Finding the Real Opportunities in ‘Opportunity Zones’: A Conversation With Chris Tyson
Louisiana now has several areas designated as Opportunity Zones — defined by the federal government as “an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.” A report by Smart Growth America ranks these “opportunity zones” to help prioritize where investments could best “deliver positive economic, environmental and social returns,” and several Louisiana locations are in the top 10 percent of such areas in the U.S.
These zones present real opportunities for Louisiana to boost low-income areas, but without smart growth policies and regulatory oversight there’s a risk that they could exacerbate rather than alleviate existing problems. "History has repeatedly demonstrated that investment without protective equitable policy and process mechanisms leads to gentrification, displacement and a lack of access to benefits in many low-income and communities of color," the report notes.
For example, if developers choose to add low-end retailers rather than supermarkets that carry fresh produce, or build affordable housing that isn’t connected to transit service or job centers, then much of the opportunity we hope to realize may be wasted.
Chris Tyson, president and CEO at East Baton Rouge Redevelopment Authority, is an expert at finding ways to maximize development opportunities in Baton Rouge, so I reached out to him to find out more about the challenges — and opportunities — of these zones and how we can make sure that smart growth happens here.
From the RDA’s perspective, what are the challenges that opportunity zones present for responsible development in Baton Rouge?
There are no regulations or requirements related to participation in opportunity zones. Because of the way the formula works, there are some opportunity zones that are within or in close proximity to relatively stable and thriving markets. There is a concern that development in those areas could lead to displacement and gentrification.
So I think those are real concerns people have with the structure of the legislation and the uncertainty around how this is going to play out. For places like Baton Rouge though, the local demographic and economic factors driving economic development here mean that we don't really have a significant displacement risk.
What we do have are development deserts. The challenge is how do we spark catalytic activity where there is no capital otherwise being directed to these areas.
Concerns about development in vulnerable communities often center on gentrification and displacement. Can you talk more about Baton Rouge’s issue with ‘development deserts’?
Smart Growth America ranked us as one of the most sprawled-out metropolitan areas with a population under 1 million. We also have a high degree of racial segregation, which usually correlates with sprawl. So the Baton Rouge region is defined by a high degree of racial and spatial stratification, and that problem looks different than in some of the large urban contexts where we have affluent populations in close proximity to more economically downscaled populations.
There are no forces right now that lead young professionals who are priced out of condos on Bluebonnet and Perkins to need to move to Hollywood and Plank to find somewhere to live. It’s possible to live entirely in one half of our city without ever going to the other. And the economic conditions that are driving development and activity in the southern part of the city and parish are not finding their way into the northern part of the parish.
So we have a development desert where there aren't market forces driving development there. And we need to be intentional about directing capital to those areas.
What opportunities do the opportunity zones present for Baton Rouge?
The opportunity zones offer an opportunity to get some capital infusion where there otherwise isn't any available. We want to take advantage of that, but we also want to make sure that we aren't just haphazardly developing new structures, that we're using sound planning principles that lead to social and economic equity.
Opportunity zones can be helpful with that because of the tax benefits.
The challenge then becomes how do we ensure that the uses for which that capital was deployed are equitable, that they serve the holistic needs of the neighborhood and help the community more broadly so that some of the negative social issues that come with disinvestment are remedied through the new investment capital that comes from opportunity zones?
How do we make sure that we are developing policies and putting programs in place so that good growth occurs in these areas?
Take the Plank Road Project as an example. It is a comprehensive effort to address to disinvestment in north Baton Rouge through a revitalization of one of its oldest, and still primary, commercial corridors, the Plank Road corridor. The project involves bus rapid transit; a land banking strategy that returned 85 to 90 vacant, adjudicated and blighted parcels to commerce; and a comprehensive master plan for the corridor.
Plank Road is an example of what can happen with good policy and planning. There we have one of the greatest opportunities to develop a walkable, built-to-human-scale environment.
It’s a project that takes into account coordinated land development, economic development and community development so that we're holistically addressing the neighborhood's needs while modeling best practices for corridor revitalization.
By combining economic investment and sound policy and by identifying the goals, outcomes and guiding principles needed for good growth in these Opportunity Zones, we can create public-private partnerships that actually leverage this tool to create real smart growth in partnership with our communities that need it the most.