Zone offense: Sacramento sees opportunity in neighborhood-investment federal program

‘Promise Zones’ could get expanded through federal tax overhaul

This is an extended version of a story that appears in the March 22, 2018, issue.

Sacramento officials say an Obama-era program to help struggling communities is paying dividends and might actually grab more investment under the new federal tax code.

On March 13, Tyrone Williams of the Sacramento Housing & Redevelopment Agency told the City Council a local Promise Zone initiative is having a measurable impact on education and youth employment. Promise Zones are part of an exchange program with the U.S. Department of Housing & Urban Development that help governments leverage federal funds in distressed neighborhoods.

The city of Sacramento enacted its Promise Zone in 2015, drawing the boundaries around much of Del Paso Heights, the downtown core and neighborhoods along Stockton Boulevard. The county is also participating, with its Promise Zone spanning the south area between Power Inn Road and Franklin Boulevard. Williams told council members that about 127,000 county residents reside in the boundaries, and that 34 percent of them are below the federal poverty line. Only 37 percent of third-graders attending school within the Promise Zone can read at their grade level, and general life expectancy in the zones is lower than for those living outside it.

According to Williams, the program’s best achievements so far have been putting on STEM programs for underserved children and creating jobs for youth through a partnership with the Regional Conservation Corps.

Councilman Larry Carr said he thinks controversy over the initiative is dying down now that its results can be tracked and locals can see that the zone’s programs are open to everyone in the city.

“It was not well understood at the time because of the contiguous boundaries of the Promise Zone,” the District 8 representative said. “A lot of communities felt left out when they were not included.”

Mayor Darrell Steinberg told Williams that he’s most interested in a new sub-initiative HUD has attached to the Promise Zone program, known as an Opportunity Zone, which allows businesses to invest in economic redevelopment within hard-hit neighborhoods in exchange for new market-rate tax credits. The Opportunity Zones were created as part of the recent federal tax overhaul. Williams’ team is currently exploring how to apply for an Opportunity Zone designation. Steinberg wanted to know how much financial activity the region might net from one.

“Based on the fact that it’s a private sector investment tool, the numbers that are being kicked around are trillions, over time,” Williams answered. “Just so you know,” the mayor shot back, grabbing a laugh from the audience, “we’d be satisfied with one trillion.”