In recent weeks, congress has released several legislative proposals in response to a series of negative press reports and criticisms of the Opportunity Zone (OZ) incentive. What is the potential impact of these proposals on present and future OZ investments, projects and businesses? Let’s try to sort this out.


Bills introduced by a cross-section of Republicans and Democrats respond to questions and criticisms about the lack of accountability and transparency of OZ investments, the selection of census tracts, and whether the OZ incentive will result in more affordable housing, jobs and other priority needs of the designated census tracts.

H.R. 5252, co-sponsored by Democratic Reps. Rashida Tlaib and Pramila Jayapal, would repeal the OZ incentive completely, expunging it from the tax code. Similar, but not identical Democratic bills, S. 2787, sponsored by Senate Finance Committee ranking member Ron Wyden, and H.R. 5042, from House Majority Whip, James Clyburn, don’t expressly repeal the OZ incentive but would significantly change fundamental mechanics, like adding land to the substantial improvement test, establishing the “substantially all” thresholds at 90 percent, and adding to the list of “sin” businesses, that would effectively repeal OZ benefits for many investors and projects. The Wyden and Clyburn bills would rescind OZ designations for all contiguous census tracts and perhaps others besides. They also would impose information reporting requirements, including public disclosure of certain information regarding OZ projects that some worry could quash investor and developer interest. Some projects already underway could be grandfathered, but many mechanical changes would be effective as of the date of the Tax Cuts and Jobs Act.

Hoping to reach some sort of middle ground, H.R. 5011, a bipartisan bill sponsored by House Ways and Means members, Republican Mike Kelly, and Democrats Terri Sewell and Ron Kind, imposes information reporting standards, including a public disclosure feature, but doesn’t try to rescind designated zones or change the fundamental mechanics of OZ. This measure is considered to have the backing of House Ways and Means Chairman, Richie Neal.

The most recent proposal, and arguably the most influential given his role as an original sponsor of the OZ legislation before it was subsumed into tax reform, is S. 2994 from Sen. Tim Scott. Joined by Senate Finance Committee Chairman Chuck Grassley and several of his GOP colleagues, Sen. Scott has introduced information reporting legislation intended to capture data about investments, jobs, housing and other factors necessary to provide the accountability and transparency that congress and the public are seeking without undermining the fundamental policy and goals of the OZ incentive, or risking the disclosure of the private tax return information of investors. Scott’s proposal does not repeal previously designated zones or otherwise change the rules of the OZ road.


Few on either side of the aisle in congress challenge the notion that it is important to measure the impact of OZ investments, projects and businesses. This information is necessary to determine the impact on the communities designated as OZs, and, eventually, whether the OZ incentive should be renewed, with or without revisions. There is disagreement, however, on the extent of information that should be made publicly available. These differences should not be insurmountable but could take some time to resolve. Given these differences and the general disarray of congress wrapping up year-end business by Dec. 20, it seems unlikely that any OZ legislation will be approved before congress returns home for the holidays, but we can expect bi-partisan efforts to continue in the new year to enact information reporting rules.

It is important to note that the same bipartisan consensus does not extend to rescinding existing designated zones or fundamentally revamping the basic rules and requirements of OZ. Republicans are not about to unwind a popular provision of the tax reform bill that the White House strongly supports, and there is support for OZ among economic development agencies across the country in both red and blue states. No one has a crystal ball, but the odds of the rug being pulled out from the OZ incentive are extremely remote.


OZ investors, developers, entrepreneurs and fund sponsors are wise to stay current on the flurry of activity around OZ policy and politics so they can make informed decisions taking into account all of the benefits and risks involved. Whether in 2019 or a later date, enhanced information reporting beyond current Treasury forms is likely. Stakeholders should set up their recordkeeping to anticipate these requirements so when the time comes they are ready to comply. Barring significant revelations of abuses within the OZ regime, fundamental changes to the operation of the incentive seem unlikely, particularly as new projects and businesses emerge to demonstrate that the incentive is working as intended.