Making Opportunity Zones 2.0 Work for Communities

The clock is ticking. Governors across the country will begin the Opportunity Zone (OZ) designation process on July 1, 2026. With hundreds of billions in private capital at stake, the decisions made in the coming months have the potential to shape the next decade of private investment in America’s historically disinvested communities.

Accelerator for America (AFA) is proud to announce a new research and engagement initiative, supported by the Robert Wood Johnson Foundation, to ensure that local leaders have the actionable guidance they need to navigate OZ 2.0. We are partnering in this work with Rvesta Consulting led by Vaughn Ross, who supported the OZ evaluation process for the City of Philadelphia Mayor’s Office for OZ 1.0, and Bruce Katz, who has researched and written extensively on the OZ incentive and its role in driving private investment in communities.

The One Big Beautiful Bill Act, signed in July 2025, made the OZ incentive permanent while also tightening eligibility criteria and enhancing reporting requirements. The new rules mean the pool of eligible census tracts will shrink by more than 20% — from over 8,700 to roughly 6,300 — and the remaining tracts will, on average, reflect deeper levels of distress, requiring a more deliberate, strategic approach from local leaders. Drawing on lessons from the first round of OZ implementation, we will produce practical tools, evidence-based research, and real-world case studies to help mayors, economic development practitioners, and community leaders make informed decisions at every stage, from census tract selection to investment strategy to local policy design. Our work will reach AFA’s network of nearly 900 local practitioners across 120 communities in 37 states, and our broader distribution channel of nearly 12,000 stakeholders nationwide.

Equipping Local Leaders for OZ 2.0

The limited data we have confirms what local leaders on the ground already knew: OZ investments from the first round were heavily concentrated in census tracts that were already growing — areas with rising home values, pre-existing private investment, and proximity to prosperous urban cores. As noted in our recent publication in partnership with Urban Institute and NRDC, the majority of OZ investments went into areas that were already in the top 20% of U.S. census tracts in terms of commercial and multifamily housing transaction activity over the five years before the OZ incentive went into effect.

There were genuine bright spots. Research suggests the OZ incentive roughly doubled housing unit production in designated tracts across the country, and a number of projects demonstrated that OZ capital can be channeled toward meaningful community impact. Mosaic Development, a Black-owned development firm, leveraged OZ investment for the adaptive reuse of a vacant warehouse in Philadelphia’s Germantown neighborhood. The warehouse is now home to mixed-income residences and community-based businesses. Similar community-driven projects took shape in Birmingham, Erie, Lansing, Salt Lake City, and elsewhere, proving that OZ investment can go beyond market-rate real estate and into projects that reflect community priorities.

When the initial round of OZs began in 2018, AFA created a replicable model of an investment prospectus to encourage targeted investment and ensure communities could make the most of the federal incentive. This approach was ultimately adopted by 59 cities with different economic profiles and local objectives.

In Lansing, MI, our prospectus promoted several projects that were well-positioned to both attract private investors and serve community needs, including the $41.5 million BLOCK600 project that created 40 residential apartments, a hotel, and a 37,000-square-foot grocery store in a neighborhood that was previously a food desert. Now, the block and surrounding properties are in the process of being redeveloped, attracting more investment and amenities to Lansing’s Stadium District. This experience taught us that OZs have the potential to attract capital to historically disinvested communities, but local leaders play a critical role in proactively shaping investment opportunities to meet city-wide and community priorities.

Our goal is to see many more projects like these in OZ 2.0 by giving local leaders the tools and trusted guidance to make that happen. That requires assessing key data points that balance market viability with displacement risk for current residents, leveraging community-informed plans and engaging with governors and their economic development teams to designate the right census tracts, identifying investment-ready projects, connecting opportunities to investors, and pairing the OZ incentive with local tools and policies to guide capital toward community priorities.

The specific census tracts chosen by governors will signal to investors, developers, and employers where the public sector wants to see investment to advance community priorities. This initiative reflects the fact that OZs have genuine potential to direct significant capital toward historically marginalized communities, but that potential will only be realized if the people who know those communities best are at the table.

Coming in May: The OZ Designation Toolkit

Our first resource, Maximizing Community Impact: An Opportunity Zones Designation Toolkit for Local Leaders, will be published in May 2026 in advance of the July 1 opening of the OZ designation window. The broad aim of this toolkit is to provide local leaders with information to help make a data-informed case for specific tracts, while also identifying the tracts that are most likely to attract OZ capital to advance community priorities.

Across the country, mayors and local leaders are navigating an increasingly complex and interrelated set of economic and development challenges facing American cities. Cities are grappling not only with overall housing supply constraints but also with a persistent shortage of affordable units. At the same time, local leaders are working to promote economic mobility by supporting mixed-income, service-rich neighborhoods that provide access to quality jobs, education, and essential goods. Cities are increasingly being called upon to position themselves for growth in sectors such as data infrastructure, advanced manufacturing, and logistics, while also managing potential displacement effects in labor markets. Alongside these structural challenges, many municipalities face tightening fiscal conditions, with the need to grow or, at minimum, sustain their tax base in the face of uncertain federal funding.

Designed for mayors, their staffs, and local partners like economic development agencies and housing authorities, the Toolkit will provide a concise overview of the OZ incentive and key deadlines, highlights from the research on what happened during OZ 1.0, step-by-step approach to prioritization of OZ census tracts, data points that align with priority community needs, and recommended ways to validate data with important local insights and align with existing community-informed plans.

The OZ Prioritization Framework within the Toolkit will give leaders the structured decision-making support they need most. This includes a clear articulation of what makes an ideal OZ tract — one where market viability, community need, and local capacity intersect — as well as a practical prioritization framework and scoring rubric for evaluating and ranking eligible tracts in their communities. Leaders will also find guidance on how to layer relevant local data and geographic overlays, including New Market Tax Credit eligibility, CRA designations, transit plans, housing and growth projections, and existing redevelopment zones, to build a compelling, evidence-based case.

The optimal OZ census tracts aren’t simply the most distressed tracts or the fastest-growing ones. They’re the places where market conditions, community needs, and local capacity intersect. The Toolkit will help leaders find those places and make a data-driven and locally-informed case for them to their governors.

The Time is Now

The window to shape OZ 2.0 is short. If they haven’t already started, we encourage mayors and local leaders in our network to begin conversations with their local communities and state officials now about the tracts that are best positioned to attract and absorb investment in ways that benefit your residents.

The Toolkit will be available through AFA’s channels this May. Stay tuned and reach out to our team if you’d like to be among the first to engage with this work.

Questions? Contact Anne Bovaird Nevins at anne@acceleratorforamerica.org and A.J. Herrmann at aj@acceleratorforamerica.org.