I’m going to tell you a story about an imaginary donkey.

My mom lives on a small farm in Virginia. For her birthday this March, she said she didn’t want anything. She has sheep, goats, and often says she has wanted a donkey. My kids (AND well-intentioned me) really jumped on this.

“Let’s get her a donkey!” my kids said.

“She’d love a donkey,” my four year old insisted. “It would be so cute! It could live in the barn with the goats!”

I started looking. Donkeys are surprisingly affordable. There was a breeder a few towns over. One even came with a halter and a name: Cletus.

But I asked my mom one more time. And her answer was very clear: “I do not want a donkey.”

My kids didn’t care. “Just surprise her,” they begged. “She’ll come around.”

But here’s what would have happened if I bought my mom a donkey:

• It would have brayed loudly every morning and woken up the neighbors.

• It would have eaten the vegetable garden.

• It would have kicked at the chickens.

• And my mom—not my kids—would be the one building the fence, paying the vet bills, and cleaning up the mess.

In short: the person who lives with the donkey, not the kids who had the idea, would be on the hook for failure.

Which brings me to the Ritz-Carlton in Portland.

This week, The New York Times ran an op-ed calling Opportunity Zones a failure.

Their reasoning? The program, they said, "mostly directed money to neighborhoods that were already improving.” In other words: Opportunity Zones didn’t work because they worked too well in the wrong places.

I keep coming back to that logic. What happens when a neighborhood starts to get better—do we stop investing in it? When a struggling city finally shows signs of progress, should we shrug and say, “Never mind, it doesn't need help anymore”?

To me, that’s like watering a dry field until the first green shoots appear—and then putting the hose away. It makes no sense.

We know that economic momentum is fragile. The neighborhoods where we see new housing, new businesses, and new jobs often got there because of careful, early investment. When that starts to work, that’s the moment we should double down—not walk away.

Critics of the program have pointed to a ~$100M million luxury development in downtown Portland that included condos, a five-star hotel, and—at one point—Opportunity Zone (OZ) tax incentives. Critics saw it as proof of what they always feared: that OZs would become a taxpayer-funded playground for wealthy developers. “This is exactly the kind of abuse we feared,” said Sen. Ron Wyden, calling for greater oversight and transparency. ProPublica ran a story titled, “A Trump Tax Break To Help the Poor Went to a Rich GOP Donor’s Superyacht Marina.”

So when the project hit financial distress earlier this year—thanks to the pandemic, rising interest rates, and Portland’s tough economic climate—and ultimately fell into foreclosure, it might have seemed like the goat had eaten the rose bushes again.

But here’s the catch: taxpayers in Portland (or Topeka) were not on the hook for the failure. The project failed. And the investors lost everything. That’s not a design flaw in the Opportunity Zone program. That’s how it’s supposed to work.

Unlike many government programs, where public dollars are spent regardless of outcome, OZs work more like a pay-for-performance model. Investors only get a major tax benefit if the project appreciates in value and they hold it for 10 years. If the project fails—or even underperforms—there’s no windfall. No government reimbursement. No bailout.

The Washington Post this week, for example, talked about a housing development that was affordable and perfect. Gardens on the rooftop. Low energy efficiency. Extremely affordable for the working class. There’s one problem: units cost $1.2M to build. (Private developers built units next door for $350,000 a unit). And the residents were shocked to discover that the units didn’t even have washer-dryers in house.

In federal housing programs, taxpayers write a check on day one. And if the units don’t work because people want washer-dryers, the taxpayers foot the bill. Affordable housing might be great. But it might be an unwanted donkey.

With OZs, the government says: “Build something valuable. Make the community better. Stick around for a decade. And if you succeed, we’ll let you keep a little more of your earnings.” That’s not a giveaway. That’s an aligned partnership, with the investor assuming all the risk upfront.

And the results? So far, they’re better than most people realize.

As I’ve said before in this newsletter, according to a 2024 analysis by the Economic Innovation Group, Opportunity Zones led to the creation of more than 313,000 new homes between 2019 and 2024—nearly half of all new housing built in those designated areas. That’s not just a big number—it’s a meaningful dent in America’s massive housing shortage. Experts estimate we’re short 4 to 7 million homes nationwide, and the lack of supply is what’s driving up rents and pushing families out of cities they once called home.

Unlike other housing programs that can cost taxpayers hundreds of thousands—or even a million dollars—per unit, OZs deliver new housing at an average public cost of just $26,000 per unit. That’s because the government isn’t building the housing—it’s unlocking private capital to do it faster and cheaper.

And those investments are reaching a wide variety of communities:

• In Austin, OZ projects are helping relieve pressure on sky-high rents.

• In Erie, Pennsylvania, over $100 million has gone into reviving the downtown.

• In rural Colorado, OZ investment in workforce housing has grown the tax base enough to allow schools to move from four-day to five-day school weeks.

Critics argue that OZ money sometimes flows into areas already improving. But that misses the point. A criticism I hear often—whether it's in housing, education, or even ecosystems—is that when a place starts to get better, it no longer needs help. But when a neighborhood, city, or ecosystem is finally showing signs of life after decades of disinvestment, that’s exactly when we should lean in—not walk away. That’s the moment when catalytic support can turn fragile momentum into durable progress.

Opportunity Zones help us step in at the right time—so the progress continues, more people and jobs come in, and the area doesn’t fall behind again.

Yes, not every OZ project is perfect. Just like that donkey, some ideas that seem good at first won’t pan out. But here’s the key difference: when a LIHTC (Low-Income Housing Tax Credit) deal or a federal grant-funded development fails, taxpayers are out the money. When an OZ deal fails—like the Ritz-Carlton in Portland—the investors take the hit. And they have. It’s been reported that backers lost hundreds of millions in that deal, and the tax benefits they hoped for may never materialize.

As someone who has invested in over $200 million of projects through OZs, I’m not blind to the program’s flaws. I think the map of eligible zones should be updated. I support stronger reporting rules and transparency. And Congress should absolutely pass the bipartisan reforms that have already made their way through the House and Senate committees.

But let’s not throw the donkey out with the garden.

Opportunity Zones are one of the only tools we have that combine private risk with public good. They build housing. They create jobs. They revitalize long-overlooked communities—all while saving taxpayers money. In a world of government programs where dollars often disappear into red tape, OZs are refreshingly simple: no gain, no tax break.

So the next time someone says Opportunity Zones are a failure because a project was in the “wrong kind of area”—or didn’t pan out—tell them about the donkey. The kids had the idea. It sounded cute. But if it had gone wrong, the person living on the farm—not the idea-havers—would’ve been stuck fixing the mess. And wouldn’t have a washer-dryer.

That’s exactly what happened with the Ritz in Portland: the project may have looked flashy, but when it failed, the people who bet on it—private investors—took the loss. The public didn’t pay for the barn, the vet bills, or the braying at dawn.

That’s how Opportunity Zones are supposed to work: ideas are tested, risk is taken, and the taxpayer doesn’t clean up after someone else’s donkey. In a world where good ideas can turn bad fast, we need more programs like OZs—ones that step in when momentum starts, support growth as it takes root, and make sure responsibility lies with those who chose the donkey in the first place.