I figured out why Opportunity Zones won't amount to much: no planning
I have been struggling with writing about "Opportunity Zones" in the almost two years since the tax credit program was included in the Trump-Ryan-McConnell tax cuts for the wealthy.
There are plenty of articles about the program and all the great results it will have, and real estate funds are being created, etc. And some suggesting negatives ("The Trump administration said these tax breaks would help distressed communities. Who's actually being helped?," Washington Post).
But based on Empowerment Zones and EB-5 especially, my expectations are pretty minimal.
This image is from the presentation "The 20 Ingredients of an Outstanding Destination" by Roger Brooks International.
The biggest reason is that the interest is being driven by the investors and real estate funds and consultants, not the communities.
The program was designed to help investors first, communities second.
A current discussion about this on the pro-urb e-list helped me zero in on why I expect the program to end up not accomplishing all that much.
There aren't requirements for community revitalization plans to direct Opportunity Zone investment.
Besides being involved in the creation of a revitalization plan for the H Street NE neighborhood in 2002-2003, and the development of two Main Street commercial district revitalization programs in DC, reading the HHyattsville Community Legacy Revitalization Plan around that time, which had an appendix of action items, which was then pretty new for planning documents created in the DC area, really helped me learn about the importance of planning. (The Hyattsville Plan was updated in 2010.)
Here's what I wrote on the listserv:
I haven't been able to get a planning job in DC because of my odd resume, lack of a planning degree (I will finally take the AICP exam) and mostly because it seems like planning agencies have been reshaped to "always be positive."
By contrast I got my start in revitalization planning, and in revitalization you have to be honest about weaknesses, and creative and innovative because likely you are seriously resource constrained. Revitalization planning is about directness ("one of my core competencies") and elected and appointed officials in my experience don't like that too much, especially when directness is out of sorts with "received wisdom."
Anyway, speaking of the importance of planning, another line I have is that an RFP isn't a plan.
Rather than expect respondents to plan for you, especially when it comes to public good outcomes, it's better to set priorities with a master plan (at whatever scale) and then issue the RFP. (DC too frequently releases RFPs without plans already in place.)
So to better direct funds and to achieve positive outcomes for the community, rather than just to avoid taxes on capital gains, the Opportunity Zone program should require revitalization plans be set for each zone.
Granted, given my concerns about the problems in planning and how scopes too often are constrained to eliminate creativity, I'm not saying having plans in place would necessarily fix the problems with the Opportunity Zone program, but it would likely make a difference.
FWIW, a few years ago I was commissioned to write a series of articles about culture based revitalization in 7 cities in Europe, and based on what I learned about revitalization initiatives in Bilbao, Dublin, and Liverpool, I came up with six elements of " best practice revitalization:
I have appended those points at the end of the entry. Since those c. 2013-2014 writings, I have extended this framework into what I now call "transformational projects action planning."
-- "(Big Hairy) Projects Action Plan(s) as an element of Comprehensive/Master Plans," 2017
-- "Why can't the "Bilbao Effect" be reproduced? | Bilbao as an example of Transformational Projects Action Planning," 2017
-- "Downtown Edmonton cultural facilities development as an example of "Transformational Projects Action Planning" 2018
-- "Minneapolis Super Bowl: Urban Revitalization and Transformational Projects Action Planning,"
-- "What would be a "Transformational Projects Action Plan" for DC's cultural ecosystem," 2019
The basic idea is that a master plan should include a set of big, hairy audacious projects (like "big hairy audacious goals") to spur revitalization and community improvement in a substantive way.
TPAPs should be implemented at multiple scales:
(1) city/county wide as part of a master plan;
(2) within functional elements of a master plan such as transportation, housing, or economic development; and
(3) within a specific project (e.g., how do we make this particular library or transit station or park or neighborhood "great"?).
The six components of a successful broad ranging revitalization program. In writing about the various efforts, I drew the conclusion that successful revitalization programs, especially in those cities that were working to overturn serious disadvantages, were comprised of these elements:
- A commitment to the development and production of a broad, comprehensive, visionary, and detailed revitalization plan/s (Bilbao, Hamburg, Liverpool);
- the creation of innovative and successful implementation organizations, with representatives from the public sector and private firms, to carry out the program. Typically, the organizations have some distance from the local government so that the plan and program aren't subject to the vicissitudes of changing political administrations, parties and representatives (Bilbao, Hamburg, Liverpool, Helsinki);
- strong accountability mechanisms that ensure that the critical distance provided by semi-independent implementation organizations isn't taken advantage of in terms of deleterious actions (for example Dublin's Temple Bar Cultural Trust was amazingly successful but over time became somewhat disconnected from local government and spent money somewhat injudiciously, even though they generated their own revenues--this came to a head during the economic downturn and the organization was widely criticized; in response the City Council decided to fold the TBCT and incorporate it into the city government structure, which may have negative ramifications for continued program effectiveness as its revenues get siphoned off and political priorities of elected officials shift elsewhere);
- funding to realize the plan, usually a combination of local, regional, state, and national sources, and in Europe, "structural adjustment" and other programmatic funding from the European Regional Development Fund and related programs is also available (Hamburg, as a city-state, has extra-normal access to funds beyond what may normally be available to the average city);
- integrated branding and marketing programs to support the realization of the plan (Hamburg, Vienna, Liverpool, Bilbao, Dublin);
- flexibility and a willingness to take advantage of serendipitous events and opportunities and integrate new projects into the overall planning and implementation framework (examples include Bilbao's "acquisition" of a branch of the Guggenheim Museum and the creation of a light rail system to complement its new subway system, Liverpool City Council's agreement with a developer to create the Liverpool One mixed use retail, office, and residential development in parallel to the regeneration plan and the hosting of the Capital of Culture program in 2008, and how multifaceted arts centers were developed in otherwise vacated properties rented out cheaply by their owners in Dublin, Helsinki, and Marseille).