For Immediate Release
Office of the Press Secretary
September 2, 2004
President Bush Proposes New "Opportunity Zones"
America's changing economy is strong and getting stronger. But during
these times of change, America's economic growth is not felt equally
throughout the Nation. In poor communities and in communities where
traditional industries do not employ as many workers as they did a
generation ago, opportunity can seem more distant. President Bush
believes that government must be on the side of the people in these
President Bush believes that America's economic prosperity should
extend to every corner of our country. To help reach that goal, he has
proposed a new "Opportunity Zone" initiative to assist America's
transitioning neighborhoods - those areas that have lost a significant
portion of their economic base as a result of our changing economy, for
example, due to loss of manufacturing or textile employment, and are
now in the process of transitioning to a more diverse, broad-based,
21st century economy.
Opportunity Zones would ease that transition by targeting Federal
resources and encouraging new and existing businesses to invest in
these areas. Opportunity Zones are different from existing Empowerment
Zones (EZ), Enterprise Communities (EC), and Renewal Communities (RC).
They provide a comprehensive, results-based approach, expanding the
focus of assistance beyond economic activity to encompass education,
job training, affordable housing, and other activities critical for a
vibrant community. Communities already designated EZs, ECs, or RCs
would be allowed to apply for Opportunity Zone designation.
In addition, Opportunity Zones recognize that overcoming barriers
to growth requires local involvement. Designation as an Opportunity
Zone requires a commitment from the community to partner with the
Federal government and a demonstrated capacity to reduce local barriers
to development and create jobs.
What benefits do Opportunity Zones receive?
Areas qualifying for Opportunity Zone status would be moved to the
front of the line for certain Federal assistance programs.
Specifically, individuals, organizations, and governments within an
Opportunity Zone could receive priority designation when applying for
the following Federal programs:
21st Century After-school, Early Reading First, and Striving
Community Based Job Training Grants;
Development Block Grants, Economic Development Administration
grants, and HOME Funding;
USDA Telecommunications Loans,
Distance Learning and Telemedicine grants, and Broadband loans;
New Markets Tax Credits.
To stimulate growth, opportunity, and job creation, Opportunity
Zones would encourage businesses to locate, invest, and hire in the
Lower Marginal Rates. Small businesses located within
Opportunity Zones would see significantly lower effective tax
rates on their business income.
Investment Incentives. Small businesses located within
Opportunity Zones would qualify for an extra $100,000 in
expensing for purchases of tools and other equipment used
within the Zone. This $100,000 is in addition to the $100,000
that they can already expense under the President's tax
policies. Moreover, firms of all sizes would receive
accelerated depreciation for the construction or rehabilitation
of commercial buildings located within the zone.
Incentives to Hire New Workers. Businesses within an
Opportunity Zone would be encouraged to hire Zone residents and
welfare recipients through a unified wage tax credit combining
the best elements of the Work Opportunity and the Welfare to
Work tax credits. Workers eligible for the tax credit would
include Opportunity Zone residents, welfare and food stamp
recipients, and other targeted groups.
Regulatory Relief. As part of the Federal commitment to
Opportunity Zones, the Office of Management and Budget would
review Federal regulatory and paperwork burdens imposed on
Which communities qualify to be an Opportunity Zone?
Opportunity Zones expand the concept of traditional enterprise
zones to include communities in transition. A community can qualify to
be an Opportunity Zones by fitting one of the following two
Rural or Urban "Communities in Transition". These areas have
suffered from a significant decline in the economic base,
including a decline in manufacturing and retail establishments,
within their community over the past decade and would benefit
from targeted assistance in transitioning to a more diverse,
21st century economy.
Existing Empowerment Zones, Enterprise Communities, or Renewal
Communities. These communities received their designation due
to high poverty rates, high unemployment, and low incomes. By
receiving an Opportunity Zone designation in lieu of their
current designation, however, these communities would be
eligible for the expanded benefits available to Opportunity
There will be 40 new Opportunity Zones selected - 28 urban zones
and 12 rural zones - through a competitive process. The competitive
process will determine whether there is a commitment from the community
to partner with the Federal government and a demonstrated capacity to
reduce local barriers to development and create jobs. Examples of
areas that might qualify to compete for an Opportunity Zone designation
include Winnebago County, Illinois; Cuyahoga County, Ohio; and Erie
How does a community become an Opportunity Zone?
In order to qualify to be an Opportunity Zone, a community that
either (1) meets the "community in transition" eligibility requirements
above, or (2) is an EZ, EC, or RC, would:
Develop a "Community Transition Plan." To encourage increased
business and residential activity within an Opportunity Zone,
an applying community would develop and submit a "Community
Transition Plan," which sets concrete, measurable goals for
reducing local regulatory and tax barriers to construction,
residential development and business creation. Communities
that have already worked to address these issues would receive
credit for recent improvements.
Submit an Application. An interested community would need to
submit an application, including the Community Transition
Plan. Zone designation would be awarded through a competitive
Report Results. Approved communities would report regularly on
the concrete results they are achieving, including
construction, residential development, and business job