Probably massive amount of money to be made by a company that can systematize this whole process. They know the laws and the codes, they know what gets returns in some areas and not others. I predict cookie cutter improvements being dropped into these zones at some point as everyone figures out where works and what doesn't. It will be interesting to see how this plays out.
And this would be ... a spectacularly good outcome.
In order to do this, the company would have to develop a workable, repeatable model of how to economically improve an "opportunity zone". There's some evidence that this is a very hard problem, notably that social service agencies have been trying to do it for more than 100 years. But sure, if a company can find a solution, that would be great.
The danger is that the company would find a solution that somehow followed the letter of the law but not the spirit, like finding an investment with nominally high returns that doesn't actually improve the lives of the people living in the opportunity zones. That's definitely a danger, and possibly a likely outcome. But another possibility is that there are fairly straightforward ways to improve the lives of people in these zones that haven't happened because the people in them don't have the capital to do it. If that's the case, then incentivizing outsiders to put in that capital should be a good thing. I don't know what will happen, but it seems like it's worth a try.
It would be nice if the program was well managed, because good management could probably reduce and mitigate the negative gaming-the-system outcomes and promote the good ones. But I don't have a lot of confidence in Congress to do a good job with updates, so I hope the original bill was written well enough.
"Opportunity zone" doesn't mean what you think it means.
E.g., there are census tracts in Cambridge/Somerville with six figure median incomes that are categorized as "opportunity zones". There are also a lot of census tracts in that area with much lower median incomes hiding an incredible amount of future earning potential (e.g. Harvard and MIT students, and esp. doctors doing their residencies at top hospitals).
Tax-free money flowing into those areas isn't going to help poor folk. It's going to fund the development of $3k/month luxury apartment buildings for housing young professionals who are priced out of buying anything, because billionaires are buying everything site-unseen in cash at $50k above asking. Don't believe me? Go on apartments.com and check out the rents/amenities of buildings that already exist in these "opportunity" zones.
And to be clear, I'm not super opposed to gentrification. However, I don't see any good reason why building luxury apartment buildings in some of the hottest rental markets in the country should be a tax-free activity.
If these were downtrodden areas starving for a cash infusion, this give-away of tax dollars might make more sense (although IMO is likely to do more harm than good). But you can be pretty damn sure that a sizable chunk of this money is going to flow into census tracts where not even a six figure salary can get you anywhere close to a down payment.
And even in areas that are legitimately run down, an influx of tax-free money competing with locals for housing stock is a good way to torpedo the sort of sustainable local wealth accumulation that happens when normal folk who live in the neighborhood are able to buy housing and storefronts.
So I'm very concerned for every area that is categorized as an opportunity zone, and pretty peeved that building luxury apartment buildings in fucking Cambridge is going to be a tax-free activity.
e: And I just looked around my home town in the midwest. There are big corn fields marked as opportunity zones, even though they're kind of out of the way and there are many other areas that would make a lot more sense to redevelop and where a capital infusion could actually create new opportunities. I happen to know the current owner of those tracts is a long-time supporter/donor to the current governor of that state. Unsurprisingly, turns out governors choose these "opportunity zones".
So, yeah, that's what this is: kickbacks to state-level political donors provided in the form of tax subsidies for billionaires (or at least millionaires).
I don't think that such results qualify as unintended consequences. I somehow ended up attending a meeting at Treasury on some existing tax credit program. Other than me, everyone attending seemed to be some sort of insider and nearly everyone seemed to know each other.
So, to my way of thinking, an unintended consequence would be some no-name schmuck being the one to systematize and beat the known quantities at the game. (IMHO)
