President Donald Trump signed an Executive Order on December 12 establishing the White House Opportunity and Revitalization Council, to be chaired by HUD Secretary Ben Carson. The primary purpose of the Council will be to target existing federal programs to Opportunity Zones, distressed communities where capital gains tax relief will be provided to individuals and corporations that invest in them. Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act.
Representatives from 13 federal agencies will comprise the Council, which will be convened by the vice chair, Assistant to the President for Domestic Policy Andrew Bremberg. Secretary Carson will designate a HUD officer or employee to serve as executive director. The Council’s expenses will be met from HUD’s existing appropriation.
The Council will assess actions each federal agency can take under existing authorities to focus federal programs in Opportunity Zones. It will also assess actions agencies can take to minimize regulatory and administrative costs. The Council will regularly consult state, local, and tribal officials, as well as individuals in the private sector.
Opportunity Zones are designed to spur investments in distressed communities through tax benefits to investors (see Memo, 10/22). State governors, the mayor of the District of Columbia, and chief executives of five U.S. territories nominated areas to be considered Opportunity Zones, and the Department of Treasury designated 8,761 zones. Opportunity Zones retain their designation for 10 years.
An Opportunity Zone is composed of “low-income” census tracts that have a poverty rate of at least 20% and median family income no greater than 80% of the area median income. A census tract that is not “low-income” may be designated as part of a qualified Opportunity Zone if it is contiguous with low-income tracts that make up a qualified Opportunity Zone and it has a median household income that does not exceed 125% of the median income of the contiguous qualified Opportunity Zone. Up to 5% of the census tracts may qualify under this exemption.
Advocates are concerned that Opportunity Zones could incentivize even greater private investments in already-gentrifying areas and could result in the greater displacement of low-income families. They call for rules to ensure Opportunity Zone investments benefit low-income households. “Unless the Treasury Department quickly establishes regulatory guardrails,” said NLIHC President and CEO Diane Yentel, “there is no guarantee that low-income people will benefit in any significant way — if at all — from Opportunity Zones."
The Executive Order is at: https://bit.ly/2QzvqRa
HUD’s press release is at: https://bit.ly/2Ehb1ca
The IRS Opportunity Zone webpage is at: https://bit.ly/2Etzdce