It’s the Final Countdown: First Opportunity Zones Deadline Just Days Away
By March 21, Governors (State CEOs) must act on Opportunity Zones nominations, or risk rendering their state ineligible to receive private investment incented through the Opportunity Zones tax benefit over the next decade. To avoid this, Governors must either:
- Submit a list of census tracts it is nominating for Opportunity Zone designation to Treasury, or
- File for a 30-day extension to do so.
What We’ve Heard from States
Many states have indicated that they have or will file for the 30-day extension, but plan to be on track to submit final nominations by March 21. Treasury working directly with Governors’ offices to share guidance on census tract eligibility and the process for submission. While we expect Zones will be finalized between April 20 and May 21 (June 18 at the latest), it is unclear how, when, and if the official list of Zones will be made available to the public.
How States Are Engaging the Public in Zone Selection
There’s no doubt, selecting which census tracts will be eligible to receive Opportunity Zones investments over the next decade is inherently personal. Capital moving into communities has the potential to change the face of neighborhoods and impact residents’ livelihood for better or for worse. For this reason, it’s critical that states are engaging the public in Zone selection – analyzing maps is a necessary first step, but ground truthing assumptions by soliciting feedback is invaluable.
The main tactics we have seen states pursue:
Closed Process - We’ve gained some insight as to their methodology of states which chose not to seek public input. In those state we learned that that some chose to allocate Zones proportionally amongst defined regions using quantitative measures – such as poverty rates or unemployment rates - to rank census tracts for selection.
Hybrid Process - Some states have created predefined scenarios as a first step, and have then asked for public input. Washington, D.C. identified a core group of tracts, then utilized a web survey to solicit public feedback on three thematic options for the remaining tracts. California took an algorithmic approach like that defined above, and then requested feedback on these selections during an abbreviated input period.
Open Process - Colorado, Virginia, Mississippi, and many others have actively worked with residents, mayors, economic development councils, local leaders, Tribal Communities, and many other important stakeholders to solicit input and make recommendations for Governors’ consideration.
Our Recommendations to States
Over the past weeks, we’ve seen different strategies bubbling up, which we think are worth considering.
- Request the 30-day extension - There is no downside to doing so, and it can act as an insurance policy for any last-minute considerations. For example, Treasury has issued two updates (February 27, March 5) on which census tracts could be nominated, effecting over 3,500 tracts nationwide. States that submitted nominations prior to those updates may not be able request adjustments based on new information.
- Ground truth assumptions – Many states have used our Opportunity360 state mapping tool to evaluate census tracts; it’s been accessed by users in all 50 states, and more than 14,000 in the first three weeks since its launch. Mapping is an important first step, but leveraging first-hand knowledge of community dynamics and local economic development initiatives is critical in understanding where Opportunity Zones investments will be most effective.
- Create a priority framework for decision making – Developing and articulating a framework for ranking census tracts or investment goals will provide guidance to those submitting recommendations, and will help Governors balance competing priorities as they make Zone selections as well as substantiate those decisions. Take a look at the priorities outlined by Minnesota and Michigan below.
We are just two days away from the first deadline associated with Opportunity Zones, and so far, 30 states and the District of Columbia have information available to the public. The Economic Innovation Group has provided a list of state websites and announcements:
Know of other states with Opportunity Zones websites? Have information about what’s going on in your state? Contact Rachel Reilly.