Two years ago, when the U.S. Treasury Department outlined how its new “Opportunity Zones” program would work, many experts were skeptical. Touted as a tax incentive designed to spur investment in low-income communities and help remedy the unequal pace of regional economic development, the program looked to some like another tax break for the wealthy; others feared it would just underwrite big projects in gentrifying neighborhoods rather than lift up disinvested ones.
A new study by the Urban Institute offers more evidence that those skeptics had good reason to doubt the policy’s promises. Most investment under the program had gone to large real estate projects instead of the small businesses and community developments that it was supposedly designed to support. Only a small percentage of the more than $10 billion invested as part of the program has benefited existing businesses, the study concluded: “It appears that [Opportunity Zones] are neither on a trajectory to democratize access to capital nor will they, at scale, incentivize mission-oriented projects that align with community goals and priorities.”