 |
| Dark blue census tracts in Johnson City, Tennessee represent areas of economic distress that aren't Opportunity Zones. That doesn't lessen the need of residents there, nor ACFCU and partners' commitment. |
“Boondocks
and boondoggles,” indeed. This article in the latest issue of The Economist takes a closer look at
“Opportunity Zones.” Created through the 2017 Tax Cuts and Jobs Act,
Opportunity Zones (OZ) offer favorable tax status on unrealized capital gains
if those gains are invested in OZ-designated census tracts.
Like
“Enterprise Zones” and other well-meaning concepts that preceded them, OZs
purportedly are designed to draw investment capital into economically
struggling areas. That’s one reason Appalachian Community Federal Credit Union (ACFCU) helped drive the effort to establish
OZs in appropriate census tracts within Northeast Tennessee’s eight counties.
As a
mission-driven financial institution, ACFCU sees firsthand the overwhelming
need for action and not just words when it comes to alleviating poor economic
conditions in overlooked, underserved areas. “Opportunity” aptly describes an
actual concrete thing that is sorely needed in many neighborhoods and census
tracts in Northeast Tennessee and ACFCU’s other service areas of Southwest
Virginia and Southeast Kentucky.
 |
| ACFCU provides opportunity here in rural Kentucky, where Opportunity Zones are in light blue and regentrification is just a really long word. |
Yet
as we have seen this fledgling concept evolve toward reality, some of us at
ACFCU have developed the same concerns expressed in the Economist article.
Plenty of OZ census tracts are experiencing pockets of regentrification. If
capital linked to this program primarily flows into those areas, that concern
will prove to have been justified as, per the Economist, “investors will pocket
tax rewards for investments that they would have made anyway.”
As
ACFCU’s Regional Community Development Coordinator, Adam Dickson, aptly noted,
“the more I get into understanding OZs, the more concerned I am that the
initial intent of the program is profit with limited regard to the interests of
low-income communities.” Dickson also insightfully points out that, “OZs
provide a prime opportunity to promote social enterprise, cooperatives, etc.”
Time
will tell whether the areas most in need of opportunity benefit. The Economist
noted that “place-based policies” are theoretically attractive, because many poorer
parts of America find it increasingly difficult to catch up with wealthier
ones. “In theory, geographically targeted tax cuts or subsidies could encourage
new clusters of economic activity to form, thereby lifting depressed places,”
the article states.
 |
| Will capital flow to Opportunity Zones like this tract in Kingsport, where regentrification isn't likely in the cards? The need is obvious. |
The
Tax Policy Center’s Brett Theodos, Steven Rosenthal and Brady Meixell expressed
similar concerns in a blog post published Oct. 23 after the feds released their first set of
proposed OZ regulations.
ACFCU
and its many partners will continue bringing opportunity to economically
challenged areas that need it most and are unlikely to attract investment. Some
of those areas are in Opportunity Zones, and ACFCU continues to lead efforts to
bring OZ-eligible capital to such neighborhoods.
But
we won’t wait to see how the new program turns out. We’ll try to steer a
potentially impactful program in the right direction in our communities, including at an upcoming ACFCU-sponsored Opportunity Zone symposium, but we
won’t pin our hopes on something that could, indeed, turn out to be a
boondoggle. So I’ll take a slightly different tack than the Economist, which writes
that when it comes to OZs, “for the moment, scepticism is in order.” Here in
the mountains of Central Appalachia, where declines in coal and manufacturing
make economic opportunity as badly needed as it’s been in a long time, I share
my colleague Adam Dickson’s concern. But like Adam, I’ll choose “guarded
optimism” over skepticism. After all, as folks like to say around here, “you
can catch more flies with honey than you can with vinegar.”
No comments:
Post a Comment