New Article: Closing the Opportunity Gap

New Article: Deanna Newton, Closing the Opportunity Gap, forthcoming North Carolina Law Review (2024). Abstract below:

Opportunity Zones are low-income areas or economically distressed communities in the United States. The Opportunity Zone program encourages investment in low-income areas or economically distressed communities by offering investors tax benefits. Scholars have found little evidence that Opportunity Zones positively impact zone residents’ lives, concluding that Opportunity Zone legislation mostly benefits wealthy investors and should be reformed to benefit community members better. Investors are currently not required to finance projects geared toward the needs of local communities; they are instead funding developments they would have already invested in, whether located in an Opportunity Zone or not. This Article argues that current reform efforts and related scholarship do not give adequate weight to active and direct participation by community members and investors as it relates to economic development tax incentives. It argues for a comprehensive framework that focuses on active, direct, and transformative participation by community members and investors. The Article uses the Opportunity Zone program as an example of how two novel policy reforms for economic development tax incentives could be implemented. First, Opportunity Zone investors should be required to buy into the community financially. Buy-in would entail a one-time lump sum payment to a community Opportunity Fund to ensure actualized commitment to community development. Second, a portion of each Opportunity Zone should be reserved for current community members to invest in. The buy-in will provide community members—often members of historically disadvantaged groups—with resources, allowing them to benefit irrespective of an investor’s intent. The funds collected from the buy-in will be allocated to community members, allowing them to invest in and benefit from Opportunity Zones, which are otherwise prohibitively expensive for average residents.