Since being added to the tax code in December 2017, opportunity zones have been a complicated development that organizations, investors and community activists are trying to solve.
Fundamentally, an opportunity zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment, according to the IRS. But because this policy is a new one, there are a lot of mysteries that need to be clarified.
To unpack the complications of the new addition to the tax code, Kinder Institute for Urban Research's Houston Community Data Connections team has created an interactive storymap to break down the goals of Opportunity Zones in metro Houston. The map explains the locations of Houston-area opportunity zones, their demographics, how Opportunity Funds and Opportunity Zones work, and how the tax incentives for investment pays investors back.
"Opportunity zones are a huge topic of conversation but also a big black box right now," said Bill Fulton, director of the Kinder Institute. "Investors everywhere are trying to figure out how to leverage the opportunity, while at the same time community activists are (1) hopeful that opportunity zones will bring new investment that will benefit their community, and (2) fearful that opportunity zone investments will not be sensitive to neighborhood needs and concerns. We hope the opportunity zone storymap will be used by community folks who want to understand the opportunity zone process and investors who want to understand more about neighborhoods."
Within Texas' 145 counties, there have been 628 designated opportunity zones and Harris County has the most in the state at 105. A total of 147 opportunity zones, which are all low-income neighborhoods, sit inside Houston's nine-county area. To qualify as an opportunity zone, areas must be nominated by the state, and that nomination has to be certified by the Secretary of the U.S. Treasury, according to the IRS.
According to the American Community Survey 2013-2017 5-year estimates, the poverty rate in opportunity zones within Harris County (30.8 percent) is much higher than the county average (16.8 percent). Harris County's opportunity zones also have a higher unemployment rate (11 percent) compared to the county average (6.4 percent). Home values, rents, homeownership rates and educational attainment are all lower in opportunity zones than Harris County at large.
"We're hoping the map gives a general sense of how the program works, and where the opportunity zones are in metro Houston," said Jie Wu, director of research management at the Kinder Institute. "The map will also give basic information about the designated neighborhoods. The map has information on demographics, socioeconomic status and housing such as population by age group, poverty rate, unemployment rate, educational attainment, median household income, median home value, median gross rent, homeownership rate, renter’s cost burden and vacancy rate."
The newly-released storymap is the first part of a project tackling the explanation of what opportunity zones mean for Houston. With an estimated release in October, Part II will talk more about the historical demographics of opportunity zones in Houston and the potential neighborhood changes due to an influx of investment in those areas, according to Wu and her team.