Technical Assistance Highlight: Opportunity Zones

On December 20, 2017 the Tax Cuts and Jobs Act created a new community development program aimed at encouraging long-term private capital investment in America’s low-income urban and rural communities. Introduced by Senators Cory Booker (D-NJ) and Tim Scott (R-SC), the federal Opportunity Zones program provides three scalable tax incentives for investors to re-invest their unrealized capital gains into Opportunity Funds dedicated to investing in distressed communities.

SGA has been working with local governments since 2017 to set policies to support OZ investment to live up to its promise as a driver of beneficial capital to underserved communities. LOCUS has delivered technical assistance focused on delivering equitable opportunity zones:

The Case for Reform

While in some cases OZs have been successfully used for community revitalization, the program as it currently stands requires reform to advance equitable development, increase investment in Black, Indigenous, and People of Color (BIPOC)-owned businesses and more directly deliver benefits to low-income communities and communities of color.

The program must be reformed so that the tax incentive can more often only be used to make financially infeasible projects feasible and help those newly feasible projects disproportionately move forward in the most historically underinvested communities. Most importantly, reform must introduce transparency, data tracking, and reporting strategies to measure the impact of OZ investments in underserved communities, considering household income, housing affordability, and job creation. This data should then inform continued refinement of the program to ensure that redevelopment projects benefit local communities through wealth creation and workforce development and do not lead to unmanaged gentrification and housing displacement.

With the creation of the federal Opportunity Zones incentive program, trillions of dollars in new private investment will flow into pre-designated low-income communities around the country. But will this investment benefit the people living in these communities now, or will they be displaced as new interest and development brings increased property values and rents? And what kind of development will result —unsustainable, car-dependent sprawl (the dominant growth paradigm in the United States today) or walkable, mixed-use communities with a variety of housing options for everyone?

This LOCUS report—National Opportunity Zones Ranking Report—identifies which Opportunity Zones are positioned to bring positive social, environmental, and economic returns, by ranking all Opportunity Zones by their smart growth potential and current social equity. Second, the report includes policy recommendations for communities to ensure that development results in more walkable places that are healthy, prosperous, equitable and resilient.

Download the Report

Use the tabs below to explore the report and more about Opportunity Zones.

About Opportunity Zones

In early 2018, the governor of every U.S. territory and state, as well as the mayor of the District of Columbia, nominated 25 percent of the total number of low-income census tracts in their respective jurisdictions as qualified Opportunity Zones; the U.S. Treasury subsequently approved designations of 8,762 Opportunity Zones in all 50 states, the District of Columbia, and five U.S. territories.

At a glance, these designated Opportunity Zones:

  • Account for nearly 12 percent of America’s land mass.
  • Are home to over 30 million Americans, 56 percent of which are demographic minorities.
  • Have a 30 percent poverty rate and house residents earning, on average, 59 percent of AMI (Area Median Income).
  • Employ 73 percent of residents in commercial jobs and 27 percent in industrial ones.



By statute, a qualified Opportunity Fund is a private investment vehicle organized as either a corporation or a partnership that invests or holds at least 90 percent of its assets in a qualified Opportunity Zone business or property. These corporate and partnership investments must be made in cash and cannot be in-kind contributions or promissory notes. The eligible activities and projects that the Fund can support are broad, from commercial and industrial real estate, to housing, infrastructure, and existing or start-up businesses.

Opportunity Funds may support either Opportunity Zone businesses or Opportunity Zone business properties.

Taxpayer’s investments qualify for Opportunity Zone business designation when:

  • A business is acquired by purchase;
  • Most of the tangible property owned or leased by the taxpayer in the execution of their business activity is qualified Opportunity Zone business property;
  • At least 50 percent of their business’ total gross income is derived from its meaningful management and operation;
  • A substantial portion of the business’ intangible property is used in the active conduct of the trade or business;
  • Less than five percent of the average aggregate unadjusted basis of their property is attributable to non-qualified financial property; and
  • The business is not a private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.

Taxpayer’s investments qualify for Opportunity Zone business property designation when:

  • A property was acquired by the qualified Opportunity Fund after 2017;
  • The property began to be used when the qualified Opportunity Fund began operating in the Opportunity Zone;
  • The qualified Opportunity Fund substantially improved the property;
  • During the qualified Opportunity Fund’s holding period, almost all of the use of the property was in a qualified Opportunity Zone.

Proposed Regulations in Opportunity Zones

In October, the IRS released its first round of proposed regulations on Opportunity Zones. This is the first of several proposed federal regulations and guidance documents expected to be released before tax filing begins in 2019.

The proposed regulations address ​key issues like self-certification, qualified Opportunity Zone businesses, and valuation of Opportunity Fund assets. The IRS also released a Revenue Ruling providing clarification on the substantial improvement of existing buildings purchased by Qualified Opportunity Funds.

See LOCUS’ complete summary of the IRS’ proposed Opportunity Zone regulations here.


LOCUS has completed significant work on OZs through its National OZ Academy, Massachusetts OZ Academy, National OZ Marketplace, Equitable Investment Atlas, and National OZ Ranking Report. These resources are designed to help local governments and investors to use the incentive as a vehicle for equitable, walkable, and sustainable development.

National OZ Academy

LOCUS launched the National Opportunity Zones Academy in September 2019 and provided assistance to a cohort of local governments until mid-2021. 

The Academy helped communities across the country use Opportunity Zones to grow into more socially equitable, economically prosperous, and environmentally sustainable places. With educational and tailored technical assistance, communities established sustainable and equitable growth and development strategies for their Opportunity Zones that balanced pent-up demand for walkability with an urgent need for attainable housing, accessible transportation, living wage jobs, open space, and other aspects of smart growth.

The Academy also provided best practices through peer learning amongst participating cities and towns. Five cities participated in the inaugural National Opportunity Zones Academy: Chicago, IL, Norfolk, VA, New Orleans, LA, Greater Miami, FL and the Beaches, and Pittsburgh, PA.

National OZ Ranking Report

The 2018 National Opportunity Zones Ranking Report identifies which Opportunity Zones are positioned to bring positive social, environmental, and economic returns, by ranking all Opportunity Zones by their Smart Growth Potential (SGP) as well as Social Equity + Vulnerability Index score. The report also includes policy recommendations for communities to ensure that development results in more walkable places that are healthy, prosperous, equitable, and resilient.

Download the Report 

Equitable Investment Atlas

To support the Opportunity Zones program in delivering on its promise to benefit distressed communities, LOCUS and Smart Growth America created an interactive mapping tool that would allow users to search all designated Opportunity Zones in the 50 U.S. states and the District of Columbia for information regarding their Smart Growth Potential (SGP) and Social Equity. It was intended to guide communities in designated Opportunity Zones, as well as other stakeholders and investors, to better understand designated zones’ SGP status relative to other locations across the country.

The Equitable Investment Atlas, along with the LOCUS Opportunity Zone Navigator, helped to answer the following questions:

  • What are Opportunity Zones and where are they?
  • What’s in them and who calls them home?
  • What type of investment and revitalization opportunities are available in each Opportunity Zone, based on their various economic, environmental, demographic, housing, and infrastructure characteristics?

SGP was calculated based on four metrics—walkability, job density, housing diversity, and distance to the nearest Top 100 central business district—to generate a final score ranging from 0 to 20 and indicating how “like” a Walkable Urban Place (WalkUP) the zone is. An SGP score of 10 was the minimum score to be designated an SGP Opportunity Zone.

The Atlas also called out the location and characteristics of the nation’s “Bubble Communities,” places whose SGP and Social Equity score between 7 and 11. These communities stood out from other classifications due to the fact that they were most in control of their future, but could experience the fastest rapid change in social equity or economic performance if they were intentional about their investment and policy frameworks.

National OZ Marketplace 

SGA created the National Opportunity Zones Marketplace as a resource for individuals and organizations interested in working closely on equitable development in Opportunity Zones across the country. Through the Marketplace, SGA connected equitable development projects and businesses with a national network of responsible developers, investors, and local leaders to bring their vision of a healthy, prosperous, and livable place to life.

The Marketplace served dual purposes: 1) it promoted smart growth business and real estate opportunities, and 2) allowed anyone to connect with other professionals to share ideas and pursue projects in markets of mutual interest.