On September 3, 2019, the Economic Development Administration (EDA) of the U.S. Department of Commerce published a Request for Information (RFI) notice in the Federal Register.
Via this RFI, they are soliciting public input on how the federal government can better align its various economic development programs and resources so as to encourage and facilitate beneficial investments in urban and economically distressed communities, including in qualified Opportunity Zones.
Opportunity Zones were created by the Tax Cuts and Jobs Act of 2017 to spur economic development by giving tax incentives to investors in economically-distressed communities nationwide.
While the program has potential, it has been criticized by many as being too focused on benefiting the wealthy, with few guidelines or controls focused on maximizing actual benefits to communities. It was also launched in a very raw, undefined state, leaving most potential investors in a state of confusion as to how to proceed.
While the Opportunity Zone tax incentive could become a powerful new tool for bringing much-needed private capital to under-served communities, such economically distressed communities cannot rely on private capital and tax incentives alone to create the conditions for long-term sustainable economic growth.
As documented in Storm Cunningham‘s third book, RECONOMICS: The Path to Resilient Prosperity—coming in January of 2020—(preview available here), few of these target communities have any real process for turning investment into revitalization. Among other things, they are also in need of public sector investment and technical assistance to ensure they develop the foundations and investment conditions necessary to support a thriving private sector.
However, too often communities that attempt to access these catalytic federal resources encounter a labyrinth of distinct rules and regulations, multiple application and review processes, and a myriad of burdensome and duplicative administrative requirements.
The Department of Commerce requests information from and the perspectives of stakeholders who support economic development in Opportunity Zones, including State, local and tribal officials, institutions of higher education, nonprofits, philanthropic organizations and other impact investors, economic development and other experts in relevant disciplines, and affected stakeholders in the private sector.
EDA is encouraging our economic development partners to think of Opportunity Zone investment as a new arrow in their quiver to not only enhance ROI for business interests, but also to encourage the public/private partnerships needed to drive private investment to distressed areas.
Written comments on this RFI must be submitted by October 18, 2019.
Image courtesy of the Mississippi Development Authority.