Since their inception, Opportunity Zones have been touted as a vehicle to attract investment into talented but underserved communities. Included in the Trump Administration's late 2017 tax legislation, Opportunity Zones encourage investment in economically challenged census tracts. The program accomplishes this by providing favorable tax treatment to capital gains accrued from investments in real estate development or startups headquartered within the Zones.
Opportunity Zones have received wide bipartisan support and have been touted as one of the few actual mechanisms to direct capital to startups headquartered outside of the coasts. On Thursday, February 5, Opportunity Zones across the country were recognized at the "Forbes OZ 20: The Top Opportunity Zone Catalysts" event in Salt Lake City, Utah.
Leading the way for urban communities?
One of America's traditional examples of heavy industry and manufacturing joined Opportunity Zones in Los Angeles, Colorado, and Alabama as one of four Grand Prize winners at the event. The recognition caps off a year of Opportunity Zone-focused economic development in Erie. The effort has made Erie one of the most prominent champions of Opportunity Zones.
The result is a Grand Prize--and plans for more than $60 million in investments in real estate development and local startups in the near future.
"This is a pivotal moment and tremendous accomplishment for Pennsylvania and for non-coastal startup communities across the country," said James Grunke, President & CEO of the Erie Regional Chamber & Growth Partnership. "For decades, Erie and the other communities that were recognized at the event faced challenges and setbacks that were often beyond our control. However, our work has just begun. The coming years will see Opportunity Zones soar to heights many of these communities haven't seen in decades."
Prior to the creation of Opportunity Zones, the pitch for investing in Middle America was almost solely focused on a sense of civic duty. Supporters of OZs believe that the favorable tax treatment allowed by the legislation creates real incentives for investors to place their capital into traditionally distressed communities. Those supporters are also quick to note that the return on investment goes far beyond money.
"Supporters of Opportunity Zones want to see a societal return on their investment," said Grunke. "That passion for meaningful investment is something we hear from investors in our Flagship Opportunity Zone, and it is something my colleagues across the nation also hear. That said, the startups in these communities have real talent and real potential. Now, because of Opportunity Zones, they have the capital."