Montgomery County, Illinois, is roughly 700 square miles of sparsely populated land almost perfectly situated in between Springfield and St. Louis. It’s home to a Route 66 Welcome Center and, if a federal tax-incentive program is successful, is supposed to be a hotspot for new economic development.
But when Mike Plunkett, a county coordinator whose job it is to field those millions of dollars in investment, looks around, he wonders why a developer would come there.
“What do we have to offer that a million other Midwestern communities don’t have? We have very little competitive advantage,” Plunkett said.
In the eight years since the federal government implemented “opportunity zones,” a tax-incentive program that aims to spur economic development in selected low-income census tracts in the U.S., many counties have been experiencing what Montgomery has.
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As the Treasury Department fields nominations from governors’ offices for the second round of opportunity zone investments this summer — tracts that will be eligible for tax-incentivized investments starting in January 2027 — communities are wondering whether they will actually experience the benefits of the program this time.
Plunkett said he has received only one inquiry about the program: from a construction gear manufacturer that set up shop in Montgomery County.
“There have been no other inquiries about the opportunity zone,” Plunkett added.
Multiple local officials from around the country reached by NOTUS said they weren’t aware their county was in an opportunity zone. “This is the first I’ve heard about this program,” said a rural county treasurer in Illinois, who requested anonymity for fear of retaliation. “There isn’t any attraction to come here.”
The average rural zone attracted just $7.3 million in investment from 2018 to 2024, compared to $23.3 million for the average nonrural opportunity zone, according to a June paper by the Treasury’s Office of Tax Analysis. In total, 16% of opportunity zone property was in rural areas, even though it makes up 38% of the U.S.’s 8,764 opportunity zones. In all, $112 billion has been invested using opportunity zone tax incentives.
There’s no comprehensive federal tracking of the impact of opportunity zones, but outside research has shown the program yielding mixed results. Opportunity zones have spurred the construction of 416,000 new homes, according to one paper from the Economic Innovation Group, a think tank that leads the pack in measuring the program’s impact. They have created new jobs, most of which go to residents from more affluent areas outside of the opportunity zone, reports another from the National Bureau of Economic Research. They have no significant effect on commercial investment and business activity, says a third by economists Naomi Feldman and Kevin Corinth, who is a fellow at the American Enterprise Institute.
Local economic development officials largely said they felt the incentives were not properly promoted.
Corey Proctor, the planning director for Forrest County, Mississippi, said his county needs new housing and has vast swathes of land he believes could attract industry, but local developers lack the requisite information to leverage the tax incentive.
Those developers could benefit from workshops that provide a rundown on how to invest in an opportunity zone, whether delivered by his office or the state or federal government, Proctor said.
“It’d be good to have everyone on the same page,” he said.
Last year’s budget reconciliation law does seek to remedy the rural investment disparity.
Opportunity zones allow taxpayers to invest capital gains income from stocks or property into funds that back development projects in low-income tracts. In return, investors can defer and reduce their tax payments on their gains. After 10 years invested in the fund, gains on the opportunity zone investment itself are completely tax free.
Starting next year, investors in newly created rural opportunity zone funds will receive a 30% reduction in their capital gains tax bill after five years invested in a rural opportunity zone, compared to 10% for nonrural zones.
Rural counties can’t offer the scores of people to fill shiny new apartment complexes and office buildings, or the transit infrastructure to support construction that their urban competitors for opportunity zone dollars can. They also typically lack the robust economic development teams with arsenals of resources for investors to utilize that many cities leverage.
That puts rural counties in a tough spot. With limited county staff and few established local investors, rural county leaders said attracting opportunity zone investment will require an unprecedented effort by local economic planners to read up on opportunity zones and pitch their own to developers — work that they currently don’t do or don’t know about.
Local officials told NOTUS that having extensive data on the impact of opportunity zone investments could help draw in new investors.
Currently, no one — neither the developers, nor the opportunity zone municipalities or the Treasury Department — bears the explicit responsibility to measure the program’s impact before changes in last year’s budget reconciliation law. Investors currently need only submit basic data on the value and the location of their property holdings on annual tax forms.
Under the latest budget law, however, investors must report the numbers of residential units held and full-time workers employed in the fund’s businesses, as well as the basic data on their investments. Congress allocated $15 million for the Treasury to produce annual reports enumerating opportunity zones’ housing and job creation, as well as less-frequent reports detailing the impact of investment on metrics such as poverty and unemployment rates and median family income.
“That would be on my wishlist for opportunity zone 2.0 is to really strengthen the reporting mechanisms so that communities truly can major those ROIs,” said Kersten Swinyard, the economic development director for Salt Lake County, Utah. “We’d love to be able to highlight these numbers. We just don’t have them.”
Localities that have successfully drawn investment do not have a clear picture of the program’s impact — or take pains to estimate it. Though she lacked impact data, Swinyard said opportunity zones were an undeniable success in Salt Lake County, where the tax incentive helped attract large logistics and industrial projects, as well as housing and commercial development.
“Opportunity zones can be either a useful way to channel investment to places that really need it or a tax shelter with high abuse potential, and the determining factor as to which side wins out is precisely the type of tracking and evaluation that is required, and that we’ve never seen quite enough of,” said Jared Bernstein, the chief economic adviser to then-President Joe Biden who co-authored the original 2015 paper proposing opportunity zones with Kevin Hassett, the current National Economic Council director.
The program’s impact is hard to grasp even on the ground and even in urban areas with more resources.
In Washington, D.C., which has raked in $1.2 billion in opportunity zone investment, the mayor’s office and developers are trying their own hands at data-gathering to paint a picture of the program that will keep investors coming back.
The mayor’s office cobbles together assessments through its building permitting process, conversations with developers about how much capital they’ve deployed and job estimates configured by the city’s tax revenue and licensing offices, said Nina Albert, the deputy mayor for economic planning and development.
RedBrick LMD, one of the largest private landowners in D.C., has hired a third-party firm to evaluate their opportunity zone investments for the purpose of pitching to impact investors.
Opportunity zone projects like those of RedBrick have transformed pockets of the city, particularly in Anacostia, Congress Heights and Barry Farm.
Aside a bend in the Anacostia River, facing the white arches of the Frederick Douglass Memorial Bridge stretching to Navy Yard, RedBrick erected the Bridge District towers — a swanky mixed-income and mixed-use development with a plant wall in the lobby and a pool on the rooftop. A brewery and coffee shop sit on the ground floor.
The Bridge District — an opportunity zone project touted by Albert — went up in an area with little else, as the program intended. Bounded on one side by the river and treetops of Anacostia Park and the other by crisscrossing roadways, the closest major development visible from the roof is the Marine One hangar about two miles away.
Albert credits D.C.’s expansive tax incentives for developers beyond opportunity zones. There’s the federal New Markets Tax Credit Program, the District’s low-income-housing tax credit, and even a local tax incentive for opening grocery stores.
“It’s surpassed our expectations,” Albert said of opportunity zones. “I wouldn’t say it’s our premier tool.”
RedBrick LMD managing partner Louis Dubin had a different take.
“Anything we may have done locally would be so de minimis it would really not have materially contributed. So I would attribute this all to opportunity zone,” the real-estate developer told NOTUS.
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