Community Developments Investments (January 2021)
Opportunity Zone Measures of Distress
The goal of the federal opportunity zone tax incentive is to increase investment in economically distressed communities across the nation. By many measures of socioeconomic well-being, opportunity zones are, on the whole, among the highest-need communities in the United States.
High poverty rate: Opportunity zones have an average poverty rate of 27.7 percent compared with the national poverty rate of 14.1 percent.
Persistent poverty: Even though opportunity zones only cover one-quarter of the country's low-income census tracts, they cover 38 percent of all U.S. census tracts that have been persistently poor (with a poverty rate of at least 20 percent) since at least 1980. Opportunity zones cover 49 percent—essentially half—of the country's pockets of concentrated persistent poverty, meaning census tracts in which at least 40 percent of the population has lived in poverty since at least 1980.
High unemployment: Thirty-one percent of prime age adults residing in opportunity zones are not working, compared with 22 percent across the United States.
High housing vacancy rates: The average opportunity zone housing vacancy rate is 13 percent compared with 8 percent nationally.
Older housing stock: The housing stock in opportunity zones is much older than that of non-opportunity zone areas; in the typical zone, the median residence was built 50 years ago—more than 10 years before the median residence nationwide.
Low home values: The median home is worth less than $100,000 in 43 percent of opportunity zones. In 46.5 percent of opportunity zones, the median value of homes surveyed between 2014 and 2018 was lower than that surveyed between 2006 and 2010.
Low homeownership rate: Homeownership rates are lower in opportunity zones than the national average, and 46 percent of the opportunity zone population owns a home, compared with 64 percent nationwide.
Limited economic mobility: Economic mobility for children from poor backgrounds is measurably worse in opportunity zones than outside these zones. Only 7.3 percent of children born to poor parents in the average opportunity zone were able to climb into the top fifth of the income distribution upon adulthood, lower than the 13.2 percent average for poor children outside of opportunity zones.
High prevalence of brownfield sites: Opportunity zones, which represent only 10.7 percent of all U.S. census tracts, contain nearly one-third (32 percent) of the country's brownfield sites, which are properties that have been contaminated by prior (often industrial) use and typically stand vacant for years or decades. The country's opportunity zones contain over 14,700 known brownfield sites.
Source: Economic Innovation Group
This publication is part of:
Collection: Community Developments Investments
Letty Ann Shapiro
On the cover
Photos show the Stonewall Building in downtown Birmingham, Ala. The photo in the middle shows Alex Flachsbart, chief executive officer of Opportunity Alabama, and Ed Ticheli, a developer, discussing the renovation of the Stonewall Building, previously known as the American Life Building. The background image shows the renovated Stonewall Building, which is located in an opportunity zone and will contain 140 affordable housing units. (Photos: Opportunity Alabama and LMS Real Estate Investment Management)
Articles by non-OCC authors represent the authors’ own views and not necessarily the views of the OCC.