WASHINGTON, D.C. – House Majority Whip James E. Clyburn (SC-6), Congresswoman Alma Adams (NC-12), and Congressman Wm. Lacy Clay (MO-1) today introduced H.R. 5042, the “Opportunity Zone Reform Act,” which aims to tighten rules around the Opportunity Zone program and terminate zones that are not low-income. This legislation is a House companion to nearly identical sections of S. 2787, introduced last week by Senator Ron Wyden (OR), Ranking Member of the Senate Finance Committee.
Opportunity Zones were established by the 2017 tax law with the intention of providing incentives to investors to redeploy their capital to impoverished areas in desperate need of investment. However, over time, it’s become apparent that the lack of oversight, questionable zone designations, and misguided implementation of this program has led to it becoming, in too many instances, another tax credit for investors instead of benefiting the communities that it was designed to help.
The Opportunity Zone Reform Act would do the following:
- Eliminate loopholes that could allow “sin list” investments like casinos and prohibit investments in stadiums, parking lots, and luxury apartments.
- Terminate zones that are not low-income or impoverished, while allowing states to replace zones that are terminated.
- Tighten existing rules to ensure that this generous incentive goes to productive, new investments that are actually in zones, and not to projects that were already underway or investors trying to park their money tax-free.
Majority Whip James E. Clyburn
“From the start, I’ve raised concerns that the Opportunity Zone incentive would turn out to be a tax credit for rich investors with limited benefits for low-income communities. This program needs to be tweaked if it is to accomplish its stated purpose, and this legislation makes the necessary reforms to ensure it is making an impact in the communities that need investments the most.”
Congresswoman Alma Adams
“Initially this unique program showed significant potential to re-energize our communities, but I remain concerned that without the necessary guardrails there is little to no guarantee the program will benefit our constituents in the selected opportunity zones. My district of Charlotte-Mecklenburg is home to 17 opportunity zones and the underserved residents in those communities deserve the intended vision of economic revitalization, job creation, and sustainable investment. This legislation includes critical reforms that help ensure the program does not create one-sided ‘opportunity’ for wealthy investors at the expense of those most in need of investment.”
Congressman Wm. Lacy Clay
“Our new Opportunity Zone Reform legislation will help ensure that this tax credit is used to lift up our most challenged neighborhoods without exploiting the low-income people who live there. The tax breaks sole purpose should not be to support gentrification. With these much needed reforms, the Opportunity Zone concept will be more likely to drive retail, residential and commercial development in areas that have been underserved and disinvested for decades.”
Full bill text here.