Booker, Scott, Kind, Kelly Introduce Bipartisan, Bicameral Bill Reforming Opportunity Zones

WASHINGTON, D.C. – Today, U.S. Senators Cory Booker (D-NJ) and Tim Scott (R-SC) and U.S. Representatives Ron Kind (D-WI) and Mike Kelly (R-PA) introduced a bipartisan, bicameral bill reforming Opportunity Zones, the tax incentive for individuals who reinvest unrealized capital gains into high-impact projects in underserved communities. Additionally, U.S. Senators Mark Warner (D-VA), Chris Van Hollen (D-MD), and Todd Young (R-IN) and Representatives Terri Sewell (D-AL-07), Dan Kildee (D-MI-05), and Jackie Walorski (R-IN-02) co-sponsored the legislation, called the Opportunity Zones Transparency, Extension, and Improvement Act.

Booker and Scott originally introduced the Investing in Opportunity Act in April 2016. A provision based on the bill was included in the 2017 tax bill. As communities across the country have begun to see investments take hold, Booker, Scott, Kind, and Kelly are proposing a series of improvements to the tax incentive.

“The Opportunity Zone incentive has the potential to unleash much-needed economic growth in high poverty communities across the country – communities that investors too often overlook. But without robust guardrails in place, the incentive could be undermined or abused by those who aren’t committed to uplifting rural and urban communities across the country,” said Senator Booker. “I am proud to introduce this legislation with Senator Scott to help restore the original promise of opportunity zones by steering private capital to reinvest in underserved communities that have been historically left behind and working to level the economic playing field.”

“The Opportunity Zone program represents the good that leaders can do for communities across the country when we work together toward common sense solutions,” said Senator Scott. “Independent reporting shows that investments in Opportunity Zones are making a huge impact across the country, with billions of dollars flowing into impoverished neighborhoods. I am glad to build on that success with this legislation to make the program stronger, so that we can ensure this incentive is benefitting the Americans who need it most.”

“Opportunity Zones are bringing capital to communities in rural and underserved areas and investing in our local economies,” said Rep. Kind. “In order to ensure this program is used as it was intended, we need strong transparency and accountability measures in place. I’m proud to help introduce this bipartisan, bicameral legislation to maximize the potential of Opportunity Zones, improve safeguards, and drive economic growth across the country.”

“Opportunity Zones have brought new life to America’s Main Streets and communities that have not seen this type of investment in decades,” Representative Kelly said. “Nationally, one of the best-known Opportunity Zones is in my congressional district in Erie, Pennsylvania.  Due to great community partners and private investment, local leaders have been able to leverage the revitalization of downtown Erie.  Our new legislation will help ensure that Opportunity Zones can continue to revitalize communities like Erie for years and decades to come along with giving taxpayer’s the peace of mind that the government is working for them locally.”

“Gaps in Opportunity Zone programs have barred economically distressed areas from accessing the critical resources they need to create new local opportunities. This legislation will help close those gaps and ensure that Opportunity Zone investments lift up low-income communities – spurring further investments and ultimately benefiting Marylanders,” said Senator Van Hollen. “Maryland’s own Sparrows Point and Turner Station, alongside hundreds of recovering regions across the country, stand to see renewed economic vitality and more good-paying jobs as a result of this solution.”

“The creation of the Opportunity Zones initiative in the 2017 tax reform law has succeeded in attracting capital and investments to historically distressed communities. They serve as a critical tool to create jobs, revitalize neighborhoods, and lift Hoosiers out of poverty, which is why I am proud to help introduce the Opportunity Zones Transparency, Extension, and Improvement Act. This bipartisan legislation will better optimize Opportunity Zone investment in neighborhoods and communities across Indiana while strengthening transparency and reporting metrics to improve on the initiative’s success,” said Senator Young.

“I am proud to co-sponsor this Opportunity Zone reform bill that will provide more transparency and reporting for these zones,” said Senator Warner. “I was an original leader on the bipartisan Investing in Opportunity Act, which led to the creation of Opportunity Zones, and I know this bill will make meaningful progress and substantially improve the policy.”

This bipartisan legislation would improve Opportunity Zones by:

• Reinstating and expanding the reporting requirements that were present in the Investing in Opportunity Act (IIOA), the original stand-alone legislation that created Opportunity Zones, but were stripped out in the 2017 Tax Cuts and Jobs Act due to procedural rules.
• Ending Opportunity Zones that are not impoverished. While the vast majority of Opportunity Zones are truly impoverished areas, the legislation would sunset a small percentage of Opportunity Zone designations for tracts with a median family income at or above 130 percent of the national median family income. States would be able to designate a new tract in high-need communities for every tract sunsetted under this provision.
• Creating pathways for smaller-dollar impact investments by allowing Qualified Opportunity Funds (QOFs) to be organized as a “fund of funds” that may invest in other QOFs, providing smaller communities and projects with the financing they need.
• Providing operating support and technical assistance to high-poverty and underserved communities through a State and Community Dynamism Fund. Flexible grants will help states drive private and public capital to underserved businesses and communities.
• Extending the tax incentive for two years in order to facilitate continued investment. It took the Treasury Department nearly two years to issue final regulations governing Opportunity Zones, during which time many investors and stakeholders stayed on the sidelines awaiting clear rules for the policy. Extending the policy by an equal amount of time will help investors and communities fully use the tool as Congress intended — which is especially important now with the economy in recovery from the impacts of the COVID-19 pandemic.

The full text of the legislation can be viewed here.

The one-pager of the legislation can be viewed here.

The section by section of the legislation can be viewed here.

Booker has repeatedly pushed to restore safeguards that were stripped from the Opportunity Zones language that became law in 2017, including co-authoring a bipartisan bill in 2019 with Senator Scott, Maggie Hassan (D-NH), and Todd Young (R-IL) that would have restored and strengthened reporting requirements. Booker also wrote to the Treasury in 2019 multiple times, urging it to adopt stronger reporting requirements for investors using the tax incentive. At the request of a Senators Booker, Scott, and a bipartisan group of Members of Congress, the Government Accountability Office released a report in October 2021 that analyzed early data from Opportunity Zones. The report concluded that, while selected Opportunity Zones represented the most low-income, high poverty areas of the eligible tracts, a lack of robust reporting requirements created challenges for Treasury to conduct necessary oversight.

Quotes in support of the legislation can be viewed below:

John Lettieri, President and CEO, Economic Innovation Group:

“Supporting economic growth in low-income communities remains an urgent challenge as the country recovers from the severe disruption of the pandemic. One powerful way to do that is to strengthen the Opportunity Zones incentive, which has proven to be an effective tool for encouraging investment in struggling areas throughout the country,” said John Lettieri, President and CEO of the Economic Innovation Group. “The Opportunity Zones Transparency, Extension, and Improvement Act would enhance the policy on multiple fronts, including by enacting careful reporting and measurement standards, strengthening the incentive to draw in greater investment, creating new ways to attract funding for high-impact activities, and refining the map of designated communities to better align with the intent of the law. EIG applauds the bill’s sponsors for their thoughtful, bipartisan leadership in bringing this important legislation to fruition.”

Jonathan Tower, Managing Partner, Arctaris Impact Investors:

“Arctaris Impact Investors has invested in the revitalization of under-invested communities for 13 years over 7 funds and, in our experience, the Opportunity Zone incentive is more efficient for delivering capital and social impact to low income census tracts than all the other federal and local economic development programs combined.  The proposed amendments will help attract more institutional-grade capital to OZ funds, and Arctaris looks forward to expanding its platform to support the growth of diverse businesses, community infrastructure, and real estate.  Further, Arctaris has long advocated for and adhered to higher standards for impact reporting than contained in the original legislation, and we welcome the greater transparency requirements in the proposed amendments.”

Martin Muoto, CEO, SoLa Impact:

“This bipartisan legislation to improve the Opportunity Zones policy will drive investors to focus more on social impact in communities like South Los Angeles,” said Martin Muoto, CEO of SoLa Impact. “The OZ legislation has enabled SoLa to leverage private capital to build over 1,500 affordable and workforce housing units and house hundreds of formerly homeless residents.”

Alex Flachsbart, Founder and CEO, Opportunity Alabama:

“As presented, The Opportunity Zones Transparency, Extension, and Improvement Act will be the biggest step forward for Opportunity Zones in the program’s history. Providing a longer deferral window and allowing the feeder fund concept will substantially improve the flow of capital into the program – and, thanks to inclusion of additional reporting requirements, we can finally get real data on where those funds will flow. Most important, though, is the inclusion of the State and Community Dynamism Fund, a tool that – if properly implemented – could make Opportunity Zones the most effective incentive in the tax code at driving impactful, ground-up community development work.”

John Persinger, CEO, Erie Downtown Development Corporation:

“Opportunity Zones are helping to fuel a $100 million revitalization of downtown Erie, Pennsylvania, which is home to one of the poorest zip codes in America,” said John Persinger, CEO of the Erie Downtown Development Corporation. “Strengthening the oversight provisions and generally improving the legislation will ensure that Opportunity Zones continue to help those communities with the greatest economic and social needs, communities like Erie.”

Rick Wade, Senior Vice President, U.S. Chamber of Commerce:

“The Opportunity Zone program is a positive, compelling example of government and the private sector working together to solve our nation’s challenges. Investments made possible through the Opportunity Zone program will help underserved communities struggling to bounce back from pandemic-induced economic hardships. The U.S. Chamber of Commerce is proud to support this bipartisan legislation that ensures Opportunity Zone financing reaches the areas of our country that need it the most and expands the reach of a public-private partnership on track to decrease the poverty rate by 11 percent,” said Rick Wade, Senior Vice President at the U.S. Chamber of Commerce

Stephanie Copeland, Partner, Four Points Funding:

“The changes addressed in this bill not only practically strengthens the Opportunity Zone program, but also continues to align investors to the intent of the incentive. We are thrilled to see the thoughtful progress.”

Katie Kramer, Vice President, Council of Development Finance Agencies:

“The Council of Development Finance Agencies is grateful to Congress for their efforts to introduce important reforms to Opportunity Zones. The State and Community Dynamism Fund is critically needed at the local levels to fully deploy comprehensive OZ strategies in disinvested communities. We stand ready to support the implementation of the Opportunity Zones Transparency, Extension, and Improvement Act.”

Ross Baird, CEO and Founder, Blueprint Local:

“As active Opportunity Zone investors, we are excited to see this legislation that can ultimately drive much more impact in distressed communities. It is very positive to see the reporting requirements, which will bring transparency to this catalytic program and drive more impact in communities, as well as the fund of funds provision, which will help many more investors participate in the program and help the country’s most impactful projects find the capital they need.”

Ben Seigel, Opportunity Zones & Impact Investment Coordinator, Baltimore Development Corporation:

“From Day 1, the Baltimore Development Corporation embraced Opportunity Zones as a tool for attracting impact capital to underserved neighborhoods and projects in our city. We were one of the first cities in the country to hire an Opportunity Zones Coordinator to match investors with projects, as well as track and monitor investments and their impact. While we have been pleased with the results to date, we know that Opportunity Zones can do a lot more to drive inclusive economic growth in our city. This new legislation would significantly increase the promise and potential of Opportunity Zones in a place like Baltimore City by extending the incentive period, requiring impact reporting, and investing additional resources into OZ projects and local capacity building in underserved communities.”

Jeremy Keele, Managing Partner, Catalyst Opportunity Funds:

“We’re really supportive of this new legislation to improve key elements of the Opportunity Zone policy. As impact-focused investors active in the OZ strategy, we believe the proposed changes are likely to improve transparency and accountability program-wide, and more directly target capital and other resources into the low-income communities around this country that stand to benefit most from OZ investment.”