In 2016, Senators Tim Scott and Cory Booker introduced a federal bipartisan legislative initiative, the Investing in Opportunities Act. Enacted through the Tax Cuts and Jobs Act of 2017, the initiative created a national Opportunity Zones program designed to attract private investment through capital gains tax incentives into federally designated, economically distressed census tracts.
The provision, tucked inside a tax reform package, made $6.1 trillion in capital gains taxes eligible capital for reinvestment in Opportunity Zones.
The Foundation believed investment could be transformational if the community and entrepreneurs were deeply engaged. “Otherwise, we will get what we’ve always gotten in these types of zones – some block-by-block real estate development that benefits a very few,” Larry Jacob, Foundation vice president of public affairs and communications from 2016 to 2023, wrote in 2018.
The Foundation put funding and support toward an effort with Urban Neighborhood Initiative and the Greater Kansas City Chamber of Commerce, with critical collaboration from community members and national and local experts to assemble clear information for an investment prospectus. The city of Kansas City was also a critical partner as they worked to develop a process that pushed beyond transactional to transformative – to use Opportunity Zones to better organize needed investments in these tracts.
“Although the potential tax advantages are very lucrative, and the potential investment is high, transformation only happens if we are clear-eyed and focused on listening to the community, and working alongside the community, to ensure more economic success for those who live and work in the zones,” Jacob said.
Funding supported the 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,” Jacob said in 2019. “Yet, the conversation those zones are sparking, and the innovation those conversations yield, may just help us make more progress than we historically have.”