Local initiatives create new opportunities for international investors
The subject matter in this article will form a topic for a session at SOCAP. The session is entitled: Enterprising Communities in Rural America are Cracking the Code to Build and Thrive by Creating Jobs and Innovation – A Playbook for Rural Investment.
Home to one in five Americans and constituting 97% of the nation’s land mass, rural America is an essential part of the United States, and its well-being is intricately linked to the well-being of us all. Yet rural communities are often left out of federal policy decisions, and many suffer from a lack of resources, services, investment, and economic development.
In recognition of the vital importance of supporting underserved areas of the U.S., in 2017, as part of the U.S. Congress Tax Cuts and Jobs Act, the Opportunity Zone (OZ) incentive program was launched. The OZ incentive program is “an economic development tool that allows people to invest in distressed areas in the United States. Their purpose is to spur economic growth and job creation in low-income communities while providing tax benefits to investors.”
Of all the Opportunity Zones in the United States, 23% are located in rural communities. However, five years after the launch of the OZ incentive program, rural communities have seen little change and few investments. Working to support rural OZs in their area, leadership at Sorenson Impact Center came to see that underserved rural communities are often unfamiliar with the competitive process surrounding investment capital and do not always have the direct capacity to build the strategies that would enable them to secure the funding they need to thrive.
Rural communities are often left out of federal policy decisions, and many suffer from a lack of resources, services, investment, and economic development.
In response, after conducting more than a dozen expert interviews and three years of on-the-ground work, Sorenson Impact Center published the “Rural Opportunity Zone and Recovery Playbook,” a blueprint for economic developers and community leaders seeking to fund rural community benefit projects such as affordable housing, Main Street revitalization, and business expansions. Featuring profiles of leading rural innovators as well as best practices, the playbook provides replicable strategies communities can use to effectively target and attract mission-aligned private capital investments.
Here, Megan Brewster, Sorenson Impact Center Senior Manager and co-author of the playbook, shares how the playbook came to fruition and the impact she hopes this has on rural communities across the US.
How did the idea to create a playbook come about? Why is it a necessary follow-up to the Opportunity Zone program?
Megan Brewster: As our team worked on the ground with communities to educate them about the new Opportunity Zone incentive, it became clear that many rural communities were unfamiliar with the competitive nature of investment. With more than 8,000 OZs nationwide, these communities needed to show why they were the best place for investment and that they were prepared for that investment. As our local Utah partners gained a deeper understanding of the OZ landscape, they were eager to work with us to devise that strategy and share what they learned with others. The recommended process we developed is captured in the playbook with the hope that other rural leaders will be able to fast-track their learnings and secure investment that can fund community priorities.
What unique challenges do rural communities face that make this playbook essential for them? What impact can this have on the nation more broadly?
Rural communities have experienced underinvestment for decades, resulting in economic hardship and a lack of economic diversification in many places. They are frequently overlooked when it comes to investment and often positioned as monolithic when, in reality, they are distinct and diverse and have many compelling assets to offer.
Five years after the launch of the OZ incentive program, rural communities have seen little change and few investments.
Our rural community leaders, from elected officials to economic developers, are frequently under-resourced and overburdened and can benefit from additional outside capacity. The playbook adds value by bringing them a thoroughly researched process they can implement with the resources they have. Creating more widespread economic opportunity and quality of life in America requires intentional strategies to support our rural communities, and private investment is a big part of that.
As we think about the future and what is needed to urgently solve the social and environmental challenges we face, replication and scalability are key. How does the Rural OZs project support that?
The playbook serves as a blueprint for community leaders to follow in attracting private capital, not just in Utah, but nationwide. We intentionally provided case studies of real-world examples and recommended strategies that can be used not only for Opportunity Zones but also for projects that require other types of capital stacks.
We hope this resource also helps to reshape the narrative around rural communities as places of the past and instead spotlights the economic and social opportunities inherent in our rural communities, which can be places of growth and innovation. More investors are realizing that not only can they achieve an economic return, but they can fund projects that provide social and environmental value and tangibly create a sense of place. The playbook is relevant to many different contexts and types of communities to help realize that vision.
Can you share more about the rural partners who are doing this work on the ground? What have you learned from them?
Our key partners have been the Utah Association of Counties, which works with governing bodies around the state to drive economic development and align policy incentives, as well as the rural Utah Associations of Government (AOGs), such as the Southeastern Utah Association of Local Governments. These organizations act as regional multi-county entities to pursue economic development, secure funding for key community projects, take care of vulnerable populations, and improve the quality of life in their areas. The AOGs have worked with us to develop the process captured in the playbook and translate that into investable projects ready for support.
The playbook provides replicable strategies communities can use to effectively target and attract mission-aligned private capital investments.
We are also grateful for our funding partners. The Economic Development Administration has been very strategic in funding projects that encourage regional collaboration and prioritize social impact, and the Utah Governor’s Office of Economic Opportunity works to support rural communities in several ways.
What’s next for this body of work?
Currently, our focus is on sharing the playbook with other communities that can benefit nationwide and continuing our collaborative relationships with communities to provide technical assistance to support investable projects here in Utah. There’s a lot of exciting work going on around telling the story of these communities to investors and working with anchor institutions such as hospital systems and universities to build partnerships.
Download the Rural Opportunity Zone and Recovery Playbook here.
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