“Location, location, location” in equitable development: Evaluating the spatial targeting of Chicago’s Opportunity Zones

Abstract

ABSTRACT The Opportunity Zone (OZ) program—created in 2017—is the newest federal economic development tool to assist low-income neighborhoods. While the program aims to bring investment to disinvested neighborhoods, the broad eligibility criteria enable OZs to be designated in relatively high-value, high-opportunity areas, ultimately sparking gentrification rather than job creation for low-income residents. This major equity concern with OZs centers on the question of how local policymakers targeted their OZs. In this paper, we develop an index of development potential that accounts for hyper-localized real estate trends and spatial context to gauge the future ability of areas to attract private investment and assess the need for place-based development incentives. We apply this index to assess Chicago’s OZ selection process and find that despite Chicago’s efforts to strategically align OZs to areas of high need, it ultimately designated some OZs in areas that have among the highest development potential in the city and do not require a subsidy to receive future private market investment.