In Erie, Pennsylvania, public and private sector leaders are setting a national standard for attracting investment to Opportunity Zones – a part of the Tax Cuts and Jobs Act of 2017 designed to incentivize investment in low-income communities. Prior to this legislation, there was already $750 million in ongoing public, private and philanthropic investments in the Erie area, with $600 million committed to city improvements in 2016 alone.
The Erie Downtown Development Corporation (EDDC) was one of the first organizations in the country to take advantage of the Opportunity Zone program – purchasing eight properties in Erie’s North Park Row last September. The group was formed in 2017 to drive economic growth in the city through real estate development in the downtown area. Their use of Opportunity Zones led them an invitation to Washington D.C. in December, where they briefed lawmakers on their progress and commented on the strengths and weaknesses of the Opportunity Zone legislation thus far. Together with the Erie Downtown Equity Fund (EDEF), the EDDC has raised approximately $30 million in gap financing funds for its real estate development projects to date.
The Erie Innovation District (EID), located within an Opportunity Zone, is another key part of Erie’s drive to attract investment. Innovation districts are a relatively new phenomenon that utilize collaboration between anchor institutions and community partners to develop innovation hubs that attract new business, investment, and funding, which in turn fuel the growth of a city. The EID, in collaboration with Erie Mayor Joe Schember’s office, conducted a “smart city” pilot program in August 2018, which brought advanced security cameras, LED lighting and free public Wi-Fi to a small area of the city. Now, there are aggressive plans to expand this program to the city’s Opportunity Zones within the next three years in order to make them safer and more attractive to investors.
At the head of Erie’s Opportunity Zone movement is the Flagship Opportunity Zone Development Company (The Flagship) – a subsidiary of the Erie Regional Chamber and Growth Partnership created last fall to build-out the city’s portfolio and entice developers to invest in its eight Opportunity Zones, which are collectively known as Pennsylvania’s “Flagship Opportunity Zone”. The Flagship serves as the central organizer for attracting investment to Erie’s Opportunity Zones. Its website is based on the city’s investment prospectus, which details the reasons for investing in Erie. It includes in depth market data, breakdowns of each neighborhood and Opportunity Zone, information on funding and institutional capacity and a clearly laid-out argument for investing in the city. The Flagship also serves as the single entry point for investors, which will streamline the process of pairing them with local funds, projects, and partners.
The EDDC, EID, and Flagship were invited to the first national Opportunity Zone Investor Summit in Palo Alto on Monday, where their work was presented as a prime example of how public and private stakeholders can work together to attract investment dollars to a city’s Opportunity Zones. The work in Erie is guided by the city’s master plan for revitalization, and made possible by compromise and collaboration among city officials, community leaders, nonprofits and businesses.
The completed IRS guidelines for Opportunity Zones are expected to be released soon, with formal Opportunity Zone funding to be announced in Erie shortly thereafter.
At the Global Resilience Institute, we are engaged in similar work on Opportunity Zones – developing a national model for how they can be leveraged to advance community resilience.
Sources and Further Reading