In December 2017, Congress passed the Tax Cuts and Jobs Act, which included the Opportunity Zone tax incentive meant to spur economic development and revitalization in communities lacking access to capital. The incentive is the largest new federal economic development program enacted in years. Each state selected Opportunity Zones from a pool of eligible low-income census tracts. In Virginia, Governor Northam tasked the Department of Housing and Community Development (DHCD) and the Virginia Economic Development Partnership (VEDP) with gathering local, state and other stakeholder input to nominate 212 tracts as Opportunity Zones. Investors receive tax benefits over a long horizon for equity investments in Qualified Opportunity Zone businesses and property.
The Opportunity Zone program enables the goals outlined in the Comprehensive Economic Development Policy for the Commonwealth. As an equity-based program, stakeholders are rewarded for investing in and maximizing Virginia’s assets. The program is flexible enough to grow existing and new businesses across a range of industry. With proper oversight and facilitation, the program offers access to economic opportunity for citizens in traditionally underserved communities. Last, the program can be matched with Federal, Commonwealth, and local incentives to maximize the benefits for investors, communities, and low-income individuals.
Many states around the country have rallied around the Opportunity Zone initiative, but there is no prescribed leadership model for success. Like Virginia, many states have taken point by convening stakeholders, educating the community, and attracting investors. However, there is a unique opportunity for Virginia to be a beacon for the rest of the nation on two fronts: 1) building a marketplace where stakeholders can learn and engage, project sponsors can share ideas and pipeline, and investors can discover investment opportunities; and 2) making inclusive and equitable economic growth a priority alongside the market-driven capital flows.
With a grant from the Virginia Housing and Development Authority and support from Virginia’s Department of Housing and Community Development and the Secretary of Commerce and Trade, Virginia Community Capital and its subsidiary LOCUS Impact Investing took the mantle of building out an Opportunity Zone Market. And thus, Opportunity Virginia was born.