The much-debated 2017 federal tax law included a new program in which low-income census tracts can be designated as Opportunity Zones, which are meant to encourage private investment in exchange for exemptions from certain capital gains taxes.

Now, the Bipartisan Policy Center (BPC), a Washington, D.C.,-based think tank, is hoping the incentive program can be used to build and improve child care and preschool facilities, particularly in areas considered child care “deserts.”

“If you want business, you want housing, you want anything — you need child care,” Linda Smith, BPC’s director of early childhood policy and former deputy assistant secretary for early childhood development at the Department of Health and Human Services, said in an interview.

BPC is hoping that as community leaders and investors look at sites for development or how to support entrepreneurial enterprises, they’ll consider early childhood as part of their overall vision. The funds can be used for both new businesses and the renovation of existing facilities.

“Early childhood can be part of the plans that these communities pull together,” Tim Shaw, a senior policy analyst at BPC, said in an interview.

The U.S. Department of the Treasury, which will certify the zones, is accepting public comments on regulations related to “Opportunity Funds,” the money investors can use for economic development in the zones. The comment period continues until Dec. 28, and the department as well as the IRS will hold a public hearing on the program on Jan. 10.

Addressing ‘supply bottlenecks’

Part of increasing young children’s access to high-quality child care and preschool programs is opening and upgrading the supply of centers and classrooms specifically designed for young children. The challenge, Smith said, is early childhood programs are led by educators “who care about children and are schooled in child development, but are not schooled in construction and renovation, finance and business.”

An older policy brief from the National Institute for Early Education Research also noted that the supply of child care and preschool programs often falls well below demand because of the time it takes to purchase or lease space, get the necessary permits, secure financing, and complete construction or renovation.

“Without the public sector taking the initiative to plan and invest in new facilities, supply bottlenecks are inevitable,” the authors wrote. “Meanwhile, children will either go unserved or public administrators will resort to stopgap policies, such as shortening the program day to accommodate double and even triple sessions or reducing program standards to expand the pool of eligible providers.”

The interest in taking advantage of Opportunity Zones also comes as BPC has released a new framework meant to guide policies and standards for early-childhood facilities. The document notes that early-childhood programs and “affordable, developmentally appropriate, high-performing early learning facilities” are essential parts of a community’s health and the national economy. The framework also says early learning programs support the workforce, home-based programs also have facility needs and policies related to facilities should be flexible to adapt to changing workplaces.

A recent article in a Detroit publication highlights existing efforts in that city — as well as in Philadelphia, Ohio's Cuyahoga County and Atlanta — to improve substandard classroom spaces and create facilities that contribute to young children’s learning and teachers’ job satisfaction. The article notes natural light, low windows, good ventilation and transition spaces for children that might struggle with separation as important elements in designing such facilities.

Efforts to locate and construct optimal spaces often require collaboration between lenders, developers, realtors and early-childhood program administrators. BPC’s framework also says there is "multi-sector responsibility" for addressing facility needs that includes philanthropy, the faith community, businesses, and federal, state and local governments.

Some communities have already completed significant work to envision how Opportunity Funds can create economic growth. Erie, Pennsylvania, for example, has developed an "investment prospectus" describing multiple residential, commercial and mixed-use projects. By drawing attention to how child care and preschool facilities might factor into those projects, Shaw said, “You are more likely to get communities like Erie to include early-childhood explicitly in their plans.”