An Overlooked Opportunity to Aid America’s Economic Recovery

 
 

With President Biden and Congress finalizing the American Rescue Plan (ARP), the only thing that may be more plentiful than dollars are pundit and partisan opinions about it. And as compromises often turn out in Washington politics, everyone may end up disappointed. 
 
But whether you believe this package is a crucial, well-timed lifeline or a millstone in the making, one thing is certain: this relief is nowhere near the investment we will ultimately need to rebuild and reinvent our economy. 
 
The ARP’s $1.9 Trillion price tag is a lot of money, no doubt. But reasonable estimates of the pandemic’s ultimate economic impact range from $10 to $15 trillion or higher. So with as much as an entire year of American economic activity to make up for, no amount of direct federal relief will be sufficient to rebuild better than ever — the way Americans are so proud to do. 
 
To move toward that brighter future local and national leaders: public and private, Republican, Independent, and Democrat, need to find practical tools and ways to move massive amounts of investment and jobs into our nation’s cities and communities.
 
So as President Biden and our leaders across parties in Congress look for new capital to rebuild, they would do well to put to use a bipartisan tool with the capacity to make a real difference: Opportunity Zones.
 
Conceived during the Obama Administration and signed into law by President Trump, Opportunity Zones offer tax advantages to long-term private investments in low-income communities. The law was championed by Senator Cory Booker (D-NJ), Senator Tim Scott (R-SC), and dozens of other legislators across the aisle representing cities, suburbs, and rural communities alike. 
 
The early studies of Opportunity Zones’ sized the market as high as $6 trillion in eligible dollars for investment. And initial activity in the market shows the tools’ potential. Over 650 funds have raised more than $15B in capitalfrom investors across the country. The program has brought new attention to long-overlooked communities and stimulated new partnerships between public, private, and nonprofit leaders. And a promising new generation of impact-oriented investors, entrepreneurs, and developers are making important strides. 
 
Among them is RevOZ Capital, a leading OZ fund invested in projects that have created 1,700 jobs in emerging communities like Sacramento, Indianapolis, Charleston, and San Bernardino. In a sign of their commitment, RevOZrecently launched a Social Impact Council that we both sit on to better ensure their investment decisions ensure real community impact.
 
As encouraging as this progress is, the program isn’t perfect. The public needs more information on investment activity and impacts. Remaining uncertainties around key tax and fiscal policies have kept billions in investment on the sidelines. And new incentives and safeguards may be needed to ensure that local communities remain front and center in investment decisions.
 
These issues are significant. But the potential for positive impact is too great for us not to act.
 
Baltimore, Oklahoma City, and hundreds of similar communities stand ready as partners with the federal government in its COVID relief and recovery efforts. They will welcome federal support, but understand that a far greater infusion of capital will be needed. While Democrats and Republicans continue to debate the price tag of the federal response, they should align quickly behind a re-commitment to Opportunity Zones and motivate billions in new private investment off the sidelines and into neighborhoods in need. 
 
The post-COVID recovery will be an all-hands-on-deck effort of historic proportions, demanding collaboration from Americans from all walks of life. There are thousands ready to join this chorus, and millions who stand to benefit from a “2.0 version” of Opportunity Zones.
 
Will President Biden and his colleagues in Congress seize the moment? We hope so. And we will be ready to work alongside them when they do. 
 
Stephanie Rawlings-Blake served as the Mayor of Baltimore from 2010 to 2017 and President of the US Conference of Mayors from 2015 to 2016. She is CEO of SRB & Associates and a member of the RevOZ Capital Social Impact Council.

Mick Cornett served as Mayor of Oklahoma City from 2004–2018, and President of the US Conference of Mayors from 2016 to 2017. He is the author of The Next American City and a member of the RevOZ Capital Social Impact Council.

Lisa Merage