Opportunity Zone Magazine Volume 1, Issue 3 | Page 53

OPPORTUNITY ZONES AND ECONOMIC IMPACT: A PRACTICAL FUND APPROACH 53 Service (IRS) in defining the purpose of your practice: “Opportunity Zones are an economic development tool—that is, they are designed to spur economic development and job creation in distressed communities.” 1 Importantly, the IRS states both job creation and economic development as distinct goals within the OZ program. Therefore, it is fundamentally important not to conflate the two goals when striving for economic impact 2 in an The IRS states both job creation and economic development as distinct goals within the OZ program. OZ investment. The two goals are distinct in their ease of measurement. And, as discussed below, the objectives to support the goal of job creation are different than the ones in support of economic development. 3 The priorities given to these objectives vary across OZ communities. 4 In short, the goals of job creation differ from those related to economic development, and should be treated as such. • quality of wages • education levels including workforce training • career advancement opportunities, including individual equity across racial and gender lines • surrounding work-life conditions such as connected to transportation, medical services, child-care, grocery stores, affordable housing • access to capital to start or grow businesses, including minority and women-owned businesses • wealth creation including to individuals in the OZ communities • environmental conditions affecting quality of life Each of these economic development objectives can be measured at least qualitatively, but the measurements are more complex and variable compared to the simple task of “counting heads” as in job creation. For example, opinions may differ on quality wages, affordability, wealth, connected transportation, equity, etc. All OZ communities share the objective of job creation, but they vary considerably on the priorities assigned to the myriad of objectives under the goal of economic development. These differences are the reason that engagement and measurement JOB CREATION Job creation is relatively simple to measure. Here, the goal and objective are the same throughout OZ communities. An OZ business or project knows how many employees it has, and the growth in employees is easily tracked over time. Indeed, the IRS could even gauge jobs in OZs through payroll and other required tax filings. Of course, such distinctions as temporary jobs in a real estate development project versus longer-lasting jobs in an operating business matter here; but even these distinctions can be countable. Even the indirect “multiplier effects” associated direct job creation can be quantified. 5 ECONOMIC DEVELOPMENT Economic development is inherently a broader, fuzzier goal compared to job creation. Inspired by Nobel prize economist Amartya Sen, economic development is defined as “the expansion of capacities that contribute to the advancement of society through the realization of individuals’, firms’ and communities’ potential.” 6 In OZ discussions, the specific objectives within the goal of economic development expansion of capabilities to realize the potential include: 7 Let our Top 25 Advisors assist you with your OP Zone Project. Better yet, join our ever-growing family of OP Zone Funds. www.gatewayopfunds.com OPPORTUNITYZONE.COM