The opportunity zone is an economically-distressed area, attractive for private investors, and thus a development tool intended to revitalize underdeveloped low-income communities. In order to be nominated and designated as an opportunity zone, the community of a certain area needs to qualify for it, measured by the criteria of the Tax Cuts and Jobs Act of 2017. In other words, they need to be nominated by the state and certified by the US Treasury.
An area can be considered an opportunity zone can in communities where:
- the poverty rate is at least 20%
- the median family income does not exceed 80% of the state’s median income.
After the zone is certified as an opportunity zone, it can keep this designation for ten years. At the moment, almost 9000 qualified opportunity zones have been selected in the all states of the US. Even in American Samoa, Guam, Puerto Rico, Mariana Islands and the Virgin Islands, opportunity zones were created. (Fundrise, 2019)
For instance, Chicago, Illinois, suggested 133 out of 500 census tracts in the city to the state of Illinois to become opportunity zones by using information from the 2011-2015 U.S. Census Bureau’s American Community Survey. These 133 census tracts were selected based on the city area’s with the greatest needs, based on a high rate of unemployment, high rate of poverty and a low family income (compared to the area median income). (City of Chicago, 2018)