Doing good while also doing well has long been a challenge for investors who rightly pursue profitable investments, but also want to improve the world they live in. Opportunity Zones, created by President Trump’s 2017 Tax Cuts and Jobs Act, provide a unique investment vehicle to do just that. Since I became head of the Economic Development Administration (EDA) in March, I have worked with Commerce Secretary Wilbur Ross to engage with communities and regional leaders to promote the advantages of investing in Opportunity Zones.
Investors have been undergoing regulatory uncertainty which, at this time, is still in place. “You have final rulemaking from (the) IRS expected before the end of this year,” Lettieri said. “Frankly, until that’s done, I think a good portion of the marketplace is going to sit on their hands, and not really start to move until they have all of their questions answered.” Specifically, he went on to say, investors are being asked to put their capital gain into “higher risk and less well-trodden areas.
The Mastercard Center for Inclusive Growth released its Inclusive Growth Map, a web-based service that enables users to learn about measures of inclusion and growth within 8000+ Opportunity Zones across the United States. The Inclusive Growth Map enables users to benchmark existing levels of inclusion and growth within particular Opportunity Zones, and to assess whether investments increased or decreased measures of inclusive growth.
The United States Department of the Treasury and the Internal Revenue Service (IRS) today released a proposed Form 8996 for Qualified Opportunity Funds (QOFs) for the 2019 tax year. The form is designed to collect information on the amount of investment by opportunity funds in business property by census tract. “This is an important step towards a thorough evaluation of the Opportunity Zone tax incentive,” said Treasury Secretary Steven T. Mnuchin.
A secondary attribute, appealing to clean energy developers, is that opportunity zone funds can be used for solar, microgrids, electric vehicle charging stations, and energy storage.
“The federal government isn’t picking winners and losers here,” said Pilkerton. “The governors picked those 8,700 opportunity zones, (and) the most important thing for local communities to recognize about opportunity zones is that investment plans are going to be contingent upon what they put forward."
After studying revitalization efforts in 11 cities across the U.S., Chris Benner, a professor at the University of California, Santa Cruz, and Manuel Pastor, a professor at the University of Southern California, found that communities that spur equitable development for all of their citizens do it through deliberative efforts that put professionals -- those real estate developers, government officials and economic experts who actively profit from development -- on equal footing with residents, who bring expertise in what it means to live in the community.
“Through Opportunity Zones, the federal government is helping foster partnerships between people who may have never sat at the same table before,” he said. “Community leaders, public housing advocates, investors, builders, state officials and federal officials.”
The 2017 tax reform law was a once-in-a-generation tax cut for America’s families, small businesses, and workers. A huge part of that victory was that we were able to bring hope and prosperity to communities that have been left behind through new Opportunity Zones.
In Pennsylvania, early signs suggest that the program is not living up to the claims of transformative change and is unlikely to be a cure for the communities most in need of a boost. Instead, investors appear to mostly prefer areas already experiencing redevelopment, where the payday will be far greater.