How a Tax Break to Help Poor Communities Became a Bonanza for the Rich

At least some struggling neighborhoods are already starting to receive investments.

In Birmingham, for example, a developer is using opportunity-zone funds to convert a building, vacant for decades, into 140 apartments primarily aimed at the local work force.

“We are seeing projects that are being announced here in Alabama that would not have happened otherwise,” said Alex Flachsbart, founder of Opportunity Alabama, which is trying to steer investors to economically struggling neighborhoods.

Similar projects are getting underway in Erie, Cleveland and Charlottesville, Va. Goldman Sachs is using some of its capital gains — profits on the company’s own investments — in opportunity zones, including $364 million for mixed-income housing developments in Salt Lake City, Baltimore and other cities.

Mr. Case, the AOL co-founder, and Derrick Morgan, a former professional football player, are among those who have announced that they will invest in opportunity-zone projects that are designed to address clear social and economic problems.

As he announced his retirement from the Tennessee Titans in July, Mr. Morgan wrote on Instagram that his goal would be to “create more opportunities for those who are underserved and overlooked” in communities like Coatesville, Pa., where he went to high school.

Emanuel J. Friedman, a hedge fund manager, is using some of his capital gains and money he has raised from others to build 11 warehouses in rural Jasper County, S.C., near the Savannah seaport. The warehouses won’t employ many people, but he said the jobs would offer higher wages than hotel housekeeping positions at the nearby Hilton Head resort, where many area residents now work.

“Of course it will make a difference,” Mr. Friedman said. “It is mind-boggling. It is the best thing I have ever done.”