Housing and Urban Development’s (HUD) Opportunity Zones program that has helped distressed neighborhoods and disadvantaged Americans across the United States should continue in some form under a Joe Biden presidency, experts say.
President-Elect Biden’s transition team did not respond to Breitbart News’s inquiry, but according to HUD, Biden’s campaign platform, and a real estate investor involved in the program, its benefits should lead to its continuation.
For background, Opportunity Zones was created under the Tax Cuts and Jobs Act of 2017, shepherded and signed into law by President Donald Trump and, under the direction of Secretary Ben Carson, it has resulted in providing housing and infrastructure for approximately 31.3 million Americans across all 50 States, the District of Columbia, and five U.S. territories.
“Over the last several years, Opportunity Zones have spurred $75 billion dollars in private sector investment and have created at least 500,000 new jobs in designated Opportunity Zone tracts,” a senior administration official at HUD told Breitbart News. “These new investments will lift at least one million Americans up out of poverty and onto the path toward self-sufficiency, decreasing the overall Opportunity Zone poverty rate by 11 percent.”
“We hope the next administration will continue to highlight this prosperous program,” the official said.
Jill Homan, president of Javelin 19 Investments, a Washington, DC-based real estate investment, development, and advisory firm that has invested in Opportunity Zones, told Breitbart News that she believes the program will continue, even if some changes may be made under a Biden administration.
“The fact that Vice President Biden has included it in his Build Back Better plan means that he agrees that this bipartisan legislation is helping low- and moderate-income communities,” Homan told Breitbart News. “Since Biden’s plan outlines changes to the Opportunity Zone tax incentive, it is affirming the bipartisan support of the OZ tax incentive, which originated under a Republican president.
Sens. Tim Scott (R-SC) and Cory Booker (D-NJ) and Rep. Ron Kind (D-WI) are responsible for putting Opportunity Zones into the 2017 tax legislation.
“I expect the changes to OZ will come in the form of reporting requirements and enhanced qualified opportunity fund (QOF) certification,” Homan said. “In terms of the former, currently, the IRS does not think it can add additional reporting requirements through the regulatory process. The IRS staff has indicated as much in OZ hearings.”
“For example, that they have concerns about privacy and how to handle reporting since it was not included in the actual OZ legislation,” Homan said. “Thus, reporting legislation would need to be passed, and Senator Tim Scott has authored bills with other members to this end.”
Biden’s platform did not provide these kind of details, but Homan said the devil is in the details.
“It is incredibly important for QOFs to adhere to the letter and spirit of the law and regulations even now, and I expect a Biden Administration may add additional requirements to achieving OZ certification,” Homan said.
Homan told Breitbart News that she hopes any changes will keep the bipartisan nature of the Opportunity Zones program.
“The Biden administration needs to be careful about loading up the tax incentive with a severe compliance and reporting requirements and ending up with a politicized government-run program,” Homan said. “As it stands now, I’m seeing a vibrant marketplace of Opportunity Zone investments from ones supporting small businesses and affordable housing to those large scale real estate projects transforming under invested communities.”
“My hope is that the changes would not harm small businesses by making the OZ tax incentive not work for them and would not keep investments from coming into the communities that need it the most,” Homan said.
The Council on Economic Advisors confirms HUD’s statistic that OZ tax incentive has attracted about $75 billion in equity into low-income communities.
“While that is an estimate, by my calculations and those in the industry, it is a fair metric for the amount of activity we are seeing.” Homan said. “I’m encouraged by investor interest and the project sponsors’ diversity of deals. From building a $300 million food production and distribution facilities in rural South Carolina and creating 1,500 new jobs to investing in an early stage minority-owned animation studio in Baltimore, the Opportunity Zone tax incentive is truly transforming communities and attracting capital to low income areas.”
“Opportunity Zones are economically distressed communities, defined by individual census tract, nominated by America’s governors, and certified by the U.S. Secretary of the Treasury via his delegation of that authority to the Internal Revenue Service. Under certain conditions, new investments in Opportunity Zones may be eligible for preferential tax treatment,” the HUD website states. “There are 8,764 Opportunity Zones in the United States, many of which have experienced a lack of investment for decades. The Opportunity Zones initiative is not a top-down government program from Washington but an incentive to spur private and public investment in America’s underserved communities.”
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