Opportunity Zones jumped into the world of economic development with much fanfare last year seen as the key to addressing substantial income inequality in both urban and rural communities. There can be no doubt that many Opportunity Zone Funds have been formed but many more communities, developers and companies are still seeking investment. Hundreds if not thousands of Opportunity Zone Funds have been formed and directories can be found at https://www.ncsha.org/wp-content/uploads/NCSHA-Opportuntity-Zones-Fund-Directory-7.17.19.pdf and other sites. Newmark Knight Frank reports, an estimated $20+ billion is currently being raised by funds nationally, for the purpose of investing in Opportunity Zone product. However, what is the best tactic for a community, developer or company to attract this growing base of capital designed for Opportunity Zone investment—it is to prepare the Opportunity Zone site for development through a proactive infrastructure investment strategy.
The 8700 Opportunity Zones are by their nature struggling sites. They are Opportunity Zones for a reason. Local, state and federal government programs are being designed to support the growth of Opportunity Zones by developing the infrastructure needed at the site.
The federal government through the Commerce Department’s Economic Development Administration (EDA) recently announced that are adding Opportunity Zones as an Investment Priority. This new Investment Priority will significantly increase the number of catalytic Opportunity Zone-related projects that EDA can fund to spur greater public investment in these areas. EDA’s investment priorities guide the agency’s investment portfolio to ensure its investments make the strongest impact on sustainable regional economic growth and diversification. Through its competitive grant process, EDA evaluates all project applications to determine the extent to which they: align with EDA’s investment priorities; effectively address the creation and/or retention of high-quality jobs; document that the applicant can or will leverage other resources, both public and private; demonstrate the applicant’s capacity to commence the proposed project promptly, to use funds quickly and effectively; and provide a clear scope of work that includes a description of specific, measureable project outputs.
EDA has previously taken steps in its 2018 Notice of Funding Opportunity for Public Works and Economic Adjustment Assistance Programs to make eligible entities within qualified Opportunity Zones generally eligible for EDA funds. To date, EDA has invested close to $30 million in 40 projects in designated Opportunity Zones to help communities and regions across the country build the capacity for economic development.
The state of Indiana designated six sites will receive technical assistance and capacity-building support as part of the Rural Opportunity Zone Initiative. The purpose of this initiative is to build the capacity of Opportunity Zones in rural Indiana to attract private, public and/or philanthropic sector investments that support locally-driven priorities. This program is funded by a Rural Business Enterprise Grant from the Indiana U.S. Department of Agriculture Rural Development. The selected county sites are as follows: Crawford; Daviess; DeKalb; Knox; Newton; and Switzerland. The Indiana Office of Community and Rural Affairs completed an initial assessment of the zones and determined forty-six sites are rural opportunity zones. Each Indiana site may receive support to include:
- Guidance in establishing a task force;
- Proprietary data products that profile types of properties in the area;
- Assessment of key economic drivers;
- Profile of existing businesses and companies in the zone and surrounding areas;
- Transportation infrastructure and connectivity;
- Discovering the area’s community/economic development assets;
- Suitability analysis;
- Mapping of broadband services in the zone; and more.
The goal of the Indiana Opportunity Zone initiative is to encourage long-term private capital investment in low-income urban and rural communities. Whether through local, state or federal funding or private capital, preparing an Opportunity Zone site for development through proper site planning is the key to its economic success.