Economic Development

Background

When done well, community planning spurs economic development that helps all members of a community thrive. This includes older adults, people of color, people with low incomes, and people with disabilities. Place-based strategies for spurring economic development can help drive economic growth in distressed areas. This creates jobs and improves quality of life.

Opportunity Zones, created in the 2017 Tax Cuts and Jobs Act, are one example of a place-based program to spur economic development. They provide tax benefits to investors that invest in economically distressed areas. About 57 percent of census tracts are eligible, and about 25 percent of eligible tracts can receive funding. State governors have flexibility to decide which of the eligible areas will receive funding and how to target funding.

Innovation districts are another example of such place-based programs. These are sections of metropolitan areas redesigned to encourage both economic growth and livability. They offer rich opportunities as places to live, work, and promote entrepreneurship. Thus far, innovation district leaders have focused on attracting younger adults. Intentional planning, which integrates older adults and people from historically disadvantaged groups, can allow the benefits of revitalization to reach all populations. One solution is to promote the construction of many different types of housing to serve individuals, families, older adults, and people with disabilities. This could include housing units in a variety of sizes and types, as well as housing with services.

All these place-based economic development strategies, which promote compact development and proximity to jobs and amenities, can make these areas more desirable to live in, driving up housing prices and potentially displacing current residents. Intentionally preserving, expanding, and diversifying housing options for all levels of affordability can allow a broader range of people to live in innovation districts. It also can help avoid displacement of current residents. Addressing these issues requires a variety of tools to engage developers, homeowners, renters, and the public sector. These tools include the preservation of existing housing stock, subsidies for households with low and moderate incomes, tax incentives, affordable housing requirements for new construction, and strategic public investments.

Place-based economic development programs are just one way to bring resources to underserved areas. For communities to receive the best return on these programs’ investments, local policymakers, and other stakeholders should incorporate them into an overall community development strategy. Doing so makes programs more likely to attract the resources communities need and will support over the long term. Policymakers should also evaluate development programs to determine which strategies are most effective at supporting the growth of underserved communities. One analysis of 18 states’ Opportunity Zones found that many states selected tracts that were already gentrifying and would likely have received investment from developers anyway.

ECONOMIC DEVELOPMENT: Policy

ECONOMIC DEVELOPMENT: Policy

Place-based economic development strategies

Policymakers should support efforts to spur economic development in economically distressed areas. These efforts should be designed to prevent displacement. They should allow existing residents to continue to live in the community and benefit from economic development activities.

Place-based economic development programs—such as Opportunity Zones and innovation districts—should intentionally plan for, integrate, and engage older adults, communities of color, low-income households, and other underserved populations. Policymakers should use these strategies as one piece of a holistic approach to promote livability and economic development opportunities.

Opportunity Zones

Policymakers should target Opportunity Zone funding to the areas that will most benefit from investment. This includes neighborhoods with large proportions of people with low incomes, people from historically disadvantaged racial and ethnic groups, and older adults. Funding should be used to create programs to address critical challenges in the community, such as a lack of affordable housing or grocery stores. Local leaders should combine Opportunity Zone funding with other funding sources and partnerships to promote livability and economic development. Policymakers should provide oversight to ensure transparency and accountability.

Innovation districts

Innovation districts should intentionally:

  • plan for, engage, and integrate older adults and historically disadvantaged groups as an opportunity and a community asset; 
  • promote the economic well-being of existing residents of all ages, backgrounds, and abilities, including through the availability of affordable and accessible housing options; and
  • increase work opportunities for people of all ages, abilities, and backgrounds.

In addition, they should:

  • ensure an adequate supply of housing that is accessible to and affordable for people with low and moderate incomes (see also Housing Accessibility),
  • create workforce development programs that are accessible to and meet the needs of a diverse population of older workers and job-seekers,
  • encourage older adults to participate in the entrepreneurial ecosystem, and
  • promote intergenerational engagement and understanding (see also Intergenerational Cooperation and Cognitive Health).