Federal anti-poverty program sets sights on La.

By Ryan Whirty
Contributing Writer

As Gov. John Bel Edwards announced a legislative agenda with a specific focus on anti-poverty efforts, a federal program aimed at encouraging investment in poor and lower-class communities has been opened to nominations for Louisiana.

The recently launched Opportunity Zone program was created as part of the much-ballyhooed federal tax bill adopted by Congress and signed by President Trump last year.

Under the program, the U.S. Treasury Department, through the Internal Revenue Service, will establish zones in each state—nominations for which will be submitted on a state-by-state basis—in which investors will be offered tax breaks as incentive for investing in the designated zones.

The program offers investors a chance to roll capital gains into opportunity zone investment funds, with such capital gains benefitting from new tax breaks and lessened regulations through the new tax bill.

In February, the IRS issued guidelines to governors’ offices as state officials and members of the public nominate poverty stricken areas for the Opportunity Zone program. In this state, the Louisiana Economic Development agency is now accepting nominations for such zones at https://www.opportunitylouisiana.com/Opportunity-Zones. Nominations are made according to Census tract.

“LED is supporting Gov. John Bel Edwards, who ultimately will nominate Opportunity Zones in Louisiana to the U.S. Department of the Treasury,” the agency stated in a March 9 release. “With public input, Gov. Edwards will nominate up to 25 percent of Louisiana’s low-income census tracts for inclusion in the Opportunity Zones program.”

However, despite the assertions of the program’s supporters and creators, some observers are expressing concern that the process could lead to gentrification in low-income neighborhoods that pushes out longtime residents.

In a March 9 article, Institute for Southern Studies and facingsouth.org Editorial Director Sue Sturgis outlined such worries, noting that the South, where poverty can be especially dire and systemic, and where some cities are already battling gentrification.

Sturges also cited a potential loophole in the tax legislation that could allow a percentage of program investment funds to be funneled into Census tracts not deemed to be low-income.

In a Feb. 26 analysis of the Opportunity Zone program, the Brookings Institute’s Adam Looney pointed to a dearth of empirical studies addressing the efficacy of such programs, asserting that “our playbook of effective place-based policies is limited.”

“In the absence of evidence” Looney added, “unevaluated programs often become permanent and costly additions to the size of government whether they work or not. Opportunity Zones have already hailed a “policy triumph” by one optimistic observer, despite not yet having gone into effect, little evidence that they will be effective, and a price tag that might soar by billions if permanently extended. Let’s make sure we know whether ‘Opportunity Zones’ work when it comes time to renew them.”

This article originally published in the March 19, 2018 print edition of The Louisiana Weekly newspaper.