The inclusion of the Investing in Opportunity Act (IOA) in the Tax Cuts and Jobs Act of 2017 has sparked a lot of excitement among investors, local institutions and community leaders looking to redirect dormant capital gains into distressed or developing communities that could match the criteria for Opportunity Zones (OZs). COMMERCIALCafé asked which of the 8,764 eligible tracts might prove the most attractive to prospective investors.
To this end, we put together a list of top counties based on the points they scored in terms of employment, GDP and population growth, poverty rates, the educational attainment level of the labor force and the number of eligible opportunity zones within each area.
Texas Looms Large
To qualify as OZs, census tracts had to meet certain criteria: an average poverty rate of 20% and a median family income of no more than 80% of the statewide median income. After applying the methodology to the initial 8,764 tracts, the resulting list of top 20 counties for investment in opportunity zones placed Travis County, Texas, in first place with a total of 66 points. Travis County has experienced a 6.5 percent population growth between 2014 and 2017, with the county’s metro area of Austin adding 105 people per day in terms of net migration to the region. The area encompasses 21 opportunity zones and has a 12% poverty rate, well below the required 20% for individual tracts.
Three other Texas counties make the top 20. Galveston County garnered 61 points overall, ranking eighth, with 19 out of 20 points received for its GDP growth, a 12 percent poverty rate and a total of peight opportunity zones. Harris County has a whopping 105 tracts, with an average poverty rate of 16 percent.
Zooming out to the state level, California and Texas have the highest number of opportunity zones ripe for investment, with the former having 679 OZs and the latter boasting 628 OZs. Texas received a C- on its latest infrastructure report card, with its 53,488 bridges scoring highest (B), while its wastewater, flood control facilities and dams all received Ds. California’s report card highlights the poor condition of its roads (D), bridges (C-) and transit (C-).
There are 27 counties with more than five opportunity zones each in California. Roughly 4.17 million people 25 years or older live in the designated census tracts, 260,500 of which have a bachelor’s degree. Texas has 32 counties with more than five opportunity zones each, with 2.9 million people living in these tracts and approximately 173,500 college-educated residents among these.
Researcher by nature, curious by profession. With years of intense research on the U.S. commercial real estate market behind her, Diana is currently putting her experience to use by writing for the COMMERCIALCafé blog.