A recent article asks the question, “Is Anyone Actually Investing in Opportunity Zone Funds?”

We’ve profiled several investments in Opportunity Zones on this website. Additionally, many institutional investors organized Opportunity Zone funds to the tune of billions.

But there could be a growing sense that Opportunity Zones aren’t spurring the amount of investors proponents thought.

Analysists may have a difficult time understanding which investments were spurred by the Opportunity Zone incentive. Opportunity Zones are an incentive based on a counterfactual – a rumination on what type of development might or might not have occurred without the incentive. Counterfactuals don’t fare well in politics.

Speaking about the financial crisis, former Congressperson Bernie Frank states:

“The other problem we have though, but this is a constant problem in public policy, the economists have a technical term called the counterfactual. If you are an economist and you are modeling a policy, you talk about the policy, and then you would call the counterfactual. … There’s no counterfactual in the real world.”

Ultimately whether an investor would or would not development is a counterfactual argument. Perhaps they wouldn’t if not for the incentive … hard to tell.

Opportunity Zones could damage areas if they catalyze gentrification and displacement. However, if they don’t catalyze gentrification, there are positive elements that Opportunity Zones bring to the table. The United States is beginning a national dialogue about local real estate markets.

So far, most real estate investment occurs in major metros. Under-served and smaller communities and neighborhoods need to access a capital market for real estate investment. Opportunity Zones are shining a light on this issue.

Additionally, many communities are now packaging, promoting, and publicizing local development projects.

We’ll likely see more Federal intervention into Opportunity Zones. A U.S. Department of Commerce investment into Santa Fe College’s Center for Innovation and Economic Development noted that the grant was in an opportunity zone and matched with local funds.