Following Thursday’s release of proposals from the U.S. Treasury, lawmakers on Capitol Hill are pushing for stricter oversight of the newly created federal opportunity zone tax incentives — an increasingly popular economic development tool in New Jersey.
“The underlying legislation, the Investing in Opportunity Act, was intended to support the growth and revitalization of our nation’s most economically underserved communities,” reads a joint letter dated Oct. 31 to the U.S. Treasury Acting Inspector General Richard Delmar. “It was not the intent of Congress for this tax incentive to be used to enrich political supporters or personal friends of senior administration officials.”
It is signed by three U.S. lawmakers who are often credited as the architects of the tax credit: U.S. Sen. Cory Booker, D-NJ; U.S Rep. Emanuel Cleaver, D-Texas; and U.S. Rep. Ron Kind, D-Wis.
The four-page tax form and new reporting requirements for opportunity zone funds released by the Treasury were met with skepticism by the trio. They pointed to a recent New York Times report which detailed allegations that former “junk bond king” Michael Milkin was able to pressure U.S. Treasury Secretary Steven Mnuchin – with whom he has close ties – to relax the OZ rules so that land where one of his properties is located could qualify for a program.
Then on Oct. 24, ProPublica published a report outlining how Dan Gilbert, the billionaire founder of Quicken Loans, was able to lobby the federal government to amend the opportunity zone definition so it would include areas in Denver where several of his lucrative properties are located.
Booker – a presidential candidate with single-digit voter approval in the polls – said in a separate press statement that he would be pressing the U.S. Treasury to collect and release data on the number of opportunity funds and their assets, the asset class make-up, and economic outcomes for residents in those zones.
Meanwhile, the New Jersey freshman Democrat also wants the U.S. Treasury to compile funds data on how much is invested and when; whether the investments are going into new or existing businesses or real estate; how many workers are employed at the fund at the time the investment is made; the size and number of units in the case of property investments; and the kinds of activities that the investments would support, such as single-family housing or business.
“The Opportunity Zone incentive has the potential to unleash much-needed economic boosts to distressed communities across the country – communities that are too often overlooked by investors,” Booker said in a separate statement.
“But without robust guardrails in place, it has the potential to be undermined or abused by unscrupulous actors who aren’t committed to the intent of the legislation to help rural and urban communities across the country,” he added.