A new blueprint for rural communities seeks to help empower them to create their economic futures.
The Sorenson Impact Center created the playbook in response to Opportunity Zones (OZ). The Opportunity Zones program is part of the 2017 U.S. Congress Tax Cuts and Jobs Act. It aims to be an economic development tool that allows people to invest in distressed areas in the United States.
“Rural Opportunity Zone and Recovery Playbook: A new blueprint to attract private investment for community priorities” helps inform rural areas across America to drive investment dollars into their communities.
Through two years of research in Utah, the Sorenson Impact Center team found that some rural community members lacked sufficient knowledge around how the system worked.
“A lot of folks really expected that having an Opportunity Zone – just being designated one – would be enough to really bring investors and capital to them,” said Megan Brewster, Sorenson Impact Center Senior Manager and co-author of the roadmap, in an interview with the Daily Yonder.
“They didn’t quite understand that it’s a competitive market in the sense that there’s more than 8,000 nationwide, and that really having a conscious, intentional strategy around what they would do with that capital, why they needed it, what their brand is as a community would really help give investors the confidence to then actually make some of those deals penciled through.”
The playbook lays out the formula in a six-step process, which are: 1) plan for social impact, 2) build your team, 3) understand investors, 4) leverage incentives, 5) create a community vision and project menu, and 6) connect with investors.
Often, when comparing urban to rural, the rural communities have a higher risk of possible financial loss, Patrick Mullen, Opportunity Zone consultant with the Utah Association of Counties, a nonprofit supported by the state in providing technical assistance to rural OZ communities, told the Daily Yonder.
“Because if you’re going get an investor to come out of an urban community and place money into a rural community, usually they’re sitting there saying, ‘Well, how are you going to make it worth my time, and also help me protect my downside, because going into smaller markets or into areas that have more potential economic volatility, you need to figure out ways to really help that capital get more comfortable.”
Researchers from the University of California Berkeley have found that in the ﬁrst year of the OZ policy, the top 5% of OZ tracts received 87% of total investment, while 84% of tracts received no investment at all. Tracts refer to Census areas that are economically-distressed.
The playbook includes a series of case studies of successful rural OZ projects, including some in Utah. The Union Block Building in Brigham City, Utah, population 19,000, is one example. Built in the 1890s, the historic building along the town’s Main Street had sat vacant for several decades, Mullen said.
“A commercial airline pilot named Dave Walker, who lives in the Bay Area, and his wife got together and said, ‘Hey, we want to raise some money. And we want to redo this building, turn it into some apartments on the upper floors, turn it into a commercial, kind of antique store on the bottom. But we’re having a hard time convincing people to put money into a project in Brigham City’s Main Street,” he said. “It’s just not an area you see a lot of investment capital flowing to. We worked with them in the early days to sort of help walk through the deal, as we outlined in the playbook.”
Funding for the “Rural Opportunity Zone and Recovery Playbook” came from the federal Economic Development Association (EDA), with match funding provided by the Governor’s Office of Economic Opportunity (Go Utah).