By Anayat Durrani

The Ways & Means Committee held an open hearing on the topic of the Opportunity Zone program. While lawmakers and participants voiced differing opinions on the program, most agreed the program could be made better to help Americans left behind.

"Nobody wants to cut this program off,” said U.S. Rep. Bill Pascrell, a New Jersey Democrat who chairs the House Ways and Means Oversight Subcommittee. “I don’t think it’s going to continue to exist the way it is. And I don’t think that’s a Democratic or Republican conclusion.”

Pascrell said when all facts are examined, he believes it will be concluded that the program “could be made much, much better.”

Opportunity Zone program is helping distressed communities

Proponents argued that Opportunity Zones were a benefit to struggling communities nationwide.

"The bipartisan Opportunity Zone tax incentive allows greater investment in local communities to help lift Americans out of poverty and strengthen small businesses," U.S. Rep. Mike Kelly (R-PA) said. "That is the truth about Opportunity Zones.”

John Persinger, CEO, Erie Downtown Development Corporation, was among the witnesses testifying before the committee. He said the EDDC and their partners are investing over $100 million to develop twelve projects across three blocks in downtown Erie, $40 million of which comes from Opportunity Zone funds.

"Congress should study why Opportunity Zones are working in Erie, Pennsylvania, when decades of other Federal policies have failed or underperformed, and assess how, going forward, more legislation can be crafted like Opportunity Zones, so that people who live in communities similar to Erie have the flexibility to attract investment to meet their community needs," Persinger said.

Critics of the program say the Opportunity Zone program is designed to benefit investors that seek the lowest risk and biggest possible returns. They say investors have primarily invested in communities that were on the upswing and mainly focused on real estate ventures.

“The problem that Opportunity Zones were supposed to address is a significant one: the large and widening gap between communities that are prospering and those that are being left behind,” said David Wessel, director, Hutchins Center on Fiscal & Monetary Policy Senior Fellow in Economic Studies Brookings Institution.

Wessel told the subcommittee that it is worrisome because Americans are increasingly less likely to move than they used to. He noted that there are places where OZs are working such as downtown Erie, Pennsylvania and SoLa Impact, which is using OZ money for affordable housing in South LA.

“But there are 8,764 OZs, and nothing in law or regulation requires OZ investors to put their money into those census tracts that really need the money or into projects that will benefit the people who live in the zones,” said Wessel.

Targeting social impact through Opportunity Zones

Brett Theodos, Senior Fellow, Urban Institute said Congress can chart a new path that prioritizes projects that generate substantial social impact and community benefit for low- and moderate-income residents. To improve Opportunity Zones, he suggested the US Department of the Treasury consider conducting a rigorous certification process for Opportunity Funds, make the tool more like a program, not merely an incentive, and lastly, to require transaction reporting.

“Through reforms, Opportunity Zones can be made to benefit low- and moderate-income communities in urban and rural contexts,” said Theodos.

A recently released Government Accountability Office report says at least $29 billion had been invested under the program through 2019.

In its report, GAO recommended steps the IRA could take such as addressing risks caused by limited data availability, and research compliance risks of high-wealth investors and large partnership Qualified Opportunity Funds.


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