November 6, 2025
But we have renewed responsibility to drive opportunity to those it was created to help.
Even in divided political times, we all value clean water, sound roads and bridges, public safety, fair courts, tuition-free public schools, and all the civic services that make up the foundation of our communities. We look to private investment to grow the local economy and expand the tax base to maintain and strengthen this civic foundation. Appalachian communities are working hard to leverage opportunities for new economic growth. New rules in the federal “Opportunity Zone” program can add to the momentum.
History of Opportunity Zones
The Opportunity Zone program was the brainchild of Kevin Hasset, who became chair of Trump’s Council of Economic Advisors, and Jared Bernstein, who became chair of Biden’s Council of Economic Advisors. As the political divide widened during the slow, painful recovery from the Great Recession, Hasset and Bernstein worked together on a common-ground initiative to redevelop impoverished places by creating investment opportunities for wealthy investors.They proposed the creation of “Opportunity Zones” where tax cuts would entice investment capital into low-income communities. The program was enacted on a temporary basis in 2017 and made permanent in the Trump Administration’s 2025 reconciliation measure (“One Big Beautiful Bill”).
What are Opportunity Zones?
As first established, Opportunity Zones were low-income (and contiguous) census tracts identified locally, selected and nominated for “Opportunity Zone” status by states, and certified by the U.S. Department of the Treasury. Investors funded projects in these zones through long-term placement of capital in qualified ‘Opportunity Funds,’ which brokered deals and oversaw development projects in the zones. In exchange, investors got deep federal capital gains tax breaks on income from the investments. The intermediaries—the Opportunity Fund administrators—got lucrative development and management fees.
The program worked as intended. Investment flowed. Condos and apartment buildings shot up in old and dilapidated (mostly urban) neighborhoods. A 2025 analysis by the Urban Institute noted that the program has leveraged more than $100 billion into the over 8,700 Opportunity Zones across the nation.
See the interactive opportunity zones map here by Novogradac.
Outcomes of the Opportunity Zone Model
Program funds flowed to census tracts with potential for development. Program administrators mitigated risk and boosted returns by focusing on real estate, which is less risky than business investment. The program has been criticized for funding projects in places that were already developing, drawing capital and effort from places with the greatest need.
The Economic Innovation Group, which sponsored the initial study underpinning the program, found the investments created 313,000 new housing units between 2019 and 2024, and suggested it was an effective tool in the federal housing policy toolkit. The Urban Institute, on the other hand, found far less investment in job creation, concluding: it turned out to be largely a market-rate rental housing and other real estate projects instead of a way to create jobs or develop economies.
Ultimately, Opportunity Zones strengthened the tax base of places that attracted investment and enriched investors and intermediaries. The impact on low-income residents and businesses of the zones were less beneficial. Renters were displaced from affordable housing in old buildings as they were sold to make way for pricier units and higher-income households. Local homeowners and businesses were then hit by unaffordable tax hikes as property values soared with new, sometimes luxury, developments.
Looking Forward:
With program renewal, we have a new opportunity to make the program live up to its philanthropic branding in what will be newly-targeted zones and new rules better targeting benefits to people who live and work in low income communities. New changes to the law that will help with this include ensuring:
- Low-income places are better targeted. The definition of “low-income community” has been targeted to poorer census tracts, where medium income is no more than 70% of area median income (lowered from 80%) or where the poverty rate is at least 20%. The ‘contiguous tract’ eligibility – which incentivized development in places that may not have been low income – has been removed. Any area with a poverty rate of at least 20% must also have median family income no greater than 125% of the state or metropolitan median.
- Rural areas get deeper subsidies to stimulate investment. Investments in these places will get boosted tax benefits, like a 30% basis step-up (compared to 10% previously). The required increase in property value for real estate investment (“substantial improvement” requirement) has been eased, lowered to 50% of a property’s adjusted basis instead of 100%, to encourage investment in rural communities where property values are lower.
- Transparency is increased through new reporting requirements for Qualified Opportunity Funds, which must now disclose total assets held, investment amounts, and data on employment and housing.
Under this now permanent program, new zones must be selected every 10 years: Governors will nominate a new set of Opportunity Zones at the end of 2026 under the new program rules. Appalachian communities can leverage this opportunity to entice reshoring manufacturers to old industrial sites, redevelop shuttered coal plants, help existing companies expand capacity to make new products, and to rehabilitate, instead of replace, housing stock. The emerging “green banks” (like the Appalachian Sustainable Finance Hub of Pittsburgh), which have seen severe funding instability by the Trump Administration, could turn their attention to creating or partnering with Opportunity Funds to draw investment capital into the region.
And at the same time, work can begin to ensure Opportunity Zone residents and workers are the recipients of the benefits of the program rather than the ones experiencing negative impacts. Elected leaders should create community advisory boards to oversee Opportunity Zones. Such boards could give voice to diverse stakeholders: residents, public officials, health and educational institutions, banks, community organizations, businesses, labor, faith-based organizations, and more. It could advise elected officials on process and protections and direct local public services and local investments to enhance life for Opportunity Zone residents. It could create a protocol for Community Benefit Planning and a template for Community Benefit Agreements. It could review the reports of the Opportunity Funds operating in local zones and determine if the projects are living up to agreed-upon benefits.
Making this program work to benefit low-income places and people is a hard job. It’s time to roll up our sleeves to make this program live up to its promise as new zones are formed, new capital raised, and new projects identified for investment.
This program remains one small way to bridge the political divide—if we work at making it work better.