Opportunity Zones can attract affordable housing
Partisanship on Capitol Hill is at an all-time high, but if there’s one thing in the Trump administration’s 2017 Tax Cuts and Jobs Act that both sides of the aisle can get behind, it’s the creation of Opportunity Zones. This part of the TCJA didn’t capture much media attention — most people were focusing on the new tax brackets — but OZs nonetheless create ample room for wealth creation.
Opportunity Zones are economically distressed census tracts that aim to attract private investment by employing a mixture of federal, state, and/or local tax incentives and deferrals on investments made with eligible capital gains. Conceptually, OZs facilitate upward mobility, something both Democrats and Republicans support.
A careful look at sociodemographic trends during the recovery years of the Great Recession reveals that lower performing ZIP codes gradually lost their populations to more prosperous ones, while higher-paying jobs began concentrating in large metropolitan areas.
An analysis by the D.C.-based Economic Innovation Group found that the topperforming 20% of prosperous ZIP codes added more businesses during the recovery years than the remaining 80% of ZIP codes, combined. From 2012 to 2016 alone, economically distressed ZIP codes lost 13,300 businesses, while prosperous ones gained over 180,000 new businesses.
Opportunity Zones were created to address those issues of population loss and declining economic dynamism. To tackle those trends in Florida, Gov. DeSantis apportioned 427 zones across the state, 12 of which are in Orlando proper and several more in the surrounding areas.
By driving private investment towards the oft-neglected parts of our state’s cities and rural areas, fresh revenue streams can breathe new life into the surrounding economies and reinvigorate local tax bases.
According to a report by the Brookings Institution on the change in income among black populations, median household income in the Orlando metropolitan area’s black communities rose by almost 22% since 2013.
The Opportunity Zone designation can further drive the development of anchor institutions such as schools, hospitals, and public transportation in these communities; it is these anchor institutions that make up the support system for a qualified and stable workforce, and many OZs nationwide lack sufficient access to these fundamental public goods and services.
Orlando’s own Rep. Anna Eskamani is looking to leverage OZs to alleviate the market pressures facing renters. Her call for adding tiny homes, modular homes, and accessory dwelling units to the Florida Building Code would offer versatile housing options for Orlando residents.
Eskamani and others have raised concerns with the governor’s selection of OZs, and have pointed to cases of OZ designation malpractice. It’s unclear how valuable the tax break could be, and the public may never know given that the 2017 tax legislation as passed included no public reporting requirements.
Eskamani’s proposal comes at a time when more people in Florida and across the nation are laying out solutions to the affordable housing crisis.
In the coming weeks, new residents will begin moving into the first 120 mixedincome units of Parramore Oaks, an Opportunity Zone project stemming from a partnership between the City of Orlando and InVictus Development. While the Parramore Oaks development brings a variety of housing options, Rep. Eskamani believes that the city must do the most it can to protect historical and cultural components of the neighborhood.
With the right investments, made with the intent of the legislation, Opportunity Zones could simultaneously propel Orlando’s growth and improve our communities up and down the I-4 corridor.