Guiding Principals that Could Help NJ and its Cities Alleviate Poverty, Create Jobs and Promote Business
A May 3, 2019 Shelterforce article, “Pushing Opportunity Zones to Fulfill Their Promise” shares guiding principles that could be used to ensure that Opportunity Zone investments are equitable and help prevent displacement.
The Opportunity Zones program was enacted as part of the 2017 federal Tax Cuts and Jobs Act. This federal program is designed to drive long-term capital investments into low-income rural and urban communities. This federal program provides opportunities for private investors to support investments in distressed communities through participation in Qualified Opportunity Funds.
Investors can defer paying federal taxes on capital gains reinvested in Qualified Opportunity Funds that invest in low-income communities, under rules released by the U.S. Department of the Treasury.
Under the federal legislation, eligible Opportunity Zones are low-income census tracts. These low-income census tracts have a poverty rate of 20 percent or a median family income up to 80 percent of the area median. The legislation authorized New Jersey Governor Phil Murphy to designate low-income cents 169 tracts that were nominated on March 20, 2018. The tracts were approved by the U.S. Department of the Treasury on April 9, 2018.
Seventy-five municipalities, in each of New Jersey’s 21 counties, received at least one Opporutnity Zone. Click here for resources from the New Jersey Dept. of Community Affairs (DCA) including an interactive map.
Shelterforce reports that some discussions at the recent Opportunity Zone Investment Summit focused around the need for all Opportunity Zone stakeholders to keep in focus the low-income and people of color populations that the Opportunity Zone program was designed to benefit.
“City leaders, however, must develop policy frameworks to ensure that the investments do what they were created to do: 1) alleviate poverty, 2) create jobs, and 3) support small and local business.”
The guiding principals for Opportunity Zones from Policy Link or city and state officials include:
- Engage community members throughout the development process
- Develop equitable development strategy alongside Opportunity Zone investments
- Cities should develop specific targets and requirements for the number of affordable housing units preserved and created at or below 60 percent AMI, based on local needs
- Enforce equitable development standards through local zoning and permitting authority
- Incentivize good behavior and responsible investments
“While the program could potentially inject much needed capital into communities that have been neglected for decades, cities must take action to make sure that investments that come into vulnerable places present healthy, sustainable, and equitable opportunities for residents.
It is imperative to intentionally work with community and put safeguards in place to guarantee that true transformation takes place for residents of these communities. If city leaders are not careful, this wave of speculation will do more harm than good.”
Click here to learn more about Opportunity Zones from the State of NJ.