Unrealized Gains: Opportunity Zones and Small Businesses

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October 2020

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Unrealized Gains: Opportunity Zones and Small Businesses

The Opportunity Zone tax incentive was conceived as a tool to promote economic development, job creation, poverty reduction, and support for new businesses in areas of concentrated poverty. After a couple of years of sizable investments flowing into these newly designated zones, we wanted to know:

Are these investments supporting small business stability and growth, achieving the stated goal of place-based economic development and job creation in distressed communities? If not, why not? And what are the risks and rewards specifically for minority-owned legacy businesses within Opportunity Zones?

Unrealized Gains takes a close look at these questions, and specifically the impact on the minority-owned and legacy businesses that form the social fabric of many neighborhoods in these areas. It examines Opportunity Zone activity and investment trends in four cities in different regions: Miami, Florida; Atlanta, Georgia; Louisville, Kentucky; and Washington, DC. The authors interviewed the stakeholders involved in OZ investment decisions, and then those conversations were contextualized by demographic and economic data.

The report offers five core findings summing up those interviews and research, and provides seven recommendations for realizing the full potential of these investments and bringing benefits to communities in ways that support current residents, mobilize local economies, provide job opportunities, and protect legacy businesses.