Senate Finance Chair to Billionaire Developers: Explain How Opportunity Zone Tax Break is Helping The Poor
There is little reason to believe that opportunity zones will deliver meaningful economic benefits to the low-income families they are ostensibly designed to benefit. > Not only are opportunity zones based on failed trickle-down economics, but investors are incentivized to fund highly-profitable projects rather than projects more responsive to the needs of truly distressed communities, such as affordable housing.
> Additionally, regulations for opportunity zones are inadequate to hold investors accountable for making investments that actually benefit local communities
(For more information on the federal Opportunity Zones program and its shortcomings, see Opportunity Zones Bolster Investors’ Bottom Lines Rather than Economic or Racial Equity.)
BLOGGER INSERT: First let's go back in time here in Mesa to March 2018
How do you ensure that wealth creation extends to the communities themselves, and not just the investors?
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The 90-day determination period for designating Opportunity Zones began in late December 2017 when the Opportunity Zones Program was created in the Tax Cuts and Jobs Act.
Invested capital will flow through “Opportunity Funds,” new funds and vehicles required to invest 90% of their assets in economically distressed communities. Governors must nominate areas for inclusion by March 21.
According to the Economic Innovation Group, which helped craft the law, there is probably close to $6 trillion sitting around in capital gains. . .
What will entice people to invest in Opportunity Zones?
Much of that is wrapped up around unrealized capital gains -- and avoiding taxes.
According to the Economic Innovation Group, which helped craft the law, there is probably close to $6 trillion sitting around in capital gains -- money made on existing investments -- with the run-up of the stock market.
The new law envisions the creation of Opportunity Funds whose managers would look for eligible projects in the Opportunity Zones, things like new businesses, investing in existing ones, real estate projects or even infrastructure.
An investor who puts his or her existing capital gains into one of those funds gets to defer paying taxes on that gain. . .
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"The chair of the Senate Finance Committee is demanding information from several billionaire developers to determine whether they are abusing a Trump tax break that was supposed to benefit poor communities.
Citing ProPublica’s reporting on the program, Sen. Ron Wyden, D-Ore., sent letters today to Jorge Perez of Related Group, Kushner Companies and several other developers asking for details on how they are taking advantage of what’s known as the opportunity zone program.
The program, created in President Donald Trump’s 2017 tax overhaul, provides a series of tax breaks for making investments in swaths of specially designated land around the country. The program’s bipartisan advocates contended the program would funnel money into disadvantaged neighborhoods that were otherwise starved for investment.
Under the program, investors receive tax advantages. Chief among them is that any gains on projects in the zones are tax-free after a number of years.
But ProPublica and other news outlets found that investments often went to develop projects that benefit the affluent. In a series of stories in 2019, ProPublica reported that developers around the country had successfully lobbied to get favored tracts included in the opportunity zone program, at the expense of poorer areas. Several of those tracts were in well-off areas or were sites of long-planned projects that predated the tax break, suggesting that public subsidies could flow to projects that were going to happen regardless.
Now Wyden is scrutinizing the tax benefit. “I have long been concerned that the Opportunity Zone program may permit wealthy investors another opportunity to avoid billions of dollars in taxes without meaningfully benefitting the distressed communities the program was intended to help,” Wyden wrote in the letter.
Wyden’s letter zeroed in on one of the projects highlighted by ProPublica: an opportunity zone in West Palm Beach, Florida, that contains a superyacht marina owned by a major Republican political donor.
“It appears that the Opportunity Zone program is already helping subsidize luxury real estate development by wealthy developers, and in many cases will allow these investors to realize the gains on their investments completely tax-free,” Wyden wrote. “Among the investments that have reportedly qualified for these generous tax breaks, are projects that include luxury apartment buildings and hotels, high-end office towers, self-storage facilities and a ‘superyacht marina.’”
In his letter to Perez, head of a company developing the luxury condo project in the West Palm Beach zone, Wyden requested information on when the project was conceived; details of any lobbying of public officials on the opportunity zone issue; and numbers on job creation and tax benefits associated with the project.
Asked for a response back in 2019, the West Palm Beach developers said they were not motivated to seek the tax break for their own benefit and hoped to spur additional economic development for the surrounding area.
Wyden’s letters are designed to fill in details about how the program is unfolding. While some have called for its outright abolition, even supporters of the opportunity zone program have decried the lack of any reporting requirements that might allow experts to measure whether the tax breaks are achieving their stated goals.
In 2019, Wyden introduced legislation that would increase reporting requirements for opportunity zone investors and curtail the kinds of projects that would qualify for tax breaks under the program. The legislation would also remove areas that were originally designated as opportunity zones that weren’t actually poor, including well-off areas of Detroit and Baltimore that ProPublica reported on that year"
RELATED CONTENT ON THIS BLOG
The hot topic of OZones has been featured multiple times of this blog for months, as faithful readers this site know well.
However, there's always more information to put in front of your eyes all the time.
Highlighted today are two reports from 03 January 2019, backed up with inserts of streaming vids [Trump signing the Opportunities & Jobs Act on December 12, 2017] + an audio to save you time on what is a lengthy and detailed post today that also features links to what the City of Mesa has published online with an excellent aerial Map.
Tomorrow's Mesa City Council Study Session at 5:15 pm starts off with a look at the City's Annual Financial Review for the fiscal years ending June 30, 2018.
The regular meeting will be presenting and discussing various ordinances and resolutions about more proposed real estate developments downtown that are within the OZone.
The brainchild of Silicon Valley financier Sean Parker,
Opportunity Zones allow investors to obtain massive tax advantages if they invest capital gains—money made on the sale of assets like a home, a business, or a piece of art—into “distressed” areas of the country where the post-financial crisis recovery passed by.
Advocates for the program believe this could be a game-changing community development tool.
- Downtown Mesa
- the Fiesta District
- the Falcon District
- the Gateway Area [Gateway Area North and Gateway Area South]
- the Riverview District [added below]
To visit the Aerial Mesa tool and explore Mesa’s Opportunity Zones visit the links below.
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DOWNTOWN MESA Link > https://aerialsphere.com/city-of-mesa/downtown-mesa/
Source:
https://www.selectmesa.com/business-environment/incentives-programs/opportunity-zones
OPPORTUNITY ZONES:
A NEW INCENTIVE FOR INVESTING IN LOW-INCOME COMMUNITIES
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