Opportunity Zones reformed under bipartisan, bicameral bill offered by Scott, Kelly

U.S. Sen. Tim Scott (R-SC) and U.S. Rep. Mike Kelly (R-PA) on April 7 introduced a bipartisan, bicameral bill that would reform the federal Opportunity Zones tax incentive.

The Opportunity Zones Transparency, Extension, and Improvement Act, H.R. 7467 / S. 4065, specifically would amend the Internal Revenue Code of 1986 to modify the rules related to qualified Opportunity Zones, which are a federal economic development and community development tax benefit established as part of the 2017 Tax Cuts and Jobs Act available to investors with capital gains designed to encourage long-term private investment in low-income urban, suburban and rural census tracts.

S. 4065 is sponsored by U.S. Sen. Cory Booker (D-NJ) and four original cosponsors, including Sen. Scott and U.S. Sen. Todd Young (R-IN). H.R. 7467 is sponsored by U.S. Rep. Ron Kind (D-WI) and four original cosponsors, including Rep. Kelly and U.S. Rep. Jackie Walorski (R-IN).  

A provision based upon the original 2016 bill was included in the 2017 tax bill, according to the lawmakers, who want to reform the program now that communities across the country have begun to see investments take hold.

“The Opportunity Zone program represents the good that leaders can do for communities across the country when we work together toward common-sense solutions,” Sen. Scott said. “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,” he added.

“Opportunity Zones have brought new life to America’s Main Streets and communities that have not seen this type of investment in decades,” Rep. Kelly said, adding that nationally, one of the best-known Opportunity Zones is in his congressional district in Erie, Pa.

“Due to great community partners and private investment, local leaders have been able to leverage the revitalization of downtown Erie,” said Rep. Kelly. “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.”

If enacted, the bill would reinstate and expand the reporting requirements that were present in the Investing in Opportunity Act, 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, according to a bill summary provided by the lawmakers.

Additionally, the bill 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, the summary says.

Among several other provisions, the bill also would create pathways for smaller-dollar impact investors to receive financing, according to the summary.

The legislation is supported by the Economic Innovation Group, Arctaris Impact Investors, SoLa Impact, Opportunity Alabama, the Erie Downtown Development Corp., the U.S. Chamber of Commerce, Four Points Funding, the Council of Development Finance Agencies, Blueprint Local, the Baltimore Development Corp., and Catalyst Opportunity Funds.