With few large-scale solutions available to policymakers that can address the enormity of this challenge, it’s easy to despair. However, the advent of the next presidential administration provides the very real possibility of revving up the engine of one of America’s greatest strengths — private capital markets — with Opportunity Zones, one of the most successful economic development programs ever created. By renewing and expanding them, we can unlock significant investment in underserved areas.
Introduced under the first Trump administration by a uniquely bipartisan coalition in Congress and passed in the 2017 Tax Cuts and Jobs Act, Opportunity Zones were originally designed as an experiment to incentivize new streams of private capital investment in distressed areas, pushing overly bureaucratic decision-making from the federal government down to more nimble states, cities and individual investors in exchange for long-term investments that generate new economic activity and housing. Opportunity Zones have now taken root in more than 8,700 communities and have been embraced by governors, mayors and lawmakers from both parties.
Skepticism in the media and philanthropic circles was originally widespread — as it often is with new and unproven legislation with the potential for such dramatic impact. Yet Opportunity Zones had successfully attracted over $100 billion in private investment by 2022, according to the Economic Innovation Group, making it the most consequential economic development program in U.S. history. Now, with a new Trump administration and GOP control in Congress, there is room for even bolder action.
Early on, Arctaris Impact Investors made it the organization’s mission to align profitable Opportunity Zone investments with local development priorities. Arctaris witnessed firsthand examples of the transformative potential of the Opportunity Zone legislation, which has delivered more value than all the other tools in the economic development shed combined. To get it right, you have to have the right mix of community leaders, investors, entrepreneurs and developers with a shared long-term vision of the future.
Take Erie, Pa., for example. In what was once America’s poorest ZIP code, Opportunity Zones have transformed abandoned buildings into a vibrant urban core with apartments, shops and cafes. This renaissance hasn’t just beautified the city; it’s created quality jobs, drawn new taxpaying residents and businesses to move downtown and boosted the local economy.
Similarly, in Detroit, Opportunity Zones have helped convert hundreds of vacant single-family homes into safe, quality rental housing for low-income families under the Housing Choice Vouchers program (formerly known as Section 8). And in Cleveland, an investment in an asphalt paving and repair company is helping to bridge the racial wealth gap via minority-business ownership.
Thinking Bigger
Opportunity Zones were initially established as a 10-year program, with new investments to sunset at the end of 2026, but given the widespread support from governors, mayors and other stakeholders around the country, bipartisan legislation has already been introduced in Congress to extend the program through 2028.
We can and should be thinking much bigger. The Trump administration and Congress have an opportunity to extend, expand and refine the program, ensuring that private investment translates into direct, tangible benefits for America’s lowest-income communities. We believe there’s a pathway to build upon the $100 billion invested in Opportunity Zones so far to create the world’s first $1 trillion economic development program.
If we are really serious about the success of Opportunity Zones, Congress should include them as a permanent part of the tax code, providing the private sector with the clarity and confidence needed to achieve the true scale of impact that’s possible.
We also propose increasing the program’s reach, extending it from the 25 percent of America’s lowest-income communities at its launch to 40 percent. This would enable the regular selection (and re-selection) of thousands of communities every decade, accounting for the local and regional impacts of an ever-changing U.S. economy.
Embracing and expanding Opportunity Zones holds enormous potential for the incoming administration to address the unevenness of the American economy. Just as importantly, in a hyperpartisan era, Opportunity Zones may be one of the rare big policy ideas that everyone can get behind — including Democrats at all levels of government. We urge the incoming administration and the new Congress to make Opportunity Zone expansion and permanence an early legislative priority.
Steven G. Glickman is the co-founder and former CEO of the Economic Innovation Group and a former senior economic adviser in the Obama White House. Jonathan Tower is the founder and CEO of Arctaris Impact Investors, a national impact investment firm focused on revitalizing under-resourced communities.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
