It's time to back this bipartisan plan to boost America's communities
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Nearly a year ago today, the Economic Innovation Group—an organization that advocates for policy nationally to address economic issues—released the Distressed Communities Index, an interactive tool that identifies areas experiencing economic prosperity and distress. The data revealed quite a large number of communities are operating under economic distress, and as a result are now seeking ways to climb out of the lingering effects of the Great Recession.

The economic recovery was not prescriptive across the nation, and many regions and states have struggled to rebound to the same economic position they once held. Even now as some states have finally returned to pre-recession unemployment rates and jobs gains, the growth in personal income has lagged. According to data from the Pew Charitable Trusts, growth in personal income has increased at a rate of 1.6 percent, more than 40 percent lower than the rate over the past 30 years.

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Seeking a solution to facilitate positive growth in our communities, a bipartisan group of lawmakers have reintroduced legislation that would create a pathway for injecting much-needed capital into local and regional economies.

 

Sponsored by Sens. Cory Booker (D-N.J.) and Tim ScottTimothy (Tim) Eugene ScottBlood cancer patients deserve equal access to the cure Rand Paul: 'We deserve to know' identity of Trump whistleblower Bottom Line MORE (R-S.C.), and Reps. Ron KindRonald (Ron) James KindAmerica's workers and small business owners need the SECURE Act Blood cancer patients deserve equal access to the cure Democrats see whistleblower report as smoking gun MORE (D-Wisc.) and Pat Tiberi (R-Ohio), the Investing in Opportunity Act seeks to remove barriers to economic growth and encourage investment in businesses and communities.

The proposed legislation provides a practical solution: capitalize private investment in the communities that need it most. A departure from other economic development programs, the Investing in Opportunity Act does not rely on tax credits or public financing. Rather, it removes a tax disincentive that stands in the way of private sector investment.

The bill seeks to allow investors to temporarily defer paying capital gains taxes if they invest the money directly into a project within a qualified development zone. Laid out in the legislation, these zones would be determined using the same definition of a low income community in the New Markets Tax Credit Program, and would generally include low income areas where funding is often hard to come by.

By the end of 2015, only 7 percent of counties had bounced back to their pre-recession peak, according to a study of measures of annual job numbers, unemployment, economic output and home prices. States like Alabama, Connecticut and Nevada were among the last in the nation to recover, proving geographic location had no bearing on rate of recovery.

By directing an incentive toward low income communities, the bill encourages investors to focus their resources on the highest need areas across the country. Stimulating economic activity fills a critical need and supports private sector growth, particularly in areas that have traditionally been underserved. The Investing in Opportunity Act also creates a mechanism for much needed investment in community placemaking and urban revitalization that would otherwise lack capital for market turnaround and job creation.

Investors are also able to pool their resources in an “opportunity fund” to finance larger projects, such as investing in funds that will provide capital for supporting new and existing businesses, infrastructure projects and blighted properties, for example.

This new investment vehicle reduces risk, while allowing for greater impact in our communities. Tapping into this unrealized resource for economic development, this new pathway means more small businesses and entrepreneurs can finally get access to capital needed to create new jobs and scale their operations.

Moreover, a funding construct of this nature can do more than inject capital into the communities that need it most. It can fill a need for public-private partnerships for infrastructure and transportation projects, both of which can lift an economy.

While the post-recession recovery has led to a widened gap of cities and regions experiencing economic prosperity and those experiencing distress, specifically focused resources in the areas that need it the most can lead to job creation, stimulate economic activity and drive financial stability. In a time where bipartisan efforts are needed most, the Investing in Opportunity Act provides a bridge to connect more than our communities.

Chris Camacho is president and CEO of the Greater Phoenix Economic Council. He is policy council member of the Economic Innovation Group.


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