With contributions from Shaw Sprague and Dan Watts
Included in the Tax Cuts and Jobs Act of 2017, Opportunity Zones are perhaps the single largest new federal tax incentive in decades. Designed to spur private investment to revitalize distressed communities, Opportunity Zones have the potential to direct trillions of dollars in deferred capital gains taxes to transform 8,700 distressed census tracts—a prospect at once thrilling and alarming to preservationists and community activists.
The Tax Cut and Jobs Act that established Opportunity Zones did not detail exactly how the incentive would work in practice and the Department of Treasury has subsequently issued two sets of regulations to address questions about how the incentive is implemented. A year and a half after the creation of the incentive, it appears Opportunity Zones have yet to catalyze the amount of reinvestment originally envisioned as investors and financial markets have sought more clarity about how the incentive would work.
Treasury issued its second “traunch” of guidance on April 17th to help spur investment activity. Unfortunately, these new regulations still leave key questions unanswered for preservationists, especially for those interested in pairing the Opportunity Zone incentive with the federal historic tax credit (HTC). The National Trust Community Investment Corporation and the National Trust for Historic Preservation are working with other preservation stakeholders and advocates, in both the preservation and development sectors, to assure that the Opportunity Zone tax incentive complements the HTC and other community development financing tools and supports the historic preservation movement.
Clearly much is in play, and it remains to be seen whether Opportunity Zones will drive more rehabilitation or more demolition. This may hinge on how well the preservation community mobilizes and encourages investment toward the transformation and rehabilitation of historic buildings, while ensuring that local protections are in place that protect vulnerable resources and discourage the displacement of existing residents—the very people Opportunity Zone investment is meant to help. In order to know where to focus our attention, it is essential that we know which of the 8,700 Opportunity Zones are home to the most historic properties.
To better understand the potential impact of Opportunity Zone investments on historic properties and preservation initiatives, the National Trust for Historic Preservation has created an interactive mapping application to highlight the intersection between National Register–listed historic districts, National Main Street Center main street districts, HTC projects, and the 8,700 Qualified Opportunity Zones (QOZs). The mapping application is designed to help the preservation community understand where historic buildings might benefit from responsible Opportunity Fund investments or might be at risk of demolition or inappropriate incentivized redevelopment.
The application is simple and intuitive to use and allows users to explore map data by either panning, zooming, and clicking on featured elements or by running preselected queries that identify QOZs that contain historic districts, or HTC projects that have taken place in QOZs.
Datasets featured in the application include QOZ boundaries, National Main Street Center main street districts, completed projects that utilized HTCs, and (when possible) National Register of Historic Places historic districts.
It is important to note that the application only includes National Register historic district boundaries for states and locations where accurate information is currently available. The lack of National Register data in certain parts of the country does not imply that there are no listed historic districts in those areas. More National Register data will be added to the application as that becomes available. In addition, the application does not include locally designated historic properties.
Following are two map views from St. Louis, Missouri, and Orlando, Florida, illustrating varying degrees of overlap between QOZs and designated historic properties, historic preservation activity, and the utilization of HTCs.
We encourage you to look at your own neighborhoods, cities, and states to get a sense of where potential Opportunity Fund investment could support preservation or put historic resources and communities at risk. Also consider those QOZs that have few designated properties but that you know to contain a rich stock of older and historic buildings.
Given the overlap of Opportunity Zones with historic buildings and districts, as demonstrated by the mapping tool, it is imperative that the preservation community join in the efforts to ensure that historic properties are protected, on the one hand, and positioned for rehabilitation, on the other. Preservationists should work with state and local organizations to help focus attention on the value of their existing assets and consider how the OZ incentive could be used to support preservation and revitalization efforts. Access the interactive map below or in a new window.
Anthony Veerkamp was the former director of policy development for the National Trust for Historic Preservation’s Research & Policy Lab. Dan Watts is the senior GIS project manager, and Shaw Sprague is the senior director of government relations.