Google “opportunity zones” and you’ll be greeted by solicitations for investment. Created in the 2017 tax bill and first designated in April 2018, the zones target economically depressed areas, mostly urban, that come with tax breaks for investors.
The zones have come under criticism because of concern that local residents won’t have enough input in development, or that profit will come at the expense of what’s good for the communities.
“That criticism about making a profit at the expense of a local community — I think it’s based on this underlying premise that you cannot have profit and social impact at the same time, and I think that’s fundamentally incorrect,” said Margaret Anadu, the head of Goldman Sachs’ Urban Investment Group, in an interview with Yahoo Finance’s On the Move. Anadu’s experience with social impact investing long pre-dates opportunity zones, said “You can have social impact and profit at the same time.”
She cited local examples including the Harlem neighborhood in New York City, and Newark, NJ, where Goldman has worked with for-profits such as grocery stores which generate returns but have created jobs and deliver fresh food to areas that need it. In the case of Harlem, once city-owned land is now populated by mixed-income residential projects and new restaurants as a result of private capital investment.
“Cities can be revitalized when there’s the right intention and focus with local stakeholders and private capital at the table,” Anadu said.
Baltimore opportunity zone project questioned
Another Goldman-financed opportunity zone project, in Baltimore, has come under fire for being situated in a census tract that’s not low-income — but Anadu, and the developer of the project, say that criticism misses the point.
“That project over time is going to be up to 14 million square feet and create 80,000 jobs,” Anadu said. “Those jobs are going to go to the surrounding low income communities — and not by happenstance — but because that project at the core rests on hundreds of meetings with local stakeholders in those communities.”
Goldman Sach’s Urban Investment Group has invested $8 billion since inception in 2001, including the financing of the nation’s largest public housing energy retrofit in Newark. (Anadu joined the unit in 2005).
She noted that opportunity zones aren’t the exclusive vehicle for investment in and revitalization of underserved communities in the U.S. Other tools, like tax increment financing and tax abatements, can also play a role.
Julie Hyman is the co-anchor of On the Move on Yahoo Finance.
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