Examining place-based levers that drive private investments in Chicago’s opportunity zones

The Tax Cuts and Jobs Act of 2017 introduced the Opportunity Zones (OZ) program, which aims to attract long-term capital to real estate projects and businesses in distressed communities. It offers tax benefits to private investors with capital gains tax liabilities who invest in OZ funds, thus driving private capital into these disinvested communities. While the program shares a common goal with other market incentives to revitalize disadvantaged neighborhoods using private capital, there is little evidence of the involvement of local governments and community actors written into the policy. I examine the impact of the OZ program in Chicago and argue that local initiatives, planning practices, and stakeholder motivations significantly shape the program's outcomes and community impact. By analyzing census data, planning documents, and interviews, the study examines favorable combination of local planning incentives that maximize the benefits of the OZ program and explores the relationship between stakeholders as well as the motivations behind their decisions. The study finds that OZs yield the best return on investment as well as most community impact when combined with other incentives. In Chicago, the city's local initiatives enhance the impact of OZs by improving the implementation process and directing the incentives towards vacant properties in distressed neighborhoods. However, since the initiatives prioritize commercial development, the OZ program is likely to predominantly promote such projects. Among the various stakeholders, I emphasize the crucial role of the City of Chicago and nonprofit or community-based developers in OZ implementation. The city can provide oversight and further support nonprofit developers to absorb and retain benefits within the community. Moreover, the City and nonprofit developers are highly committed to creating opportunities for community participation and minimizing the risks of displacement. The study recommends maximizing the involvement of these stakeholders and addressing Chicago's community development needs, particularly in the housing sector, to bridge the gaps in OZ implementation. Given that the OZ program has a time limit, it is important to improve its implementation practices to ensure that private OZ capital, even if for a short period, does not drastically change the neighborhood’s socioeconomic structure and hinder the neighborhood's potential for development.

Name thesis:degree_name

M.U.P.

Level thesis:degree_level

Thesis

Discipline thesis:degree_discipline

Urban Planning

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2023

Author dc:creator

• Devanarayanan, Anagha

Contributors dc:contributor

• Greenlee, Andrew J
• Allred, Dustin

• Opportunity Zones
• Community Development
• Economic Development
• Housing
• Neighborhood
• Incentives
• Chicago
• Private Investments
• Local Government
• Investment Strategies

Statement dc:rights

• Copyright 2023 Anagha Devanarayanan

Language dc:language

en, eng

Handle dc:identifier

https://hdl.handle.net/2142/121530

OAI record oai:identifier

https://www.ideals.illinois.edu/oai-pmh?verb=GetRecord&metadataPrefix=etdms&identifier=oai%3Awww.ideals.illinois.edu%3A2142%2F121530