Birmingham, Alabama, Opportunity Zones

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Walking the talk in Opportunity Zones
Vice President, Public Affairs Kauffman Foundation

Walking the talk in Opportunity Zones

Cities with an eye on progress see that Opportunity Zones must put community enhancing approaches on an equal plane with investor benefits.

To make the biggest impact out of Opportunity Zones, we must partner with communities in those zones to spur economic development and job creation.

With the recently released U.S. Treasury regulations, we’re seeing a lot more articles focused on what Opportunity Zones mean for investors and returns on investment. One recent article on Treasury guidance celebrates the clarity of the regulations and refers to the program as the "tax-sheltering Opportunity Zones."

That mindset is more than unfortunate.

Opportunity Zones have the potential to have a positive impact on "economically distressed" communities across the country, affecting more than 30 million people. This program should and must put community enhancing approaches on an equal plane with investor benefits and returns.

Some local communities certainly are doing that.

Opportunity in Birmingham

Walking through Birmingham, Alabama, a couple of weeks ago was like walking through Kansas City roughly a decade ago.

Birmingham has a dynamic mayor who is focused on doing everything he can to build up a city he clearly loves. There are signs of life in its neighborhoods and downtown that didn’t exist 18 months ago.

And, they’re taking bold moves with Opportunity Zones. You can get a sense of that here.

I took a few trips down to Birmingham a couple of decades ago. One of my best friends from college is from there. It’s where I was introduced to really good BBQ (and, yes, KC friends, I still really like it).

At that time, city leaders were trying desperately to keep the city from dying. They made progress on some fronts, most notably with the University of Alabama – Birmingham and its medical school ris. But, the progress was limited to the school, earning UA-B the nickname "The University that Ate Birmingham."

Birmingham goes BIG

So, this administration is trying to do it differently. Its stated focus is on neighborhood revitalization and using the Opportunity Zones to launch Birmingham's Inclusive Growth (BIG) Partnership.

Mayor Randall Woodfin and his staff are making progress. Things are happening. In fact, they recently announced the renovation of the historic American Life building using an approach through the Opportunity Zones that was both investor-friendly and community enhancing. This workforce housing project will meet a double bottom line. (Workforce housing is affordable housing in reasonable proximity to work).

That’s needed in Birmingham and all our cities. Despite the progress, take a bus ride another half mile out of downtown Birmingham and it's a very different story. Talk to the Lyft driver about the growth in downtown and hear about how he’s struggling with crime in his neighborhood, having to travel to find a decent grocery story, and how the redevelopment downtown has him worried about higher rent. And, of course, they are still trying to come to grips with a racial history that has made the city infamous the world over.


Potential for progress

Throughout my career, I’ve had the privilege to work in cities around the country. Every city has its own unique history and people. But, there’s a lot that is now common – economic inequality is entrenched, a history of legal and de facto racial segregation, affordable and workforce housing that is scattered and insufficient, basic infrastructure that is crumbling, and crime that drives away folks that have a choice to move and keeps others from moving in.

The other things that are common – a more direct focus on racial healing, emerging solutions for infrastructure, including more savings through tech and new approaches, ideas to address the housing situation with more focus on moving away from concentrated poverty to mixed income, and more mayors are having open conversations about the history of cities that lead to the racial segregation and systemic issues we’re dealing with today. Although there’s not a magic elixir for crime reduction, a cohesive focus on deterrence, education and housing policies, community organization collaboration, and behavior intervention programs seem to have traction.

Kansas City Opportunity Zones

A map of the Opportunity Zones in Kansas City, Missouri. Learn more >

Here on the ground in Kansas City, a broad-based coalition ranging from our Chamber of Commerce, to our City, to community based organizations have rallied around a unifying vision: to stimulate economic activity and jobs in areas of disinvestment in Kansas City in ways that build wealth and increase economic mobility for residents currently living in the zones.

That focus in Kansas City means working together as an inclusive community group to set out specific goals, including:

  • Local business growth: an entrepreneur-centered approach to economic development.
  • Workforce development: building wealth for residents through quality jobs and equity ownership.
  • The alignment of public, private and civic capital: provide one stop shop process for inclusive projects.
  • Strengthening the system of community development: new and innovative financial tools for affordable housing and neighborhood economy, capital pools, and structures.

The Opportunity Zones alone won’t fix our most distressed census tracts. Yet, the conversation those zones are sparking, and the innovation those conversations yield, may just help us make more progress than we historically have. Cities have replaced states as the laboratories of democracy. Opportunity Zones are just the latest experiment. There’s real progress happening. It won’t be felt by everyone right away.

Progress certainly won’t take place if the zones are reduced to a tax shelter. The focus on community at the table, being part of the discussion, and seeing direct benefit is the purpose of these zones – to spur economic development and job creation in the zones.

Of course, there will always be criticism, but I left Birmingham – as I have in other cities I’ve visited to learn – with renewed hope.

Kansas City is hosting a national and regional investor summit on June 26-27. Learn more about Kansas City’s approach to meet its vision >

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