By Kenan Fikri, Rachel Reilly, and Daniel Newman
I. Executive Summary
Opportunity Zones (OZs) are low-income census tracts in which certain new investments to stimulate economic activity are eligible for special federal tax incentives. They stem from a bipartisan policy enacted in late 2017 intended to bridge the country’s growing geographic divides by rekindling market activity in disinvested neighborhoods. OZs represent one of the most ambitious and potentially far-reaching place-based economic policies in a generation.
Yet, given the potential scale of the opportunity, engagement across the state and particularly among the investor community could be significantly greater. To fully maximize what OZs can do for Indiana, the state must focus on addressing the two binding constraints on further expansion and maturation of the OZ marketplace identified through this research: raising more local capital for local investing and increasing the capacity of stakeholders to understand and deploy this new financing tool.
Mapping Opportunity Zones
Indiana is home to 156 designated OZs distributed throughout the state. More than half a million people, or 8 percent of the state’s population, live in them.
Even before COVID-19 struck, OZ communities were struggling with poverty rates nearly twice the statewide level, far more adults out of work, elevated housing vacancy rates, and lagging educational attainment. OZs also provide a window into economic and geographic inequalities across race that exist at the national level and in Indiana: 36 percent of OZ residents in the state are minorities, compared to 20.5 percent of Indiana’s total population.