(iPoster) Opportunity Zones: Federal Place-Based Policies and Shifting Urban Governance

• In Event: Poster Session: Public Policy & Urban and Local Politics
  In Poster Session: Poster Session: Public Policy

Abstract

How can local governments and civic movers and shakers join forces to shape local economies and resident quality of life, allowing for healthy growth and investment? Such questions preoccupied political scientists and sociologists of the Mid-Twentieth Century, helping to spark a larger debate within the social sciences about elite versus pluralist rule (Dahl, 1964; Hunter, 1969). More recent times, by contrast, have seen the dominance of urban regime analysis (Stone, 1989), where working partnerships between local government and business elites were painted as key to effective urban governance in Atlanta after World War II. Peterson (1981), meanwhile, won attention for suggesting that local governments were incentivized within the federalist system to concentrate more on economic development and crime prevention.
Today, however, local policy in a variety of areas appears to be shaped more by supply-side economic policies that cut out local government almost entirely. And a prime exhibit in making the case for such a stance is the federal Opportunity Zone program, a placed-based development program funded via billions of tax expenditures and billions more from wealthy investors and investments funds.
The OZ program was brought into its existence as part of the Tax Cuts and Jobs Act of 2017 (Wessel, 2021). It is a variation of an older economic development concept, the enterprise zone, adopted at the state level first, wherein economically distressed areas would theoretically see their economies boosted via tax incentives and looser business regulations. What was different this time, however, was how gigantic the new initiative would turn out to be. The program was also decidedly more supply-side at its core, with no urban planning or community-building component, a la the Clinton-era Empowerment Zone/Enterprise Communities (EZ/EC) initiative, which included a few dozen districts in a relatively small part of U.S. territory.
By contrast, the Trump-era OZ program included tax incentives as well as capital gains credits for outside investors in qualifying projects, an idea borrowed from the New Market Tax Credits (NMTC) program, which evolved from the EZ/EC era. The OZ would take such place-based policies to a much larger swath of the United States. All in all, some 8,700 zones exist nationwide, in urban, suburban, and rural census tracts covering 56 percent of the country geographically (Kennedy & Wheeler, 2021; Wessel, 2021).
It is somewhat surprising, then, to notice that the OZ program has received scant attention in anything but economics, real estate, or legal research, and there mainly focused on the program’s mixed record in creating jobs and boosting investment. Researchers have faulted the program for attracting more real estate investment than aiding in the creation of jobs or businesses.
What has not been as closely examined is how the agency of local government and civic leader coalitions has been affected by the EZ program, nor whether local government and civic leaders have attempted to shape or channel EZ investments. A closer look is warranted, however, as American cities are in a different territory than, say, cities of the post-World War II era.
It is not clear, however, what the best means of studying what the OZ program means for city development planning and influence would be. First, the federal government has never released data on OZ projects and their costs. What could work best is to look at existing case studies of local government attempts to influence the OZ selection process, marketing, and investments, along with undertaking at least two independent case studies.
In the end, this research could help build a new theory or school of urban power analysis while incorporating ideas from network theory, American political development, and other areas of scholarship.


Dahl, R. A., 1915-2014. (1964). Who governs? Democracy and power in an American city. Yale University Press.
Hunter, F. (1953). Community power structure: A study of decision makers. University of North Carolina Press.
Kennedy, P. & Wheeler, H. (2021). Neighborhood-level investment from the U.S. Opportunity Zone program: Early evidence. April 15. Available at SSRN: https://ssrn.com/abstract=4024514 or http://dx.doi.org/10.2139/ssrn.4024514
Peterson P. (1981). City limits. University of Chicago Press.
Stone, C. N. (1989). Regime politics: Governing Atlanta, 1946-1988. University of Kansas Press.
Stone, C.N. (2015) Reflections on regime politics: From governing coalition to urban political order. Urban Affairs Review 51(1) 101–137.
Wessel, D. (2021). Only the rich can play: How Washington works in the new Gilded Age. PublicAffairs, Hachette Book Group.

Author

• Ray S Mikell, Jackson State University