Major Key Alert: Opportunity Zones Should Matter To Black Communities
By Christopher Pitts
Treasury Secretary Steven Mnuchin predicts $100B in capital investment will come from Opportunity Zones
Black Americans are particularly over-represented in the 8700 designated Opportunity Zones
Opportunity Zones (OZ) represent our country’s newest strategy to improve struggling communities. There are about 8,700 designated areas, which are required to have a poverty rate of at least 20%. Minorities should benefit as the program is designed as a tax benefit, that specifically encourages investors to place funds into low-income neighborhoods. Ultimately, the goal of these OZ tracts is to use the investment to create new housing developments, businesses and jobs for those most in need.
Why This Matters: Championed by two black Senators in Tim Scott (R-South Carolina) and Cory Booker (D-New Jersey), most OZ tracts are in communities that have significant black and brown populations, in states like California, Philadelphia, New York, Los Angeles, and Washington D.C. Nearly a third of the 31.3 million people who live in Opportunity Zones are considered poor, almost double the national poverty rate. Black Americans are particularly over-represented in Opportunity Zones, constituting twice as large a share of the zone population as they do the national population. Treasury Secretary Steven Mnuchin predicts that $100 billion in private capital investment will be invested into Opportunity Zones.
The excitement for this program has caught wind with numerous financial institutions, and investors, both interested in the bottom line and social progress. As a result, luxury hotels are just as likely to be built as affordable housing units in these areas. Therein lies the problem, Derrick Morgan, a former NFL football player for the Tennessee Titans is one investor that hopes to promote social impact in OZ tracts. He created the KNGDM Impact Fund to raise $50 million to invest in real estate and operating businesses in Opportunity Zones.
Situational Awareness: The federal Opportunity Zone program is not without its critics, some see this policy as having a detrimental effect on the communities that the policy should serve. By reducing taxation on the very wealthy, the overarching problem is there's not a mechanism in place that guarantees these investments will actually help the poor. Proponents believe with stricter regulatory practices and incentives for promoting social impact this could be groundbreaking for transforming communities.
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