In a month, Treasury will release the final opportunity zones. These designations will last a decade, meaning that decisions by state and local leaders will determine the fate of the federal program. That’s key in differentiating opportunity zones from the New Markets Tax Credit: Local governments get say. Only one-quarter of eligible tracts will be open to opportunity funds. Local stakeholders’ decisions in choosing between qualifying tracts will be especially consequential.“There’s a lot of variation in how much capital the qualifying census tracts are accessing,” says Theodos, who led a project at the Urban Institute to show where opportunity zones could do the most good (and where they might not). “That means that some places need the incentive more than others, and that ranges of course across place as well. The governors have a lot to choose from, and their choice matters quite a bit.”The program’s authors say that opportunity zones can offset a tilted economy. At a time when inequality is practically a new national anthem, access to capital is especially skewed, geographically. Whole swaths of the nation have seen a decline in large banks lending to small businesses or opening new branches. Smaller and regional banks have struggled to keep up with the majors (or they’ve been absorbed by them). In some places, banking disparities are the result of racial discrimination, while other areas are just being left behind.
At the growth end of the spectrum, venture capital is highly concentrated in a handful of metro areas, and so is high-wage job growth. Sacramento, Philadelphia, Buffalo, and Hartford have lost high-wage jobs to Austin, Nashville, and Denver. Growth in places hit hardest by the Great Recession—in cities such as St. Louis, New Orleans, Rochester, Columbus, and beyond—is mostly confined to low-wage sectors.
“Given the trends we’re seeing in the economy, this is the right time and a necessary time to be reevaluating the policy toolkit that we use to address economic disparity at the community level and the regional level,” says John Lettieri, cofounder and president of the Economic Innovation Group, the think tank that helped to write the legislation. “The toolkit we use now does not equip us very well to deal with the trends that we’re seeing, which don’t look anything like the trends we saw in the 1990s or 2000s.”