The Kresge Foundation Equitable Guidelines for Opportunity Zone Investment
The Opportunity Zones (OZ) program, created by the federal Opportunity Act as a part of the 2017 U.S. Internal Revenue Code – Tax Act, delegates to the U.S. Treasury the authority to set requirements for investment under the act’s tax credit system. An Opportunity Zone as defined by the Opportunity Act is a population census tract that is a low-income community, that is then designated as a qualified opportunity zone. The Kresge Foundation, seeing that Treasury requirements were first delayed and ultimately bare, set out to create its own set of guidelines. Kresge provides capitalization to projects in OZs to attract investment, and through covenants with its partners attempts to ensure that such investments are based in a framework of equity. Within a specific OZ, these covenants include stringent reporting requirements, the creation of a community advisory board explicitly containing members of the OZ’s community, and active promotion of OZ programs to OZ residents. Additionally, Kresge set out minimum standards for both real estate and business investments. Covenants for real estate investments include specifics such as: adopting an “anti-displacement” strategy for all housing investments, shifting focus to projects that create jobs for low-income communities, and mandating that at least 50% of all multifamily housing investments serve residents with incomes under 120% of the OZ’s average median income. For business investments, covenants include requirements that at least 50% of investments create living-wage jobs, and prohibitions on investments in industries that could be harmful to disadvantaged communities (e.g. oil, mining, firearms).
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