By Jose Corona
Oakland is an amazing place. A place with a rich diversity of people, cultures and ethnicities. A place with a long history of activism and constant innovation.
At the same time, our beautiful city has also suffered from a long history of disinvestment.
Now, a new tax incentive could help guide much needed dollars back to disinvested communities like Oakland. The Tax Cuts and Jobs Act of 2017 provides for the creation of “Opportunity Zones” — specially created geographic districts that allow investors to receive substantial tax breaks in exchange for equity capital. Investors must participate through newly created “Opportunity Funds” that purchase and improve real estate or businesses. This could provide a massive boost to low-income communities, pouring in billions of dollars of investment that results in more affordable housing for residents, business expansion and support for entrepreneurs to start new firms, creating opportunities that move our low-income residents to become higher income families.
Or as critics contend, Opportunity Zones could just be more of the same: the latest in a long line of economic development incentives failing to deliver on its intention, leading to an over concentration of luxury development, displacement and all the undesirable effects of geographic disparity that Opportunity Zones propose to solve.
These concerns are, of course, valid. But instead of focusing on what we fear or don’t want, this is an opportunity for us to envision on what we do want – economic development that leads to community development and human development.
For Opportunity Zones to succeed, we must focus on how we implement Opportunity Funds. If structured appropriately, by leveraging potential local community development finance tools and attracting mission-aligned investors, Oakland and similar communities can reap benefits by financing public infrastructure such as affordable housing, non-profit, artist and locally-owned small business clusters and other community benefits. PolicyLink published a guide doing just this, with a set of recommendations for Opportunity Zones focused on equitable economic development.
Opportunity Zones can bring much needed investment to our neighborhood communities, especially in East and West Oakland. After all, we don’t have a lack of capital in the U.S. or in Oakland; we have a priority problem. At a time when inequality is the issue of our time, access to capital remains geographically skewed. Nationwide, many low-income communities have watched investment slip away and Oakland is no different.
In Oakland, implementing Opportunity Zones will be more art than science. It will require foresight, commitment and leadership to balance the type of investment capital from whom and for what in ways that recognize and commit to the values Oakland holds dear. We must promote equity, inclusion and the stewardship of our rich social fabric made up of long-standing small businesses, artists, non-profits and, most importantly, our diverse residents.
At the same time, we must allow innovation among entrepreneurs who enhance these values. Oakland has always been a welcoming community, one that values openness over walls, so that new-comers and enterprises alike are inspired to contribute, build and invest in its capacity. As a city, we must prioritize supporting Opportunity Funds that seek to invest in projects that lift up and enhance Oakland’s values.
Let’s imagine that we can attract the right investors committed to investing in our cultural values with projects that enhance them. And let’s imagine that we can leverage other infrastructure financing tools, such as overlaid Enhanced Infrastructure Financing Districts or other value-capturing mechanisms; or even imagine variations of the former Redevelopment Agencies. Then, we can envision opportunities like the development of the Oakland Coliseum City; opportunities that demonstrate to communities around the country grappling with the same concerns that we have a model for Opportunity Zones done right — a model that yielded positive community benefits to our local residents.
The test of Opportunity Zones in Oakland will be two-fold: first, whether the City prioritizes the right projects to bring in Opportunity Zone financing; and second, whether our state and federal partners set the proper guidelines for community transparency and accountability and to support with not only guidelines but technical assistance. Until the Department of Treasury issues the final Opportunity Zone rulings that proves otherwise, we must continue to imagine and plan on realizing our vision of a thriving Oakland for all.
I believe in our City leadership and I believe in our community. Working together, I am confident that we will ensure ALL of Oakland benefits from this new tool made available for us.
(Jose Corona serves as the Director of Equity and Strategic Partnerships for the Office of Oakland Mayor Libby Schaaf.)