supporting this mission.

Scaling Success

As we scale our work, our data will prove extremely useful to the LPs, fund managers, economic development leaders, community members, and others who are approaching the OZ incentive as a completely new way to create jobs, cultivate more resilient business environments, and rebuild overlooked communities across this country.  

In short, we believe OZs will work best when led by communities, driven by data, and connected to an array of investors — ultimately generating strong investment returns by improving economic vitality and quality of life.

If that's a belief you share and you see this incentive in the same way we do, we look forward to collaborating with you.