“We’ve seen a lot of recent coverage around communities fighting back against data center development on their lands, and that’s not surprising to those of us who work in community development,” said NCRC’s President and CEO Jesse Van Tol. “People talk. They hear about neighboring communities dealing with a whole swath of problems, including increased utility prices, after a new data center comes online. The tech companies would be wise to take a page from financial institutions and work with communities, not against them.”

The report found that the current AI data centers being developed are larger and more resource-intensive than other traditional data centers, making them more expensive to build and operate while also introducing numerous costs on community life, the environment and natural resources. 

However, rural policymakers are facing years of disinvestment and population declines that have diminished local tax revenue. Without alternative economic development initiatives, the report found that local leaders have accepted AI data centers to maintain financial stability despite their various negative effects and widely-held opposition within the community.

To ensure the Opportunity Zones program doesn’t become a creator of rural AI data center hotspots, the report calls for place-based economic development incentives that ban or condition data center permitting in rural areas on developers’ alignment with community planning goals and the provision of additional development incentives.  

“The placement of a data center should be something that happens with, and not to, the community,” said report coauthor and NCRC’s Principal Research Dr. Bruce Mitchell. “We hope that the report and map enable low- and moderate-income communities to get a better sense of their vulnerability to data center placement under the Opportunity Zone 2.0 program.”

The full report is available here.

This dataset draws on US Census data spanning multiple decades (from the 1970s through 2010s) and covering thousands of neighborhoods tracking demographic, economic and housing trends at the neighborhood (census tract) level across metropolitan areas nationwide.

Why this matters

Gentrification is one of the most debated topics in the housing and community development fields. Depending on how it’s measured, the same neighborhood can look like a success story or a displacement crisis. This dataset was built to cut through that confusion. It applies five research-tested methods for identifying gentrification so users can see how conclusions shift depending on the approach — and which methods are best supported by real-world evidence.

NCRC’s own research, published in the Journal of Urban Affairs, found that the methods included in this dataset were among the most accurate at tracking actual patterns of class change, racial turnover and housing market pressure. Using these methods, we estimate that roughly 60,000 Black residents left gentrifying neighborhoods in Washington, DC between 1990 and 2020 alone.

This new dataset has provided researchers and advocates with a more transparent and evidence-based way to understand where and how gentrification is occurring.

What’s in the dataset

The dataset includes neighborhood-level indicators over time, such as:

• Population and demographic change
• Income and poverty levels
• Housing values and market activity
• Employment and occupational shifts
• Gentrification indicators by decade

These indicators allow researchers to make consistent, decade-by-decade comparisons across thousands of neighborhoods in urban areas nationwide.

What we found

Using this dataset and our evaluation approach, we found that in Washington, DC – one of the most studied cases of gentrification – neighborhoods identified as gentrifying were also the primary sites of significant Black population loss between 1990 and 2020.

However, this does not mean every move was forced. But it does show that population changes were not random as they were concentrated in areas experiencing rapid economic and social transformation.

How this helps communities

This dataset is designed to support:

• Better public understanding of neighborhood change;
• More informed policy decisions, including tenant protections and anti-displacement strategies;
• Targeted investment by focusing resources where pressures are greatest; and allows for more
• Local analysis, allowing cities to apply consistent evaluation methods to their own communities.

A tool for action

By grounding the measurement of gentrification in real-world indicators, this dataset helps move the conversation beyond competing definitions and toward practical solutions.

When we can clearly identify where change is happening — and who is affected — we are better equipped to protect communities and promote equitable development.

To access the dataset and learn more about the evaluation methods, please see the following resources: 

• https://www.openicpsr.org/openicpsr/project/250783/version/V1/view
• https://www.tandfonline.com/doi/full/10.1080/07352166.2026.2621717

Funding Sources 

National Institutes of Health’s National Institute on Aging (R01AG080401)

Bruce C. Mitchell with the Principal Researcher with NCRC’s Research team.

Photo credit: Erik McLean via Pexels.

August 5 , 9:00 am EDT – 12:00 pm EDT

Join Dr. Bruce Mitchell, NCRC Principal Researcher, at the Obama Presidential Center as he explores how the color-coded maps used by federal officials from the 1930s through the 1960s continue to shape mortgage lending and where economic opportunity flows today.

Over the past four decades, neighborhoods labeled “hazardous” more than 80 years ago have received approximately 3,000 fewer mortgages than neighborhoods graded “best,” with lending declining steadily across each lower grade, decade after decade. Even after accounting for differences in housing stock, vacancy rates, and owner occupancy, these disparities persist alongside today’s racial wealth gap, where Black households hold roughly $15 in wealth for every $100 held by White households.

The Fair Housing Act of 1968 made redlining illegal, but the old red lines still influence who can and can’t get a mortgage today. 

The National Community Reinvestment Coalition (NCRC), a nonprofit organization focused on underserved communities, analyzed Home Mortgage Disclosure Act (HMDA) data from 1991 and 2021. Neighborhoods once marked “hazardous” on HOLC maps received 2.5 times fewer loans than areas once graded as “best.” The disparity remains even after accounting for vacancy, owner-occupancy rates and housing age.

“Formerly redlined communities had reduced mortgage investment for over a century,” says Bruce Mitchell, a principal researcher at the NCRC. “The impact was especially deep in redlined Black neighborhoods, where mortgage availability was further suppressed until the most recent decade.”

Even today, homeownership rates in formerly “hazardous” areas are still roughly half those in greenlined neighborhoods, according to the most recent data from the Federal Reserve Bank of St. Louis. 

“Mortgage markets are backward-looking, relying on historical sales to determine present values,” says Jason Richardson, senior director of research at the NCRC.

The Fair Housing Act of 1968 made redlining illegal, but the old red lines still influence who can and can’t get a mortgage today. 

The National Community Reinvestment Coalition (NCRC), a nonprofit organization focused on underserved communities, analyzed Home Mortgage Disclosure Act (HMDA) data from 1991 and 2021. Neighborhoods once marked “hazardous” on HOLC maps received 2.5 times fewer loans than areas once graded as “best.” The disparity remains even after accounting for vacancy, owner-occupancy rates and housing age.

“Formerly redlined communities had reduced mortgage investment for over a century,” says Bruce Mitchell, a principal researcher at the NCRC. “The impact was especially deep in redlined Black neighborhoods, where mortgage availability was further suppressed until the most recent decade.”

Even today, homeownership rates in formerly “hazardous” areas are still roughly half those in greenlined neighborhoods, according to the most recent data from the Federal Reserve Bank of St. Louis. 

“Mortgage markets are backward-looking, relying on historical sales to determine present values,” says Jason Richardson, senior director of research at the NCRC.

The lack of lending in one year depresses values, which makes lending more difficult the next. That is how lending discrimination became self-reinforcing.— Jason Richardson, Senior Director of Research, NCRC

Opportunity Zones 2.0 (OZ 2.0) is an updated federal investment incentive program created under the 2025 One Big Beautiful Bill Act (OBBBA). It provides tax benefits to encourage private investment in low-income census tracts.

OZ 2.0 will shape the community investment landscape for the next decade. The process is competitive and time-sensitive. Members who act early, build strong cases and engage state decision-makers will be best positioned to direct investment to the communities that need it most.

For more information, visit: https://ncrc.org/opportunity-zones-2-0-what-you-need-to-know-and-how-to-act-now/

Speakers

Bruce C. Mitchell, PhD Principal Researcher, NCRC
Manan Shah, Policy Advisor, NCRC

Transcript:

NCRC video transcripts are produced by a third-party transcription service and may contain errors. They are lightly edited for style and clarity.

Shah 0:01
All right, welcome everybody. It’s good to see many people on the call. Feel free to put in the chat, you know, which organization you’re with, where you’re tuning in from. Really glad to have you guys on the call today. My name is Manan Shah. I’m the policy advisor here with NCRC, and I’m joined by my colleague today, Dr. Bruce Mitchell, our principal researcher, to talk about the newest iteration of the Opportunity Zone program. As many of you have known or heard, state governors are currently nominating new census tracts to designate as opportunity zones for the next 10 years. We want to share with community advocates like yourself what the process looks like to nominate your census track and really ensure that capital is flowing to communities that need it the most. So today, we are going to share some of our own research on OZs, including a new mapping tool our research team has developed to help you identify and nominate your census tract for each state. The deadline to nominate census tracts is coming up pretty soon this summer, and so it’s really vital that community organizations act early, and so let’s go ahead and dive right in. There’s some housekeeping. NCRC’s code of conduct applies to all of our gatherings. We don’t allow any AI chatbots to join the call, but we will have a recording available after this presentation. If you have any questions throughout the presentation, please use the Q and A button at the bottom of your Zoom screen. If you have any, if you’re having any trouble with that, you can also use the chat button, but for now, just use the Q and A button, and we will get to as many of those as we can at the end of the presentation. But feel free to follow up with us. And for those of you who are new to NCRC, we are the National Community Reinvestment Coalition. We are a member organization, membership network of 700 grassroots organizations advancing to build a just economy for all. We work with banking institutions specifically to hold them accountable to the Community Reinvestment Act to get capital flowing in low- to moderate-income communities, really to expand housing, small businesses, and workforce opportunities. And so I’m going to pass it over to my colleague Bruce, who can start us off on some of his research findings.

Dr. Mitchell 2:41
Well, thank you very much, Manon. Appreciate that. As you might know, we’ve been interested in the opportunity zones for quite some time now. We’ve done a number of reports on the OC 1.0 which I’ll.. when I say that, I’m referring to the former program established under the 2017 Tax Cuts and Jobs Act. And that program, OZ 1.0, that’s due to sunset at the end of this year to be replaced by a new program, which we’ll call OZ 2.0. But if we look at the performance of the first version of the Opportunity Zone program, there’s some interesting factors about it, you know. First off, it’s the largest federal community development program, you know, in history. Basically, $100 billion has flowed into this program since 2017, about $20 billion a year, mid 2019 and 2022. This has flowed into 6,000 of what are called qualified opportunity funds, and these funds are the primary mechanism by which financing flows into opportunity zones. Across the United States, in the old program, about 8,700 census tracts across the country were designated as opportunity zones, most of these in urban areas, some in rural areas also. But what we found is, and others have found who have researched this, is that the capital in this program has been deeply concentrated. That the top 1% of the opportunity zones, they receive 42% of all investments, and the top 5% received three quarters of all investments. So it’s been highly concentrated in that old program, and there have been some revisions to new program, which we’ll go over and cover those, but we’re interested in hearing what you have to say about the opportunity zones in your community, so we have a short poll, if you would mind just checking that off on seeing whether you agree or disagree that the opportunity zones have had an impact on community contributing to community development in your community. We’ll leave that up for a couple of a seconds there, so that you can have a chance to answer that and see what the results are. So that’s really interesting. There seems to be a split between people who agree that opportunity zones have had some benefit in their communities, and others who disagree and say they haven’t had much of a benefit. So, that’s a really interesting finding, and we’re interested in hearing more from our members on this particular issue, the types of mechanisms and the types of investments that are flowing into their communities as a result of the qualified opportunity funds. That would be very interesting to us, because we’d like to really, you know, help our members work with them, so that they can, you know, better identify ways of attracting capital within their communities through this program.

Next slide, please, because what we’ve seen from the opportunity zone 1.0 is what do the residents actually get, well, in terms of gains, you know, research has found that there were modest positive impacts on employment earnings and in rates of poverty for zone residents. They also found that most of the investment, 75% of the investment in the qualified opportunity funds went into real estate, and that in fact most of that real estate investment went into market rate real estate, so you know rather than building affordable houses necessarily, it’s been building market rate housing of some sort in those areas, and any sort of building of housing these days is probably a positive impact, considering the whole state of the housing industry in this country, and the need for more housing to be built, but it’s been highly concentrated in real estate, and we’ll talk about why that is, as we go on. Also the investments that went in, they tended to favor already improving areas. That census tracts that already had higher incomes had rising home values and strong pre-existing growth. Most of the funding tended to fund those rather than to highly distressed communities. Probably the most, one of the most troubling aspects of this, though, was that it’s been very difficult to assess and see how the opportunity zones have performed, because there was minimal accountability and reporting included in that Tax Cuts and Jobs Act legislation. There was no agency that was designated to collect data, so really all the data that we have came out of the IRS reporting or from states like Ohio, which set up a separate opportunity zone program, which had more rigorous reporting requirements in that. So Urban Institute based a lot of their studies off of that Ohio-based data to see what sort of benefits were derived there.

Next slide, so as a result of this, we can see here that OZ 1.0, OZ 2.0, what have been the changes? Well, first off is the program duration, right. OZ 1.0 is due to sunset at the end of this year, so will no longer be in effect, and those census tracts will no longer be designated opportunity zones at the end of this year, which means that we’re going to have an entirely new reset of new census tracts, potentially new census tracts in this next nomination time period. The program’s also been made permanent now. It’s a permanent program in which the opportunity zones are designated every 10 years. So this nomination period, after it’s over at the end of this year, those will be set for the next 10 years as qualified opportunity zones, so it’s very important that if you have a project that you’re interested in attracting funding from a qualified opportunity fund to, that you get your tract nominated and designated as an opportunity zone, because of the long timeframe this will be in effect. Additionally, OC 1.0, the eligibility under that was 80% of median family income for the area, or for rural areas for the state. That’s become stricter in OC 2.0. It’s now at 70% of median family income, there’s also a 20% poverty inclusion, so if a tract has a 20% or greater poverty rate, it can be considered as a low-income community that could be nominated as a qualified opportunity zone. They’ve also eliminated the contiguous tract rule. What this was was that a higher income tract that was next to a low income tract or a qualified opportunity zone under OZ 1.0, that higher income tract could also become an opportunity zone. That’s been eliminated in this go-around, so you’re no longer going to have higher-income tracts being potential nominees. The capital gains deferral, and that’s one of the main benefits of this, is the ability of investors to defer their capital gains on investment. In the past, that was fixed at a December 31, 2026, deadline. In the new version, it’s going to be a rolling five year from investment date, so if you made an investment, say in 2030, then the deferral would then be fully realized as of 2035. So it’s a rolling date at this point of five years. Also, the basis step-up has changed. The basis step-up formally, it was 10% would be deferred after five years, 15% after seven years of holding that investment. It’s been simplified, so now it’s a uniform 10% after five years in the new version. There are additional rural incentives, and these are for qualified rural opportunity funds. This is a new mechanism for OZ 2.0 and in these, there’s an even higher step up. There’s a 30% deferral step up on the qualified row opportunity funds. Also, there’s a 50% improvement threshold in rural areas. What’s 100% in urban areas? And I’ll go over that in a little bit more detail in the next slide, too. And then finally, there’s enhanced reporting. They’ve improved the reporting on this, so that now the number of units purchased or constructed, the number of employees hired if a business is being invested in the assets, and the track locations they are now required and reporting, so we’ll be able to get better metrics on how OZ 2.0 is performing. So, these are all improvements in the program.

Next slide, please. So, let’s just go into a little bit more detail on how does the investment mechanism work for a qualified opportunity fund? Because the qualified opportunity fund, or QAF, that’s the main mechanism by which capital flows into urban opportunity zones. So, let’s say an investor, they sell an asset and they realize capital gains on the sale of that asset. Well, instead of paying the taxes on those capital gains, what they do is they take that capital gains amount and they invest it in a qualified opportunity fund, right? The qualified opportunity fund then takes those funds and puts them into a qualified opportunity zone, invests in there. Then after that investment is held for five years, 10% of the original deferred capital gains are excluded from taxation, so they get an exclusion from paying taxes on that 10% after five years, but here’s where the real enhancement is, that if they hold that investment for 10 full years, all of the gains that they made on that investment then become tax free to the investor. So they’re deferring their taxes, exempt a portion of their taxes, and then the investor, in addition, is able to realize any gains off of that investment at the end as being tax free after 10 years, so this is a substantial gain, potentially from an investor on this. It also tends to favor the highest rate of return, right, because you want to maximize that investment and the amount of money made off that investment. Talked a little bit about the property improvement requirement in urban areas where qualified opportunity funds function in those urban areas. If you buy pre-existing property, say for $100,000 then this property improvement requirement is 100% so you’d have to invest a further $100,000 in improving that property in order for it to qualify in urban areas, that changes for the qualified rural opportunity funds, which we’ll see in the next slide. So for qualified rural opportunity funds, the same, you know, first thing here, realize that capital gains on a sale, instead of going into a QAF, it goes into qualified rural opportunity fund, and these are unique in that 90% of the funds that are invested in those, need to then flow into a rural census tract outside of the CBSA, a metro area, right. The enhancement on the qualified rural opportunity fund is after five years, they realize actual a 30% deferment of capital gains on that original amount that was invested, so 30% exclude from taxation, and then again after 10 years, all of the gains earned in that are tax free for the investor. The property improvement requirement for the rural areas, it’s relaxed, so you no longer have to make 100% of the invested amount, you may need to only invest 50% in improvement of that property, so there’s some substantial, you know, things here that would, you know, make a rural investment be more attractive. One of our worries about this, talk to some people about this. Is that we’re kind of concerned that the type of investment that might be flowing into their into these could benefit things like AI data centers and construction of AI data centers in rural areas, but we’ll go into a little bit more about what sort of investments are favored.

Next slide, please. Because what this does, it drives investment. Because first off, all gains on investment held for 10 years are tax-free. So this tends to favor long hold strategies. That’s the whole point of it, is you wanted the investment to be a long-lasting investment within that community, but it also makes risky investments something to be avoided, right. So, you might be less likely to invest in a small business in these areas, because the investment risk there is higher than, say, investing in market-rate real estate and a persisting structure. So, investment in durable structures has been favored, particularly market-rate housing, and that’s what we’ve seen, where 75% of the investment has flown to market-rate housing. So those are some of our concerns about it, and probably some of the mechanisms that will continue to drive OZ 2.0 as they drove OZ 1.0 into the future. Next slide, please.

But before those investments can be made, we have this whole issue of the nomination process, and I’m going to share with you here a mapping application which NCRC has developed, and what this is, this is showing a map of low-income communities that can be potentially designated as opportunity zones in the next round of nominations. So, this is something that you can use. You can look at tracks and distracts where you’re interested in investing and having a project occur, and get some information about that tract, and I’m going to first off start with Salt Lake City here, and take a look at Salt Lake City, and let me just explain a little bit of what we’re seeing here, right. You see these areas with the red boundaries? Those are the old opportunity zones back from the OZ 1.0 and there’s a little widget up here you can switch back and forth, so you can show areas that were gentrified or areas that were OZ 1.0. So, I’m going to leave it on areas that were gentrified for right now. And what we see here in downtown Salt Lake City, we see these gentrified areas in the downtown area all outlined in the red. We also see these different color designations for the census tracts. We see this resident designation. This is taken from Urban Institute. The data here is taken from Urban Institute, and what they’ve done is an analysis to look at where has capital been most recently flowing in terms of small business investment, in terms of mortgage investment, in terms of overall capital investments. They’ve done analysis, and in their determination, these red areas, these are likely to attract capital even without an opportunity zone designation. The areas here in the gold color, these are more likely to attract OZ investment with a larger impact in their estimation. And then the blue areas are less likely to attract OZ investment, so the blue areas are areas that are low-income communities that haven’t seen much investment going to them currently. So if we zoom in, if you know Salt Lake City, this tract is probably pretty familiar to because the state capital is right here, it’s the area directly below the state capital, and we see this area was not gentrified. But if we look at OZ 1.0 in the former, these tracts that were below it were qualified opportunity zones. Now this tract is a low-income community and could potentially be invested in if it’s nominated as a profit opportunity. So, if you click on it, some data comes up, and this data is from the 2024 census American Community Survey data, latest census data. And this is designed to help you get some immediate type of information about the tract, so that you can, you know, potentially construct a case for your census tract to be nominated, so we have median household income in that tract, and what these bubbles are. This shows the spectrum of that whole metro area, where that tract lies within the spectrum of that metro, so it’s reasonably high in terms of median household income, in terms of median home value. 26% of the population are minority within that census tract, has high rates of college education. Begin to wonder, why is it a low-income tract cost burden 18% vacancy is fairly high, 12% unemployment 5.9% and here poverty you see is 20.1% So this is probably why this is qualifying as a low-income tract. It has very high rates of poverty within that, within that census tract, and would probably be the qualifying mechanism for it. Number of home owners, owner occupied 24% and then finally the median rent for that tract. So you can take all this data, use it to make the case for your tract. I’ll just go over to one more city here, and let’s take a look at Denver. And if we zoom in on Denver, I’m going to go to the gentrified widget there and show it. This is a city that seems substantial gentrification. It’s downtown core. Denver has been one of the most gentrified cities over the past 10 years in the country, so you see many of these low-income tracks, they’re likely to attract capital even without an opportunity zone designation, but here we’ve got one of those golden tracks that Urban Institute thought was more likely to attract OZ investment with larger impact, also indicating gentrification, but that might be one to look at, and then you have these other tracks here that were gentrified and are not eligible as low-income communities. And if you click on any of these, of course, the same data comes up here. It also shows here that this overlaps with an area that was an OZ 1.0 in the past. That one was not so. There’s some interesting data that you can get from this, the same sort of data down here to make the case for your track.

And I’ll go ahead and stop sharing on that. And if we could just bring up the slide deck again, please, because I’m going to talk a little bit about the nomination process. We’ve seen some of the things that you can, that you can utilize to make the case for your track, but this is the nomination timeline that we’re talking about, and why this becomes so critical, because as of July 1, 2026 the federal window for nominating tracks as qualified opportunity zones, it opens up, and it only lasts for 90 days until september 28 when state governors have to have all of their tracks nominated and have that filed with the federal government. Now, there’s a potential to get a 30-day extension after that, but for right now, September 28, that is the deadline. So it’s really important to get involved this nomination process if you’re interested in having a project and having your track nominated as a qualified opportunity fund. Some of the states, as we can see below the timeline here, Kansas has a had a June 1 deadline, Ohio, April 26 – they opened up a 30-day portal. Texas is accepting submissions now, and what we’re hearing is that qualified opportunity funds of people who are in development, that they are actively lobbying with their states, their state housing agencies, and their state governor’s offices to try and get their tracks nominated, so if you’re interested in having a track nominated, you want to rapidly act on this. Call your state, confirm when they’re accepting nominations, and start your advocacy work. And Manan is going to talk a little bit more about that process and the nomination process of how that works, Manan.

Shah 25:04
Yes, thanks, Bruce. As we see here, this is a process in which governors are selecting the low-income eligible census tracts. Governors may nominate up to 25% of their state’s low-income community census tracts, or a minimum of 25 state tracks for smaller states. There is no rural mandate. It was actually removed in the final version of the One Big Beautiful Bill, but as Bruce mentioned earlier, there is some rural incentives that can really push investors to invest in these rural opportunity zones, but that’s usually at the governor’s discretion. And Treasury reviews for these opportunity zones, but full discretion, the full decision making process rests with the governors on which tracks to select, and I just want to emphasize it’s important to build that bipartisan coalition, regardless of party. When it comes to nominating these census tracts, it’s important that we emphasize the benefits to low-income census checks, but also using language and evidence that shows this will benefit local economic activity, result in increases in affordability, job creation, and overall economic development. And so, like Bruce mentioned earlier, there’s no automatic renewal of the OZ 1.0 census tracts. This this new OZ 2.0 selection of census tracts will be existent for the next 10 years up until 2036. And here are some of the steps, sort of like an action plan for community advocates to nominate your track. First, we encourage you to confirm the eligibility of your census tracts. You can use our NCRC mapping tool that Bruce just presented, or Urban Institute’s eligibility map, to see if your census tracks meet its income and poverty thresholds. It’s using the American Census data from 2020 to 2024 so it’s very recent, updated. Next, please contact your economic development or housing agency, and really figure out what the state internal deadline might be. You want to make sure you’re submitting these nominations against the state deadline and not wait too long and submit before the September federal deadline. Thirdly, you want to make sure in building investment case to why investors should invest in these low-income eligible census tracts, making sure you document developer interests, what available land is there, transit access, any public investments to make sure this census track would be attractive to OZ capital to flow towards and then fourthly, you want to make sure you’re demonstrating community need. Why should investors invest? Because documenting poverty rates, unemployment, housing cost burdens, and showing that these investments can really reduce income and wealth disparities in these census tracks, while also addressing any risks for gentrification, and I think the overlay that Bruce presented with our map could provide some good evidence regarding that. And then lastly, we encourage you to build coalitions within your state, make sure aligning with local government, other CDFIs, other community development organizations and developers, NCRC can actually help you in that process and connect you with other organizations in your state that are working towards the same goal. We definitely believe that stronger coalition could have more chances and getting those census tracts submitted rather than solo efforts, so feel free to reach out to us if you need help coordinating that coalition process. And just to provide these action steps, again, you know, check your census tract availability, contact your development or housing agency, try to build that bipartisan coalition with local elected officials and prepare a one-page nomination summary. An NCRC policy and research team can really help you provide the data, you know, that the census tracks that you need to build your investment case and show that it’s going to benefit your communities, and please feel to reach out with these emails that you’ve listed below. We can really help you prepare that one-pager. And then again submit before your state’s internal deadline, not the September 28 federal cutoff, like Bruce mentioned. There’s a lot of competition from the industry in regard of these, and so we want to make sure community voices are elevated and fully represented. So, with that, that’s the end of our presentation, and we can take questions.

Dr. Mitchell 30:15
Just one thing I want to clarify, and that is that the federal deadline is September 28 there was one slide on there that I failed to correct since September 29. It should be September 28 is the federal deadline for filing.

Shah 30:33
All right, we’ve got some questions here, Bruce. The first one is, What government unit authorizes or approves qualified opportunity funds. Is it the Department of Treasury?

Dr. Mitchell 30:47
So, qualified opportunity funds. My understanding is that yes, the filing for the funds will have to be made through Treasury, like they were in OZ 1.0 Qualified Opportunity Fund, I mean, it can be a bank could form one, primarily they’re limited liability corporations, but a man could form even a CDFI could form a qualified opportunity fund, and some of these I’d say probably a majority of them that we’ve heard of have been, you know, equity investors, where they’re trying to, you know, maximize the rate of return, but in some cases they’re impact investors that are involved in these also, and would be more interested in projects that would say enhance affordable housing within an area. One mechanism we’ve heard is to try and structure these so that the low-income housing tax credit, new market tax credit and other types of aid can be structured in a package that might benefit a project within a qualified opportunity zone. We’re very interested in that. I’m not a finance person, but we’re very interested in that, and hearing your ideas about how those things might be structured. My guess is, though, that a lot of these are going to be depending on local considerations and how they can be configured locally, and what local need is.

Shah 32:13
Bruce, we had another question in the chat around the QoS. Are you able to monetize the future value of the QOF with a private equity firm?

Dr. Mitchell 32:24
I’m sorry, I don’t know the answer to that. The financing portion of this, I’m not, as I guess, read up on that aspect of, and how QOFs operate. I’m not a QOF person, so I’ll have to defer that question some other time.

Shah 32:47
Yeah, that’s go ahead, Bruce.

Dr. Mitchell 32:49
I do see one question is, how do I find what area in my community is an opportunity zone, and that’s what this whole process is. These low-income census tracts across the United States, they’re about, they’re more than 20,000 of them, right, but only 25% of those are going to be nominated as qualified opportunity zones, so probably only around 6,000 to 7,000 out of that 20 or 1,000 more tracks will actually make the cut of being a qualified opportunity zone in the nomination process, that’s why your action is important on this issue.

Shah 33:33
Next question is, can we get a link to this map? Yes, we should have sent that in the chat. You can also visit our website. We have a landing page dedicated to this OZ 2.0 with a video, basically outlining this presentation. So, feel free to check that out. And we have another question: Are there examples of opportunity zones being used to fund affordable housing or other projects that increase community investment without driving gentrification?

Dr. Mitchell 34:09
This is information I’ve heard. I mean, part of the problem here is that the reporting on the OZ 1.0 has been so poor, so it’s been very hard to assess many of these things as a result of those OZ 1.0. I have heard that there have been some cases of that, particularly in Chicago, that there are cases in which actual impact investors have funded affordable housing in some places in Chicago on a limited basis, and that has resulted in some construction affordable housing, despite the tendency for market rate housing to be built within the overall program.

Shah 34:50
Next question is around the nomination process. Do current OZ tracks need to be resubmitted for consideration, or will they be likely redesignated?

Dr. Mitchell 35:00
Yes, yes, they have to be resubmitted for designation. The map is going to be wiped clean after December of this year, so it’s a whole new process. And just because an opportunity zone is designated in the last round, it won’t necessarily be in the next round. So, yes, it’s important. If you already have investment opportunity zone from the pre-existing map, that you nominate that tract again if you have a project plan there.

Shah 35:34
Next question, if a census tract is not eligible for designation due to a low poverty rate, but really should be eligible, because the area is underdeveloped, but has few residents, mostly commercial. How could we appeal or revisit that a track should be eligible?

Dr. Mitchell 35:54
Oh boy, I don’t know of any mechanism for doing that. The legislation is really quite clear about what the requirements are, and the requirements are that it be at 70% or below of the area median income. If it’s in a metro area, that would be for that metro. If it’s in a state rural area, that would be for the state overall, or it has to meet that 20% poverty threshold, and that’s using the 2024 census ACS data. So that mapping tool, if it’s not a low-income community designated on there, it’s unlikely that it could be nominated as an opportunity zone. You may, however, you know, want to pull together and see if you can make the case with your state governor’s office that they could potentially include it, but yeah, it’s pretty clear cut in the legislation.

Shah 36:51
Next question on the 25% track maximum, is it a 25% maximum track nominated, and 25 track minimum, is that correct for governors?

Dr. Mitchell 37:07
Right, so, if let’s say only 25% of the tracks are low-income communities, and you could potentially nominate all, so it’s all the tracks in your state, so it’s 25% of tracks within the state that are low-income tracts that can be nominated.

Shah 37:30
Are there different application guidelines for tribes? Also, if a tribe has more than one census tract, would we need to submit more than one application?

Dr. Mitchell 37:42
Answer the second part of that is yes, I would submit applications for each of those tracks. All right, make different cases for each of the tracks for nomination. As far as I know, there’s nothing specific to tribal considerations within the legislation. As far as I know.

Shah 37:59
Next question, it seems to me that if we do have a project, we need to develop relationships with a qualified fund. Is there a source or directory we can go to to get a list of those funds?

Dr. Mitchell 38:16
That is an absolutely great question, and I don’t know of a unified source to look for qualified opportunity funds. At this point, I don’t know if such a thing exists. I have searched for that, and I’ve not been able to find it. If someone does find it, I’d be very interested in seeing that and hearing about such a list, but yes, and that’s I think part of the difficulty of this is the next step of this, get your track nominated, then how do you attract funding into that area, and that’s something that I’d be really interested in hearing from people who’ve had more experience in this, who have managed to attract a qualified opportunity fund, to see what sort of strategies they’ve utilized, so that we could make those available to our members, and they could perhaps pursue those types of sorts of strategies. I see a comment here: Novogradac has a lot of information about qualified opportunity zone funds. Yes, they, they do. Novogradac is one source where you can get quite a bit of information about this, and that would be one potential resource for you.

Shah 39:32
We have a double question here. The small business investment aspect of OZ 1.0 has not panned out as anticipated. Do you see this improving in 2.0?

Dr. Mitchell 39:46
We’ve certainly made some improvements in 2.0 right, but the same, I think, baked mechanisms are, you know, in place, and those mechanisms would tend to favor persistent structures, holding investments over long term and favor less risky investments, so instead of investing in a small business, potentially you might choose to invest in real estate simply because the risk is less for you and your return might be greater long term, so I think the same mechanisms are still in place in OZ 2.0 as they were in OZ 1.0 just with better reporting and some stricter guidelines on which areas qualify.

Shah 40:33
And regarding the reporting, will there be transaction-level reporting requirements like the dollar amount of the OZ investment in a given project?

Dr. Mitchell 40:42
My understanding is yes, that that level of granularity should be available in the reporting now. When that reporting is going to first start coming out, I’m not sure how long it’s going to take before we start being able to see, you know, some of the reporting from these qualified opportunity funds.

Shah 41:02
Some more questions about the QOF. With the QOF, what all will they be able to help with? For example, acquiring land or construction?

Dr. Mitchell 41:15
My understanding is yes, they would be able to write the full development process. QOF would be able to invest in in a project in a qualified opportunity zone. Sure,

Shah 41:28
And do we see investors investing in one project or in multiple projects within one QOf?

Dr. Mitchell 41:36
It depends on the QOf, and I think that many of these QOfs, they have multiple projects, which they will invest in across a range of different projects. QOfs, they vary in size, and some of these larger QOfs, yes, they’ll have a number of projects that they’ll be investing in.

Shah 41:59
And one question around sort of building relationships for philanthropic for philanthropic organizations focused on economic development and capital absorption. What would be some good ways to support city agencies through this process?

Dr. Mitchell 42:18
to city agencies?

Shah 42:21
Yeah, like local governments, sort of building coalitions.

Dr. Mitchell 42:27
I’m not quite sure on that question. I mean, certainly, you know, cities oftentimes work with developers in areas in planning development and redevelopment projects, so there would certainly be city input in that, and city involvement in that, and you know, if you have a qualified, if you have a low-income community that you’re interested in attracting investment to, I would get with that with that city development department and work with them to get that track nominated.

Shah 43:02
Since it’s is good…. Does or hold on, can you provide more context on how CDFIs can create their own OZ fund and engage with investors in OZ geographies?

Dr. Mitchell 43:21
Wow, um CDFIs can create qualified opportunity funds. The mechanism, and how they would go about that, I don’t have specifics on, and, like I said, that’s kind of a next step that I think that we need to go to in our next presentation on this, with more details about how the funding mechanisms would work for this, because I think I’m detecting a lot of interest from our audience in that aspect of it, and we’ve been really focused on this nomination process, so I don’t have much information about how to form a fund or the financial end of this.

Shah 43:57
And can you explain the reasons a track might be less likely to attract OZ investment?

Dr. Mitchell 44:05
Well, from what we’ve seen, and what the data has shown is that the investments have tended to favor tracks that already are in an upward trajectory in terms of increasing home values, increasing metrics on rents, median rent increase also tracts that are adjacent to a gentrifying area or within a gentrifying area, so if there’s already a positive economic development trajectory going on within that tract, then it’s they have tended to be the ones that benefit most from this program, right? The deeply distressed tracks did not see that much investment, at least that’s what the research has told us about OZ 1.0 and that capital was highly concentrated in these areas that we’re already on kind of a positive trajectory to begin with. That being said, under OZ 1.0, what we found when we did our research on this was that most of the tracks that were at the bottom in terms of income, at the bottom in terms of poverty levels, that they did qualify as opportunity zones, so in the track selection process itself it seemed to be fairly equitable in selecting tracks that were in dire need of economic development. There was that provision for contiguous tracks, though, where a higher income track could qualify, and a lot of investment went to those higher income tracks that were adjacent to a low income area.

Shah 45:48
And Bruce, you mentioned LITC earlier. Can you speak to how OZ 1.0 was paired with LITC, and how that might look different than 2.0>

Dr. Mitchell 45:59
Yeah, on that question again, I’m gonna have to defer that I don’t have much information on LITC, and how those two things would have worked together. I know that we’ve talked with some of our members, and the idea of structuring LITC with opportunity zones in the OZ 2.0 and stacking these investments could be a possible mechanism for making them more attractive to investors.

Shah 46:27
And have you heard of communities advocating to ensure their census tracts are not nominated for OZ 2.0, for example, out of a desire to protect their area from development with potential negative effects?

Dr. Mitchell 46:40
Yeah, that’s a really interesting question. So, we have talked to some of our members, and they’ve had very different kind of perspectives on this, and in some areas they felt that the opportunity zone designation has actually made that tract much more difficult to compete in for affordable housing than for the construction market rate housing, and has placed that track outside of their ability to invest in affordable housing, and has basically created a situation of gentrification on steroids in those tracks. So that’s been one concern about this program, is that an opportunity zone may put it out of the range of having affordable housing built. By the same token, we’ve heard from other members who have said that what we need to work with the system as best we can and take advantage of it the best we can in order to maximize affordable housing and development within our area. So they’re two very different perspectives, and your perspective may depend on your local situation, and what the local conditions of economic development are within your city, and within the area that you’re operating. Also, you know, initially we talked about, mentioned a little bit earlier, or the rural opportunity zones and concerns about development in those areas, and we’re a bit concerned about the AI data center angle of this, and that something like an AI data center would be probably a very favorable investment for a qualified opportunity fund. So, there’s a bit of concern about that, and how it might fuel investment in those areas. With AI data centers, I just like to say that with that, as with gentrification, we want to work with members to make sure these are things that happen with the community and not to the community. That this sort of investment be with community involvement, so communities are able to maximize the type of advantages and development that they get rather than have it be an opaque process in which they basically have no role or saying what’s happening with their areas.

Shah 48:53
And then what is the significance of the MFI ratio of the eligibility criteria, is a higher or lower MFI ratio, a better signal of community benefit?

Dr. Mitchell 49:05
So, the MFI, that’s the level of median family income compared to that metro area. So, before in OZ 1.0 it was 80% so it was higher, so that tracks with a bit higher income level would qualify. By lowering that down to the 70% of MFI level, they’ve restricted these low-income communities somewhat, so that is an enhancement and improvement, and it directs more capital or more of the tracks that hopefully will be nominated as being lower income communities than an OZ 1.0 so that restriction was an important one to put in place, and we’re happy to see that restriction in place.

Shah 49:51
Alright, Bruce, that looks like the last of all the questions. Let’s give a virtual round of applause for Bruce, for his expertise and just quickly, if you’re interested in becoming NCRC member, if you liked what you heard and saw today, you want to partner with us for more research or policy advocacy opportunities, you can check out our website. We also have consistent training and events from NCRC. You can visit our events website, including our national conference in the spring and regional summit in the fall. And so again, thank you all for joining. If you have any questions, feel free to reach out to Bruce and I. We’re happy to help build some coalitions in your state or help put together those one-pagers with data and other elements of OZ research, so thanks again, and we’ll see you soon.

Dr. Mitchell 50:46
Thank you, everyone.

Transcribed by https://otter.ai

A large body of research links these kinds of exposures to a wide range of health concerns. Air pollution is associated with millions of premature deaths globally each year alone and is tied to heart and lung disease, especially in communities located near industrial activity and heavy traffic. Researchers are also increasingly documenting links between environmental conditions and mental health. 

Long-term exposure to air pollution has been associated with depression and anxiety, while environmental noise from traffic and industrial infrastructure have been linked to stress and anxiety symptoms. More broadly, environmental pollution is now understood to affect a person’s physical and mental well-being, with evidence linking it to cognitive decline, psychological distress and worsening mental health over time.

The health burdens of LULUs are not distributed evenly. Decades of environmental justice research have shown that those patterns reflect long-standing inequalities in political power, land use decision-making and access to resources.

One of the clearest historical frameworks for understanding these patterns is residential segregation and its relationship to redlining. From the 1930s until the 1960s, the federal government graded neighborhoods based in part on race and ethnicity, with many Black and immigrant communities being redlined – or labeled as high-risk for investment. Redlining did not create segregation on its own, but it formalized and reinforced patterns of disinvestment that shaped neighborhoods.

A growing body of research finds that neighborhoods with a history of redlining also tend to have higher concentrations of environmental burdens, including industrial land uses, heavily trafficked transportation arteries and other LULUs. These same neighborhoods often continue to face socioeconomic disadvantages and elevated exposure to environmental stressors. A recent study conducted by researchers at the University of Michigan, the Ohio State University and the National Community Reinvestment Coalition (NCRC) reflects these broader patterns in Chicago. 

“We found that neighborhoods with higher levels of historical redlining also tended to have greater concentrations of certain LULUs, especially industrial land uses, vacant land or construction sites,” said University of Michigan lead researcher Dr. Liang Chen.

These neighborhoods also tended to report higher levels of self-rated poor mental health. In our analysis, industrial land, construction sites and vacant land were especially important in understanding how redlining, neighborhood conditions and mental health are patterned together across the city.

These findings suggest that the geography of LULUs today overlaps closely with the geography of historical housing discrimination defined by redlining. In Chicago, as in many US cities, neighborhoods that suffered decades of disinvestment continue to bear heavier environmental burdens and worse health outcomes. This illustrates how the legacies of segregation and land use continue to shape mental health outcomes today.

Addressing these patterns requires intentional policy action. Tools such as the Community Reinvestment Act (CRA) can help by encouraging investment in historically underserved neighborhoods, supporting affordable housing, community facilities and redevelopment efforts that improve neighborhood conditions and expand access to resources that promote community health.

Bruce C. Mitchell, PhD. is the Principal Researcher with NCRC’s Research team.

Photo credit: Chait Goli via Pexels.

May 20 , 1:00 pm EDT – 2:00 pm EDT

Opportunity Zones 2.0 (OZ 2.0) is an updated federal investment incentive program created under the 2025 One Big Beautiful Bill Act (OBBBA). It provides tax benefits to encourage private investment in low-income census tracts.

OZ 2.0 will shape the community investment landscape for the next decade. The process is competitive and time-sensitive. Members who act early, build strong cases and engage state decision-makers will be best positioned to direct investment to the communities that need it most.

For more information, visit: https://ncrc.org/opportunity-zones-2-0-what-you-need-to-know-and-how-to-act-now/

Speakers:

• Bruce C. Mitchell, PhD Principal Researcher
• NCRC Manan Shah, Policy Advisor, NCRC