Opportunity Zone Magazine Volume 1, Issue 3 | Page 53

OPPORTUNITY ZONES AND ECONOMIC IMPACT: A PRACTICAL FUND APPROACH
53
Service (IRS) in defining the purpose of your practice:
“Opportunity Zones are an economic development tool—that
is, they are designed to spur economic development and job
creation in distressed communities.” 1
Importantly, the IRS states both job creation and economic
development as distinct goals within the OZ program.
Therefore, it is fundamentally important not to conflate
the two goals when striving for economic impact 2 in an
The IRS states both job creation
and economic development as
distinct goals within the OZ
program.
OZ investment. The two goals are distinct in their ease of
measurement. And, as discussed below, the objectives to
support the goal of job creation are different than the ones in
support of economic development. 3 The priorities given to
these objectives vary across OZ communities. 4 In short, the
goals of job creation differ from those related to economic
development, and should be treated as such.
• quality of wages
• education levels including workforce training
• career advancement opportunities, including individual
equity across racial and gender lines
• surrounding work-life conditions such as connected
to transportation, medical services, child-care, grocery
stores, affordable housing
• access to capital to start or grow businesses, including
minority and women-owned businesses
• wealth creation including to individuals in the OZ
communities
• environmental conditions affecting quality of life
Each of these economic development objectives can be
measured at least qualitatively, but the measurements are more
complex and variable compared to the simple task of “counting
heads” as in job creation. For example, opinions may differ on
quality wages, affordability, wealth, connected transportation,
equity, etc.
All OZ communities share the objective of job creation, but
they vary considerably on the priorities assigned to the myriad
of objectives under the goal of economic development. These
differences are the reason that engagement and measurement
JOB CREATION
Job creation is relatively simple to measure. Here, the goal and
objective are the same throughout OZ communities. An OZ
business or project knows how many employees it has, and the
growth in employees is easily tracked over time. Indeed, the
IRS could even gauge jobs in OZs through payroll and other
required tax filings. Of course, such distinctions as temporary
jobs in a real estate development project versus longer-lasting
jobs in an operating business matter here; but even these
distinctions can be countable. Even the indirect “multiplier
effects” associated direct job creation can be quantified. 5
ECONOMIC DEVELOPMENT
Economic development is inherently a broader, fuzzier goal
compared to job creation. Inspired by Nobel prize economist
Amartya Sen, economic development is defined as “the
expansion of capacities that contribute to the advancement
of society through the realization of individuals’, firms’ and
communities’ potential.” 6 In OZ discussions, the specific
objectives within the goal of economic development expansion
of capabilities to realize the potential include: 7
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