Communities Need Transparency and Technical Assistance to Maximize Potential of Opportunity Zones

December 19, 2022

Opportunity Zones (OZs) are a placed-based federal income tax incentive that offers current and potential future tax benefits to investors on equity investments in new business and real estate activities in any of the over 8,700 census tracts designated as OZs. The stated goal of the incentive is to spur economic growth and job creation in neighborhoods where most residents have relatively low incomes. Since their introduction, OZs have been met with some enthusiasm for offering a new approach to community development finance, but also with concerns about whether any new business and real estate activity they attract will benefit existing businesses and residents.

To better understand how community development stakeholders are responding to these concerns, this blog post shares key themes from interviews with eight organizations across the Midwest and South that have made efforts to work with investors, governments, and communities to track OZ investments and encourage investments they believe will benefit existing businesses and residents.

These interviews produced three key themes:

  • Tracking outcomes requires more transparency. The organizations reported that transparency is integral to measuring outcomes and impacts, which can help ensure that outcomes match stated intent. Without clear reporting requirements from the outset, the responsibility for tracking outcomes falls to local actors – such as community development agencies, nonprofits, and advocates – and is often ad hoc and incomplete.
  • Attracting desirable investments requires technical assistance. The interviewees reported that technical assistance to understand the new tax incentive helped to level the playing field between well-resourced private investors and larger cities and those with more limited resources, including many small businesses, community-level nonprofits, and smaller cities. Such technical assistance, they reported, could help increase the potential for OZ investments to have positive community outcomes.
  • Smaller cities at a disadvantage. Finally, they reported that smaller cities were generally less attractive destinations for OZ investments and that small staffs and a lack of access to experts with specialized knowledge made it more difficult for these cities to attract and track OZ investments.

These interviews allow these organizations to share their experiences working with this new place-based tax incentive, which has quickly accumulated substantially more real estate and business assets under its umbrella than a similar and now decades old place-based federal tax incentive, the New Markets Tax Credit (NMTC). During 2018 and 2019, federal income tax data show that OZ investors accumulated approximately $25 billion in business and real estate assets in census tracts designated as OZs (Kennedy and Wheeler, 2021).1 During that period, federal data show that NMTC investors accumulated $7.2 billion in business and real estate assets in low-income census tracts.2

These interviews occurred during 2021, a period of significant growth for OZ investments. During 2021, equity investments to finance new business and real estate investments in OZs increased by about 60%.3 The key themes shared here supplement key themes from earlier interviews with similar organizations, which focused on how organizations intended to use community engagement to attract and direct OZ investments.


The organizations reported a lack of transparency about OZ investments that presents significant challenges for their tracking of both potential and realized OZ investments. Without the ability to track, they reported it is difficult to encourage community engagement to help shape an investment to better align with community priorities and to measure outcomes to help determine the extent to which an OZ investment benefits a community.

This lack of transparency has been a common theme in policy discussions surrounding the OZ program. Relatively early in OZ implementation, the U.S. Impact Investing Alliance, the Beeck Center for Social Impact + Innovation at Georgetown University, and the Federal Reserve Bank of New York created the Opportunity Zones Reporting Framework (OZRF) to promote transparent practices and community engagement. Others also created tools to provide a reporting and data collection structure. Although many organizations have committed to implementing the OZRF or other reporting and data collection tools,4 they cannot implement them unless they can track OZ investments. Some organizations received grants from the Rockefeller Foundation to fund personnel dedicated to supporting and tracking OZ activities. Still, the organizations I interviewed, which included one that received a Rockefeller grant, reported that even with more personnel, the lack of reporting requirements made it a struggle to track all investment activity. They also reported that the pandemic exacerbated these tracking difficulties by disrupting communication channels and sidelining community meetings and other opportunities for information exchange.

The organizations further reported that even when they are aware of emerging deals, they often do not have the ability to intervene or facilitate community engagement to ensure the projects include specific community benefits. Organizations reported only one instance of a successful intervention, in that case, to require a real estate developer to increase the number of affordable housing units.

Concerns about transparency reflect key differences between the design of the OZ tax incentive and that of older place-based tax incentives, such as NMTC and Low-Income Housing Tax Credits (LIHTC), which, like the OZ incentive, provide investors with tax benefits when they make qualifying investments in selected census tracts.

One key design difference is that investors receive NMTC and LIHTC tax benefits only when projects apply for and receive an allocation of tax benefits, while OZ tax benefits have no application requirement. Thus, at a minimum, NMTC and LIHTC projects are known to the decision-making body—the CDFI Fund or housing finance agencies, respectively – when an application is submitted. While the lack of an application process for OZ tax benefits reduces bureaucratic hurdles, it means governments, residents, or community organizations do not have a federal mandate to track potential investments and evaluate their potential to benefit existing businesses and residents.

Another key design difference across these programs is that there is no federal agency reporting OZ investment data to the public, whereas the CDFI Fund and the U.S. Department of Housing and Urban Development, respectively, report detailed information on NMTC and LIHTC projects. This reporting, although it is published with some delay, provides communities with another way to track NMTC and LIHTC investments and evaluate potential and actual outcomes.

In sum, the organizations I spoke with reported that the lack of any public reporting requirement made it difficult to estimate the total number of OZ deals being done in their communities. Some guessed there might be twice as many deals happening as they know of. For example, one organization told me, “I think the hard part is … the lack of transparency. Not knowing where it’s happening, how it’s happening, and the concern that sometimes these investments are just places to park money.”

Technical assistance

Organizations also reported that both they and local businesses need technical assistance. One reflected that OZ program “… was harder to access than we thought it would be. I would love to see more technical support around the program so that people know how to leverage it.” Organizations reported that they needed technical assistance to gain expertise on a broad range of topics to assist the many local businesses that lacked experience with these types of programs and were capacity constrained. These topics include how to interact with investors and pitch an opportunity, how to understand the financial ramifications for receiving OZ capital, and how to plan for costs associated with OZ deals. One organization reported receiving financial support to implement technical assistance at the local level, which has facilitated matching local businesses with local service providers familiar with the OZ incentives. However, not all organizations reported receiving any such support, suggesting it has not been granted to all communities equally, likely leaving many businesses unsure about how to leverage this incentive.

Smaller cities

Finally, the organizations I interviewed reported that smaller cities faced outsized challenges when it came to attracting OZ investments. For example, OZ deals may be outside the scope of administrators’ normal activities, technical assistance is rarely tailored to the capacity constraints of a smaller city, and its generally more difficult to identify investors willing to invest in real estate and businesses located in smaller cities. Representatives from two smaller cities (population approximately 200,000) I interviewed pointed to these challenges as reasons why they had not seen any OZ activity at all.


The organizations I interviewed asked for more transparency and reporting so that communities and advocates can track OZ investments and try to measure outcomes, such as job creation, poverty reduction, and business development. Further, they asked for more technical assistance to help build community capacity to steward and guide investments to people and places where they may have the most impact. Finally, they reported that smaller cities and towns already struggling with disinvestment and population loss are capacity constrained and struggle to compete for investors that tend to be more comfortable in larger urban centers.


1 This research states that electronically filed federal income tax returns for tax year 2019 show $18.9 billion in OZ investment holdings, which are estimated to represent about 75% of all OZ investments implying that total OZ investments are approximately $25 billion.

2 FY 2019 NMTC Public Data Release Summary ( (slide 6 QLICIs by reporting period).

3 Novogradac reported that equity raised for OZ investments they track increased from $15.16 billion in December 2020 to $24.4 billion in December 2021, which is an increase of about 60%.

4 For example, the Opportunity Zone Community Impact Assessment Tool.

The views expressed in this post are our own and do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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