The Tax Cuts and Jobs Act of 2017 included a new powerful economic development tax  incentive – Opportunity Zones – designed to encourage long-term private capital investment in America’s low-income communities. With over 8,700 Opportunity Zones – spanning the entire continental US, the District of Columbia and US territories – now eligible to tap into over $6 trillion dollars of unrealized capital gains to support redevelopment projects and new businesses, there’s enormous excitement amongst investors and local policymakers. Equally, there’s enormous concern among local policymakers and community groups who are afraid that this tax incentive will crowdsource unmanaged gentrification and displacement or accelerate climate change.

What is true is that not all Opportunity Zones are created equally for new business or real estate investments. The majority of the the designated Opportunity Zones could be described as low density, drivable sub-urban areas with significantly higher housing and transportation costs, higher greenhouse emissions and lower quality of life. Despite this current reality, residents and businesses prefer to live or operate in thriving, walkable communities. These desired places, whether in urban, suburban or rural communities, share common characteristics including a mix of building types and uses, diverse housing and transportation options, and social inclusiveness. According to the 2016 Foot Traffic Ahead report, these walkable urban places (WalkUPs) command a 74 percent price premium and over their drivable sub-urban counterparts and perform higher on social equity, health and climate resilience.

History has repeatedly demonstrated that investment without protective equitable policy and process mechanisms lead to gentrification, displacement and a lack of access to benefits in many low-income and communities of color. Without any guidance from authorizing legislation or proposed Treasury regulations, investors, local policymakers and stakeholders are asking which Opportunity Zones have the greatest potential to create vibrant, inclusive WalkUPs. What place-based policy framework is needed to ensure Opportunity Fund investments lead to the creation of more walkable places that are healthy, prosperous, and resilient?

The LOCUS National Opportunity Zone Ranking Report, first of its kind, ranks each of the designated Opportunity Zones based on its Smart Growth Potential (SGP) as well as its Social Equity + Vulnerability Index score (SE_SVI). This study creates a “Smart Growth Potential” filter for investors to identify which Opportunity Zones should be prioritized for investment from a triple-bottom-line perspective that can deliver positive economic, environmental, and social returns. Additionally, this study is intended to provide local policymakers and community groups with a policy framework to manage and ensure equitable, inclusive development in Opportunity Zones.