Comments to the Treasury on Data Collection and Tracking for Qualified Opportunity Zones
On May 30, 2019, Enterprise submitted comments to the Treasury in response to the Request for Information (RFI) on Data Collection and Tracking for Qualified Opportunity Zones. Enterprise believes the collection and public reporting of meaningful data on qualified opportunity funds (QOFs) and their investments into designated Opportunity Zones (OZs) are critical first steps towards ensuring the Opportunity Zones tax incentive is fulfilling its intended purpose. We believe that the federal government must require data collection and publicly report on QOF investments and outcomes in designated OZs, allowing Congress and the public to evaluate whether this new tax incentive is driving equitable investments.
In the comment letter, Enterprise broadly recommends to the Treasury that:
- All the recommended data points should be required as applicable in order to ensure comparability of data. If made optional, any subsequent evaluation of the impact of the tax incentive will not be an accurate depiction.
- The full data should be made publicly available so that an independent stakeholder with research capacities could conduct analyses of QOF investments and the outcomes and impacts on communities within designated OZs.
- The Treasury should publicly release the data on an annual basis in an annual report on the prior year’s activities.
Enterprise then provides three buckets of recommendations to the Treasury:
- Recommendations on data collection about individual QOFs, i.e. fund-level data that should be collected by a revised version of Form 8996 (a QOF is required to file Form 8996 as part of its annual Federal income tax return);
- Recommendations on data collection about individual QOF investments, i.e. investment-level data that should be collected by a new, supplemental form; and
- Additional recommendations on cumulative data the Treasury should publicly report.
In the first bucket, Enterprise provides a list of recommended data points about individual QOFs that should be collected by Form 8996. These include basic fund-level information such as Fund ID, address, total assets under management, and intended community benefit.
In the second bucket, Enterprise provides a list of recommended data points about individual QOF investments that should be collected by a new, supplemental form. Enterprise recommends that the Treasury considers tasking the responsibility of collecting the investment-level data to an agency or sub-agency that has demonstrated capacity and competencies on transaction-level data collection, aggregation, and public release. For example, the CDFI Fund might be tasked with administering the collection, compiling, and public releasing of this information, given their demonstrated experience with New Markets Tax Credit reporting. Additional resources should be provided to the agency or sub-agency tasked with collecting and publicly reporting this data to sufficiently cover the additional administrative costs.
In addition to basic investment-level information such as investment location, total dollar amount, and type of investment, Enterprise recommends the collection of data on job creation—including the number of new jobs that will go to local hires and/or will be living wage jobs—as well as data on any displacement resulting from demolition or construction and data on new affordable housing. This information will be critical to assessing whether QOFs have made equitable investments into designated low-income communities.
In the third bucket, Enterprise provides key recommendations to the Treasury on the importance of publicly sharing full data sets and cumulative data. We especially emphasize the necessity of providing a single list of designated OZs that have received QOF investments by census tract ID, with the total number of QOF investments per OZ and the total value of those investments. Only by providing this information could the Treasury or any independent stakeholder with research capacity conduct comparative analyses on how the tax incentive has impacted OZs relative to non-OZs or OZs that did not receive QOF investments across indicators such as poverty reduction or economic growth.
In the comment letter, we also stress the importance of continued access to essential Census data sets that track the type of information that is necessary to evaluate designated OZs or any other program at the census tract level. In September 2018, the Census Bureau announced its intention to adopt a more aggressive approach to privacy control. This approach, known as “differential privacy,” would prohibit Census data products from revealing characteristics of an individual, even if the individual’s identity is concealed. The application of differential privacy measures to Census data tabulated for census tracts and other small geographic areas could severely limit the data’s availability and utility—making it difficult if not impossible for researchers to evaluate the impact of QOF investments at the OZ (census tract) level. We raise this issue as it would be in the interest of the Treasury to ensure that the Census Bureau preserves open access to high-quality data for census tracts.
Enterprise believes the Opportunity Zones tax incentive should be used to advance equitable and inclusive growth. We believe investments made through socially-minded, responsible QOFs with a commitment to community engagement have the potential to transform communities, grow small businesses, and create broader access to opportunity. QOF investments should thoughtfully serve each low-income community’s unique needs—especially those of long-time residents and business owners—so that the investments do not lead to displacement but rather inclusive community benefits and growth. For those reasons, the Treasury has a critical role to play in the collection and public reporting of data that is paramount to evaluating the outcomes of the Opportunity Zones tax incentive.
Enterprise encourages our partners to also submit comments to the Treasury, which are due on Friday, May 31, 2019.
Click here to view Enterprise’s full comment letter.