Hoping to expand investments in low-income communities and strengthen local economies, U.S. Sen. Tim Scott (R-SC) and U.S. Rep. Mike Kelly are helping to lead bipartisan and bicameral legislation to reform Opportunity Zones.
Opportunity Zones are an economic development tool designed to lift the economy and encourage job creation in distressed communities. Individuals who invest new capital in businesses operating in Opportunity Zones receive tax incentives.
Provisions creating Opportunity Zones were added to the Tax Cuts and Jobs Act of 2017, and now that communities have seen the impact of investments, the lawmakers are proposing a series of reforms and improvements to the tax incentive.
Sen. Scott on April 7 introduced the Opportunity Zones Transparency, Extension, and Improvement Act, S. 4065, with bill sponsor U.S. Sen. Cory Booker (D-NJ) and fellow original cosponsor U.S. Sen. Todd Young (R-IN). In the U.S. House, Rep. Kelly was the lead original cosponsor of the same-named bill, H.R. 7467, sponsored by U.S. Rep. Ron Kind (D-WI) and cosponsored by U.S. Rep. Jackie Walorski (R-IN).
Sen. Scott noted that independent reporting shows that Opportunity Zone investments are attracting billions of dollars to impoverished communities across America.
“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. “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.”
Rep. Kelly said that one of the best-known Opportunity Zones in the country is based 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,” he said. “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,” Rep. Kelly added.
According to a bill summary provided by the lawmakers, the legislation would improve Opportunity Zones by extending the tax incentive for two years to facilitate continued investment, which is particularly important as communities recover from the impacts of the COVID-19 pandemic.
The bill would also create pathways for smaller-dollar investments by allowing Qualified Opportunity Funds (QOFs) to invest in other QOFs to help smaller communities with financing. In addition, flexible grants would be provided to help states drive private and public capital to underserved businesses and communities. In another provision of the bill, the reporting requirements present in the original stand-alone legislation that created Opportunity Zones, the Investing in Opportunity Act, would be reinstated and expanded after they were stripped from the 2017 Tax Cuts and Jobs Act, the summary said.
“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,” Sen. Young said.