Last September marked the launch of the California Opportunity Zone Partnership, organized by the national nonprofit organization Accelerator for America and consisting of the State of California, the Energy Foundation, and the Cities of Oakland, San Francisco, San Jose, and Los Angeles. It aims to support government officials of small to medium sized California cities in taking advantage of their opportunity zones in ways that will be beneficial to their communities.
In phase 1 of the Partnership’s plan, three grants will be given to three small to medium sized cities to help them attract investments in their Opportunity Zones. The three grant cities will receive support from experts from San Francisco, Oakland, San Jose, and Los Angeles. The guidance will be particularly helpful for smaller cities that may not have already devoted resources to studying the Opportunity Zone legislation and how it can benefit communities. Douglas Bystry, the president and CEO of Clearinghouse CDFI, a lender for low-income community projects, stated that some city council members from smaller communities “felt that just because of [their Opportunity Zones] all this federal money was going to drop from the sky and they were going to be able to spend it and do whatever they want. It doesn’t work that way.”
Phase 2 of the plan involves using lessons learned in the grant cities to inform state policy and guidelines that will maximize the benefits of Opportunity Zones while minimizing potential negative impacts such as gentrification and displacement. It will be interesting to learn of the unique challenges of smaller cities and suburbs and how their problems can best be solved using Opportunity Zones.
California counts all capital gains as income for taxation- which is different from how the federal government separates income from long and short term capital gains for different tax policies – so investors were excited last month when it was announced that the state would abide by the federal capital gains exclusion policy. This announcement, along with the Opportunity Zone Partnership, has spurred optimism for Opportunity Zone investment in the state, which California hopes to use to help with its affordable housing crisis and transition to clean energy.
The Partners are optimistic that Opportunity Zone investments in partner cities can help the state as a whole. As Mayor Libby Schaaf of Oakland said, “We all benefit when we walk forward together and recognize that thoughtful investment in San Francisco benefits Oakland; a thoughtful investment in Los Angeles or in San Jose benefits the people of Oakland. When you expand affordable housing in your communities, you take the pressure off mine. We are not competition, we are in partnership.”
Sources and Further Readings
California Opportunity Zone Partnership Launches – CA Opportunity Zones
Will Opportunity Zones in California Be Golden? – Commercial Observer