President Trump Signs Executive Order Directing Federal Agencies to Collaborate on Opportunity Zones
Yesterday President Trump signed an Executive Order on Opportunity Zones, establishing the White House Opportunity and Revitalization Council. The Council is tasked with finding opportunities to align federal agency priorities and funding in urban and economically distressed areas, including with the new Opportunity Zones tax incentive that was created through the Tax Cuts and Jobs Act of 2017.
HUD Secretary Ben Carson will lead this Interagency Council, to be comprised of representatives from 13 federal agencies, including the Departments of Agriculture and Treasury and the Small Business Administration. The Executive Order calls on the Council to prioritize federal efforts – such as grant funding, loan guarantees, infrastructure spending and crime prevention – in Opportunity Zones and to take a range of actions, including:
- Evaluating what metrics and methodologies the federal government can use to measure the effectiveness of investments in Opportunity Zones.
- Assessing how each agency can prioritize Opportunity Zones in federal investments and programs, including grants, financing, and other assistance.
- Developing strategies across agencies to assist communities in addressing economic issues, engaging in comprehensive planning and advancing regional collaboration.
- Recommending policies that reduce administrative burdens, ensure stakeholders can easily identify and apply for the federal resources that are best-suited for their specific needs, and align program requirements to allow layering of multiple public and private investments for multi-faceted economic development and revitalization projects.
- Supporting states and tribes that take innovative and strategic approaches to facilitate economic growth and inclusion in Opportunity Zones.
Enterprise is pleased to see the White House acknowledge the importance of collecting data on the effectiveness of Opportunity Fund investments. Unless data is collected and shared publicly, government and public stakeholders will not be able to evaluate the efficacy of this new tax incentive. We encourage the Council to consider the kinds of metrics -- such as job creation, poverty reduction and new business starts -- that were outlined in the legislation that conceptualized Opportunity Zones.
At the same time, Enterprise has concerns that the Interagency Council may unintentionally divert resources away from the tens of thousands of census tracts that have a great need for capital and economic revitalization but were not designated as a Qualified Opportunity Zone. Since only 25 percent of the distressed communities in each state, territory, and the District of Columbia could be designated as Qualified Opportunity Zones, directing all or even most federal resources to these communities would be detrimental to the remaining 75 percent of distressed communities.
The Executive Order directs the Council to submit a workplan within 90 days that details how the Council will accomplish these goals. Within 210 days, the Council must list federal policy recommendations that can encourage public and private investment in Opportunity Zones. Within one year, the Council is responsible for sharing a list of recommended changes to federal policies to support state and local governments using federal resources in all economically distressed communities; and sharing best practices resulting from the integration of public and private investments to increase economic growth, encourage new business formation, and revitalize communities.
In October, the Department of Treasury and IRS released a proposed rule on Opportunity Zones that provides stakeholders critical guidance for structuring Opportunity Funds. Comments on the proposed rule are due December 28. The IRS indicated in this first proposed rule that it would be issuing a second proposed rule in the “near future” that would lay out information reporting requirements. Enterprise strongly urges the IRS to enact regulations that promote transparency and accountability of Opportunity Fund investments and make this information publicly available.
Stay tuned to our newsletters for more information about Opportunity Zones, including the Interagency Council and reporting requirements.