Communities in California with poverty rates of at least 20 percent could soon be designated “Opportunity Zones,” under a program created by the GOP-led federal tax plan.
Irena Asmundson, chief economist at the California Department of Finance, said the Brown administration is studying which impoverished areas to include. The program allows investors who put money into the communities to receive federal tax breaks on capital gains.
“The intention of the program was to ensure that underserved areas, under federal tax law, would be able to attract a little more investment,” Asmundson said during a call with reporters on Friday.
Parts of the Central Valley, Inland Empire and the state’s far northern communities are all under consideration for the zones.
Details on the plan — including when it would start, exactly what it would fund and what effect it would have — are still being worked out by the U.S. Treasury Department, said H.D Palmer, spokesman for the state finance department.
“We can’t say with specificity ‘X’ number of investments and these types of jobs are going to occur. But it’s designed to be able to create opportunities, create investment in those areas that heretofore really haven’t been able to benefit from them,” Palmer said.
The program could help extend the economic boom that has benefited some areas of California, Panorea Avdis, director of the Governor's Office of Business and Economic Development, added in the conference call.
"We know that it hasn't been realized consistently between Northern and Southern California and even between the coastal and inland areas of the state," Avdis said.
Some experts, though, are skeptical.
Evidence on the success of programs similar to the opportunity zones is inconclusive. And if executed poorly, it could end up displacing residents of poor neighborhoods or benefit developers in neighborhoods already seeing development, Adam Looney, a senior fellow at the Brookings Institution, wrote this week on the organization's website.
The Brown administration is soliciting feedback on which areas to select through March 15 at 5 p.m. Comments can be sent to OZcomments@dof.ca.gov
The Associated Press contributed to this report.