I had the opportunity to join a great group of speakers at the CDFA Maryland Conference in Baltimore this week to discuss a wide range of economic and community development finance topics. While I talked about business incentives, other panelists covered everything from Opportunity Zones to financing for local food systems to green banks and sustainability funds.
The conversation about Opportunity Zones resonated because it touched on many of the topics we address every day. In fact, I think there are several lessons learned about responsible incentive program use that will apply to every state’s Opportunity Zones. Here are a few thoughts.
Articulate goals for your community’s Opportunity Zones. These goals don’t have to be set in stone but can provide guiding principles that will be useful to developers, investors, and community leaders considering potential qualified projects. These principles should be consistent with existing economic development strategies, comprehensive plans, and neighborhood priorities.
Smart incentive use is always connected to a larger economic development strategy. Incentive programs need clear goals tied to strategy in order to be truly effective for the communities they serve. The same will be true for Opportunity Zone-financed projects.
Measure and report on impact. As Rachel Reilly from Enterprise Community Partners explained, there is concern that the focus on helping private investors may avert the focus from the community outcomes that the Opportunity Zones initiative is supposed to be all about. Further, there are not currently any built-in reporting mechanisms.
Many incentive programs also lack procedures to collect quality data on outcomes that can be reported to the communities they are designed to benefit. Unfortunately, the lack of transparency and accountability later undermines the programs themselves as they come to be perceived as handouts to companies or developers rather than investments in the community. Well-managed incentive programs make resources available for program assessment and build in a commitment to transparency. So should Opportunity Zones.
Opportunity zones offer the potential to increase investment in distressed communities, but who will guide the development that will be financed? Who will determine if underserved communities have actually benefited from those investments? The answer is likely state and local leaders. Lessons learned from managing state and local economic development incentives can guide their way.