Housing Redevelopment #2: Improve market viability in low to moderate-income communities through procurement and direct investment to support Opportunity Zone eligible communities and businesses
Return to 2019 Chicago Housing Agenda
The Tax Cut and Jobs Act is, is not an ideal example of public policy but it’s an opportunity that will be taken advantage and will likely lead to changes in local investing. It lacks the governmental oversight and skews to the benefit of investors. While it is not guaranteed to create a socially equitable benefit to revitalizing communities, the program will be a fixture of the federal tax code for years to come and has no budgetary limitations like many other federal programs. It represents a unique opportunity for local public policy to support and re-direct Opportunity Zone investments in a manner that will have such an impact (Tax Policy Center).
Opportunity Zone funds can make equity investments in businesses, real estate and business assets. By pairing additional incentive for Opportunity Zone investments with community economic development components missing from the federal legislation, Chicago can increase the likelihood that the local impacts are most consistent with local priorities (Opportunity Finance Network fact sheet).
Proposal #1: Create explicit contracting incentives for firms beyond those that exist for Section 3 Businesses, MWBEs and those employing substantively diverse workforces to increase support for those businesses that also meet the criteria for Opportunity Zone investments.
Proposal #2: Create a Qualified Opportunity Zone fund that will attract Opportunity Zone investments (a vehicle for investors to deposit capital gains to defer payment for a period of time and reduce the tax owed) and combine the benefits of Community Reinvestment Act-minded financial institutions. By matching these private funds with a 1:1 ratio, the fund can re-position properties in Opportunity Zones at a lower cost and rely on the completion of Section 3 Job Opportunity Contractors and MWBEs.
