California Governor Newsom calls for two key rules that will shape the Opportunity Zone tax incentive in California. First, the Governor is looking to restrict the types of projects that the Opportunity Zone incentive can be applied. That include affordable housing and green energy projects.
Second, Newsroom seeks to require reporting rules on Opportunity Zone related projects.
Reporting is a key aspect of Opportunity Zones’ ability to generate social impact. The incentive could be used for any real estate development project within Zones, however, not all projects will generate a social impact. Affordable housing and green energy projects are two of the safer uses for Opportunity Zones.
Proponents also argue that industrial redevelopment could create jobs within a specific area. Also, if residential units are revitalized in a way that does not contribute to gentrification or displacement, neighborhood residents could benefit from the appreciation in nearby property values.
Reporting around Opportunity Zones can ultimately evaluate gentrification, displacement, job creation, and environmental impact as key measures of social impact. Local agencies will likely begin measuring social impact for Opportunity Zones that could be applied to other development projects.