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Monday, September 24, 2018

Opportunity Zone Tax Program: Boon or Bust for Poor Ohio Communities?

Posted By on Mon, Sep 24, 2018 at 8:37 AM

click to enlarge (HANNAFORD/FLICKR)
  • (Hannaford/Flickr)

COLUMBUS, Ohio - A new federal program could be a game changer for some of Ohio's poorest communities. The Opportunity Zone Program provides federal tax incentives to those who invest in businesses and properties in designated low-income, high-poverty census areas.

The goal is to increase local tax revenues and lower poverty. Ohio identified 320 census tracts for the program. However, Wendy Patton, senior project director with Policy Matters Ohio, said some deeply distressed census tracts that need investment were passed over in favor of very hot development markets.

"The Ohio City and Tremont areas in Cleveland, around Ohio State University in Columbus, Over-the-Rhine in Cincinnati, these are places where investment is happening without a deep federal subsidy," Patton said.

Only four of the ten poorest census poverty tracts in Ohio are designated Opportunity Zones. The program is part of the federal tax bill passed in 2017 and final federal rules for implementing funding are expected to be released in the next few weeks.

Patton explained the program is complex. And while it could enhance poor communities, it could also drive inequality.

"The danger, of course, is gentrification," she said; "that you'll get an influx of money that will drive out existing residents and small businesses and replace them with glitzy, high-income apartment complexes, homes and businesses."

To strengthen positive results for low-income communities, Patton said, state and local governments should not direct new revenues from Opportunity Zones into tax abatements and tax cuts.

"Additional revenues need to be used to strengthen schools, parks, recreation centers, public health, public transit, public services to ensure that this gives a boost to alleviate poverty," Patton said; "to help people instead of just benefiting wealthy investors. "

She added rules should also include the establishment of community advisory boards and community benefit agreements, as well as reporting requirements for accountability and program outcomes.

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