Opportunity Zone Flow Chart

Who’s Leading Spokane’s Opportunity Zone Conversation?

From time to time projects arise that shine a spotlight on Spokane’s dysfunctional economic development environment. The last time the spotlight shone brightly was during Amazon’s HQ2 process. Now it’s shining again because there’s this new cool thing called Opportunity Zones and our leaders in economic development don’t know what they are, much less how to maximize their potential.

It strikes me that if local tax dollars are going into an economic development organization then the least they can do is stay on the cutting edge of economic development tools as the feds or the state or local governments might create them.

In the case of Opportunity Zones, the feds created it and the legislation was quietly attached to Trump’s big tax cut bill that was signed into law last December. (Diving into a partisan conversation about the value of the tax cuts in general and whether or not Opportunity Zones are a good or bad thing is a worthwhile subject I’ll save for a different blog post.)

Without a complicated deep-dive into the specifics and nuances, put simply, the spirit of the Opportunity Zone law is to point private capital into low income US Census tracts. States throughout the country are under tight deadlines to nominate low income Census tracts to become Opportunity Zones. The process to become an Opportunity Zone is competitive because states can only nominate a limited number of low income tracts. In Spokane County, there are far more low income tracts than will receive nominations.

The law is so new that tax experts and economic development professionals throughout the country are collaborating around development of the Opportunity Zone capital markets. The time to influence how those markets are shaped is now. Having seats at the appropriate national level Opportunity Zone tables will bear fruit for Spokane County and the state of Washington. And by fruit, I mean money. Lots of money.

Where’s Greater Spokane, Inc (GSI) in the mix of Opportunity Zones and attracting money to Spokane County? Certainly, as our formally designated Associate Development Organization for Spokane County, they are participating at a national scale – driving the Opportunity Zone conversation and solidifying relationships that will bear fruit as the market matures. And by fruit, I mean money. Lots of money.

Certainly GSI has worked on all of our behalves to ensure that the potential of Opportunity Zones is maximized and the spirit of the law is implemented? Certainly GSI is feverishly sophisticating itself on the nuances of Opportunity Zones and how to leverage them? Certainly GSI is working to galvanize both individual investors and local corporations, strategizing around capitalization of the holding funds and where best to invest? Certainly GSI is creating and registering Opportunity Zone holding fund corporations to ensure the program bears fruit for Spokane County? And by fruit, I mean money. Lots of money.

Certainly, certainly, certainly…

Good news is the Washington State Department of Commerce likes fruit as much as I do and they have led the nation in developing a simple, fair, and transparent process for the Governor to consider Opportunity Zone nominations. One of the questions within the application is about whether or not the Opportunity Zone will advance social equity.

There’s some grand irony that GSI must navigate questions of social equity as the Opportunity Zone application process unfolds. The gods of economic development are giggling. It is a rare gift when a government application provides an opportunity to identify the social inequalities within Spokane’s economic development environment.

Here’s the answer to the social equity question that one local jurisdiction placed in its application to receive an Opportunity Zone nomination.

 

Question:

Social equity. Please describe how designating this area as an Opportunity Zone will or will not improve social equity, i.e., the fair, just, and equitable distribution of resources. In particular, please describe how designation will promote development of affordable housing, or services or employment opportunities for traditionally underserved or marginalized populations. (250 words)

 

Applicant’s Answer:

We’re asking you to increase social equity by nominating this Census tract outside of the recommendation of Spokane County’s ADO. Rest assured, Greater Spokane, Inc. (GSI), the County’s ADO, will fumble around with favoritism and garden variety good ol’boy shenanigans. GSI’s business model is pay to play. They are driven by memberships and sponsorships that only enable those with means to influence their decision making. Want to sit on the board? Better step-up with a diamond membership package. Want to get their support for an Opportunity Zone nomination? Better step-up with a marquee sponsorship for their next “We’re Taking Credit for This” banquet. GSI’s standard unit of measurement when considering external opinions is the dollar sign, as opposed to core principles.

But the biggest travesty of justice is not GSI’s pay to play business model, it’s GSI has hardly a clue what an Opportunity Zone is, much less how to leverage them. Therefore, how can we expect GSI to leverage this process to maximize capitalization dynamics within the emerging marketplace? GSI is not in a leadership position for all things Opportunity Zones. Yet, because of the inequities associated with ADO laws, those of us leading the Opportunity Zone conversation must suffer the burden of GSI’s ignorance.

Two Native American tribes and a low-income municipality are the primary beneficiaries of our proposed Opportunity Zone nomination. As far as social equity goes, that’s pretty good.

But not as good as this: the Spokane Tribe put the ‘S’ in GSI.