I think the below map from the article, depicting population density by county, starts to show how uneven the economic landscape is across the US. Porter puts it this way: “This is the inescapable reality of agglomeration, one of the most powerful forces shaping the American economy over the last three decades.”

But, of course, we don’t really have a solution to this problem. Some are suggesting employment subsidies, such as the earned-income tax credit. While others are suggesting that we need to make it easier to build in the large blue spikes shown above. That way we’ll be able to more affordably accommodate the people who will ultimately need to move from rural to urban.

While this latter suggestion may seem grim for small-town America, it is perhaps a reminder of what cities really are at their core: Cities are labor markets. They are the places where people come to get a job and make money.

I think the below map from the article, depicting population density by county, starts to show how uneven the economic landscape is across the US. Porter puts it this way: “This is the inescapable reality of agglomeration, one of the most powerful forces shaping the American economy over the last three decades.”

But, of course, we don’t really have a solution to this problem. Some are suggesting employment subsidies, such as the earned-income tax credit. While others are suggesting that we need to make it easier to build in the large blue spikes shown above. That way we’ll be able to more affordably accommodate the people who will ultimately need to move from rural to urban.

While this latter suggestion may seem grim for small-town America, it is perhaps a reminder of what cities really are at their core: Cities are labor markets. They are the places where people come to get a job and make money.

I have said this before on the blog, but I am deeply fascinated by the origins of cities because, oftentimes, the story isn’t all that lucid. Why right here? As Anderson points out in his article, usually cities “creep into existence.” 

But not Oklahoma City:

Oklahoma City was born in an event called, with extreme dramatic understatement, the Land Run. The Land Run should be called something like “Chaos Explosion Apocalypse Town” or “Reckoning of the DoomSettlers: Clusterfuck on the Prairie.” It should be one of the major events in American history. Dramatizations of it should be projected onto IMAX screens with 3-D explosions, in endless loops, forever. Every time you walk into a mall, you should be accosted by fuzzy-headed Land Run characters shouting, “What is America?!” “What does America even mean?!” Because the Land Run was, even by the standards of this very weird nation, absurd. It was a very bad idea, executed very badly. It would be hard to think of a worse way to start a city. Harper’s Weekly, which had a reporter on the ground, called it “one of the most bizarre and chaotic episodes of town founding in world history.” A century later, the scholar John William Reps reviewed the evidence and concurred. The founding of Oklahoma City, he wrote, was “the most disorderly episode of urban settlement this country, and perhaps the world, has ever witnessed.”

To learn how Oklahoma City went from a population of 0 to 10,000 in about half a day, check out the full article.

Photo by Gerson Repreza on Unsplash

Here is how these O-zones work. (All excerpts taken from this Forbes article.)

The law’s engine is a new breed of financial product, the opportunity fund, that offers investors a trifecta of attractive tax breaks. Here’s how it works. Investors who sell assets have 180 days to plow their taxable capital gains into an approved opportunity fund, which must hold 90% of its assets in Opportunity Zone projects. To put money to work fast, the law requires that the funds invest all of their cash within some specified time frame. (The Treasury Department is still deciding on that and other crucial details.) Tax on the original reinvested gain isn’t due until 2026, and the taxable gain is cut by 15%. Meanwhile the new opportunity investment grows tax-free, like a Roth IRA, provided it’s held for at least ten years. (If it’s sold earlier, it can be rolled into another opportunity fund and remain tax-free.)

Here is how it could get the real estate industry to take action.

For real estate developers, O-zones offer cheap real estate and unlimited, untaxed upside if a neighborhood takes off. Developers must do more than stash cash in crumbling property. To qualify for tax perks, they must make swift and significant upgrades (at least equal to the cost of the initial purchase). With real estate projects come new office buildings, industrial districts, restaurants and affordable housing—all of which can lay the groundwork for an economic boom. “The real estate aspect is a great catalyst to attract new businesses,” says AOL founder Steve Case, an early supporter of the O-zone initiative, whose Rise of the Rest Fund invests in backwater areas. “But it’s the startups that will be the real job creators.”

And here is how it could influence where new businesses decide to locate.

“If Facebook could have chosen to locate itself in an Opportunity Zone, like the Tenderloin in San Francisco, the investors would’ve paid no capital gains on their equity,” says Parker, who presumably would have been one of the big winners. The promise of mega-returns could send VCs, investment banks and private equity firms scrambling to launch their own opportunity funds to create incubators, scour second cities for overlooked talent or move portfolio companies into O-zones. “It wouldn’t surprise me if a lot of Silicon Valley VCs started to tell founders, ‘We’d like you to go over the bridge to Oakland, or we’d like you to go to Stockton,’” Parker says.

If you’d like to learn more about Opportunity Zones, check out the Forbes article.

I have said this before on the blog, but I am deeply fascinated by the origins of cities because, oftentimes, the story isn’t all that lucid. Why right here? As Anderson points out in his article, usually cities “creep into existence.” 

But not Oklahoma City:

Oklahoma City was born in an event called, with extreme dramatic understatement, the Land Run. The Land Run should be called something like “Chaos Explosion Apocalypse Town” or “Reckoning of the DoomSettlers: Clusterfuck on the Prairie.” It should be one of the major events in American history. Dramatizations of it should be projected onto IMAX screens with 3-D explosions, in endless loops, forever. Every time you walk into a mall, you should be accosted by fuzzy-headed Land Run characters shouting, “What is America?!” “What does America even mean?!” Because the Land Run was, even by the standards of this very weird nation, absurd. It was a very bad idea, executed very badly. It would be hard to think of a worse way to start a city. Harper’s Weekly, which had a reporter on the ground, called it “one of the most bizarre and chaotic episodes of town founding in world history.” A century later, the scholar John William Reps reviewed the evidence and concurred. The founding of Oklahoma City, he wrote, was “the most disorderly episode of urban settlement this country, and perhaps the world, has ever witnessed.”

To learn how Oklahoma City went from a population of 0 to 10,000 in about half a day, check out the full article.

Photo by Gerson Repreza on Unsplash

Here is how these O-zones work. (All excerpts taken from this Forbes article.)

The law’s engine is a new breed of financial product, the opportunity fund, that offers investors a trifecta of attractive tax breaks. Here’s how it works. Investors who sell assets have 180 days to plow their taxable capital gains into an approved opportunity fund, which must hold 90% of its assets in Opportunity Zone projects. To put money to work fast, the law requires that the funds invest all of their cash within some specified time frame. (The Treasury Department is still deciding on that and other crucial details.) Tax on the original reinvested gain isn’t due until 2026, and the taxable gain is cut by 15%. Meanwhile the new opportunity investment grows tax-free, like a Roth IRA, provided it’s held for at least ten years. (If it’s sold earlier, it can be rolled into another opportunity fund and remain tax-free.)

Here is how it could get the real estate industry to take action.

For real estate developers, O-zones offer cheap real estate and unlimited, untaxed upside if a neighborhood takes off. Developers must do more than stash cash in crumbling property. To qualify for tax perks, they must make swift and significant upgrades (at least equal to the cost of the initial purchase). With real estate projects come new office buildings, industrial districts, restaurants and affordable housing—all of which can lay the groundwork for an economic boom. “The real estate aspect is a great catalyst to attract new businesses,” says AOL founder Steve Case, an early supporter of the O-zone initiative, whose Rise of the Rest Fund invests in backwater areas. “But it’s the startups that will be the real job creators.”

And here is how it could influence where new businesses decide to locate.

“If Facebook could have chosen to locate itself in an Opportunity Zone, like the Tenderloin in San Francisco, the investors would’ve paid no capital gains on their equity,” says Parker, who presumably would have been one of the big winners. The promise of mega-returns could send VCs, investment banks and private equity firms scrambling to launch their own opportunity funds to create incubators, scour second cities for overlooked talent or move portfolio companies into O-zones. “It wouldn’t surprise me if a lot of Silicon Valley VCs started to tell founders, ‘We’d like you to go over the bridge to Oakland, or we’d like you to go to Stockton,’” Parker says.

If you’d like to learn more about Opportunity Zones, check out the Forbes article.

Share Dialog

Share Dialog

Share Dialog

Share Dialog

Share Dialog

Share Dialog