Pittsburgh is part of a new initiative that aims to help municipalities attract equitable investment. The city is one of 13 to join the National Opportunity Zones Academy, a project created by national nonprofit Smart Growth America with funding from the Rockefeller Foundation and the Barr Foundation.
Part of the 18-month technical assistance program is a website where Pittsburgh and the Urban Redevelopment Authority will be able to post development projects and attract investors from across the country. However, the larger goal is to share ideas among cities and help them figure out how to use opportunity zones to their benefit. Part of the Tax Cut and Jobs Act of 2017, opportunity zones are meant to attract capital to low-income and rural areas by allowing investors to defer, or entirely avoid, capital gains tax on that money.
Unlike other, more established tax incentive programs, the rules around opportunity zones continue to be finalized, said Thomas Link, who directs the URA’s Center for Innovation and Entrepreneurship. In addition, the agency and the city are still working out how they can best use them to help residents.
“How can they take advantage of it to build wealth in their communities? For a business to start or grow in one of our neighborhoods? For folks to gain access to quality housing and affordable housing?” he said. “And then how can opportunity zones play a role in that?”
The project aims to provide what’s missing from the federal legislation, said Christopher Coes, vice president of land use and development at Smart Growth America.
“The legislation doesn’t have reporting, doesn’t have a lot of transparency mechanisms embedded in it, and this is our answer,” he said. “How can the private sector … along with these cities, and community groups in those cities, really come together.”
Twenty-three municipalities in Allegheny County contain opportunity zones. In Pittsburgh, 28 census tracts carry the federal designation and include parts of the Hill District, Hazelwood, and Homewood. The first projects Link expects the URA to post to the National Opportunity Zones Marketplace will be for URA-owned land.
“We have control over that,” said Link, and land control means the agency can ensure the project benefits the public.
Private land owners or businesses can also participate in the marketplace in the future, if their plans align with the initiatives goals of building equity though community development. Link said work to create such a process is still in early stages.
Some of the first opportunity zone projects across the country have used the new tax law to build luxury condos and expensive office towers. Many worry the first wave of investments is indicative of what’s to come, while others note investors will always go for low-hanging fruit first.
There is fear that opportunity zones may attract outside investors to Pittsburgh who lack context, but when public process is really well-done it can mitigate that, said Link.
“We all need to work hard to come up with strategies,” he said. “we want to attract new investment and we want investment in our communities, but at the same time, to the benefit of Pittsburgh and to the benefit of our neighbors.”