The Opportunity Zone program has yet to live up to its hype.
Designed to incentivize investment in low-income areas, the federal initiative has instead become the scorn of critics who see it as little more than a tax break for the rich.
One project in Schenectady, New York, seeks to change that narrative. Hudson Partners Development is constructing a four-building, 88-unit apartment complex that will offer workforce housing. The local developer said it has secured a $4.5 million investment from Enterprise Community Partners, a non-profit that focuses on affordable housing.
The development group, a partnership between Hudson Partners and the Schenectady County Metroplex Development Authority, also secured $9.4 million in construction financing from Community Preservation Corporation, a nonprofit which finances affordable multifamily developments and sold the vacant land to Hudson Partners in 2016.
Over half of the project, known as Reserve at Towpath Trail, will be affordable for renters who earn less than 80 percent of the median area income. Construction is expected to be completed by next year.
“Reserve at Towpath Trail also underscores the positive social impact that Opportunity Zones can deliver when harnessed by, and paired with, committed impact investors,” said Seth Meltzer, principal of Hudson Partners Development in a statement.
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The development will be the first project to use investor Enterprise Community Partners’ Opportunity Zone Fund Evaluation Framework, which can be used to track an Opportunity Zone investment’s impact.
The Opportunity Zone program, pushed forward under former President Trump’s tax reform bill in 2017, allows developers and investors to achieve a significant tax break if they invest in one of 8,700 designated zones across the country. The largest tax breaks come if the investment is held for at least 10 years.
It does not mandate any reporting or impact guidelines to assess whether these investments are truly uplifting low-income communities. This lack of reporting standards is among the program’s top criticisms. As a result, some nonprofits and companies have rolled out their own tools to measure investment impact. In early 2020, Warren Buffett’s son Howard Buffett helped create software that tracks an Opportunity Zone project’s location, development type, census tract and investment size, then tabulates the data into one number.
President Biden pushed for more disclosure of Opportunity Zones investments, while on the campaign trail. The administration has yet to decide on how to overhaul the program, according to the New York Times.