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The American economy enjoyed record expansion for the past decade, but robust growth has not extended to many of the country’s economically distressed communities. The bipartisan opportunity zone (OZ) program is a creative solution to bridge that gap by encouraging long-term private investment in these areas. This influx of capital will fuel economic growth and build the housing and other infrastructure needed to revitalize communities that have been left behind. The significant tax benefits to qualified opportunity zone fund (QOZF) investors are grabbing headlines; however, the attention should be on what needs to happen at the local level to achieve positive results for both investors and the low-income areas the program is designed to help.

It’s community focus and active engagement at the local level that will ultimately enable the OZ program to fulfill its promise and achieve its full potential. Locally focused developers are the key ingredient to this process and play an essential role in successful outcomes. Why are they so crucial, and what does a roadmap to success look like?

Community-First, Developer Led

Developer-led funds with a community focus are important because they are rooted in the community. The ability to engage key stakeholders like neighborhood leaders, community groups, planning staff and local politicians results in the best strategies to meet the community’s needs while also creating projects that deliver returns to attract investment at scale to make an impact. Developers have vital hands-on experience managing complex local development projects, overseeing them from conception to planning and permitting to on-time completion — which is absolutely critical given the strict deadlines for deployment of capital in opportunity zones.

How does this play out in what developers do on a day-to-day basis?

Big Ears

As local-first developers and fund managers, we have boots-on-the-ground experience for the community in our local opportunity zones. The planning phase of a development project, before the city issues a building permit, is complicated and time-consuming. This entitlement process requires experience, patience and compromise to win the hearts and minds of everyone the project touches.

The big lesson we’ve learned is a simple one: People just want to be heard. Residents and community activists are wary of change. They typically are not aware of all that’s involved in real estate development projects and don’t appreciate how they are a lever of positive change to manage pressing issues like affordable housing and urban sprawl.

This story played out when my former company acquired non-OZ property from the Santa Clara Valley Transportation Authority in downtown San Jose for a proposed high-rise housing and retail space development. We held initial community meetings with local advocates and residents, and the reaction was overwhelmingly negative. Local residents were upset about the building, increased traffic, congestion and displacement. Also, because the property was acquired from a regional agency, we had to work outside the normal city planning process, which made the city less than receptive.

We held 35 community meetings over two years and actively listened to our neighbors’ concerns. We explained how the planning department works, what local and state agencies want to do and what multiple impact studies showed. We had open discussions about the endemic housing shortage. We talked about why we believed multi-use, high-density housing needed to be built in the center of the country’s 10th largest city near transit centers and jobs, rather than create more urban sprawl that puts more cars on the road and adds to the traffic nightmares.

We modified the project plans based on input from the community and city planners. In the end, community members who were staunch critics stood up and testified in front of the city council, and the project was approved.

Clear Eyes, Full Hearts

Our project never would have gotten off the ground without the empathetic dedication of an experienced local developer. This is the critical lesson for QOZF investors: Community-first developers are essential for positive outcomes for investors and OZ residents.

It is no surprise that blind pool QOZFs (the ones with no projects) have had trouble raising money. It’s a tough sell to ask investors to blindly invest in a fund without defined development projects and the local on-the-ground expertise to get them executed within the required OZ timeframes.

What’s in the secret sauce for success?

First, you have to care deeply about your community. Thoughtful development can create a positive economic impact and a more vibrant city prepared for a better future. Make it a priority to foster working relationships and listen to all-important local constituents — city planners, local elected officials, business leaders, residents, community advocates and not-for-profits.

At the same time, know your responsibility to create profitable investment opportunities. Successful OZ development meets the expectations and needs of the community while building investment returns that attract the capital to fund development. The big takeaway is that you can’t have one without the other.

Opportunity zones are a once-in-a-lifetime opportunity for investors and for this country’s low-income communities, which stand to benefit from an influx of capital. That capital can be put to use building housing projects for families, students and seniors, and activate ground-floor retail and office space — essential infrastructure that revitalizes communities and creates housing, jobs and a larger tax base. Local-first developers and fund managers are essential to building the community-focused projects that deliver positive outcomes for QOZF investors and achieve the true intent of the program.