Investing in Opportunity Act Adds Community Development Tools
Sens. Tim Scott, R-S.C. and Cory Booker, D-N.J., and Reps. Pat Tiberi, R-Ohio, and Ron Kind, D-Wis., today introduced the Investing in Opportunity Act to help revitalize economically distressed communities. The bipartisan legislation would create a framework for encouraging the investment of private capital in economically distressed areas of the country. It’s estimated that more than 50 million Americans live in a distressed community.
removes a barrier to investment through a temporary capital gains deferral in exchange for reinvesting in distressed communities;
encourages investors from across the nation to pool resources through “Opportunity Funds,” established for making investments in distressed communities;
concentrates capital by establishing “Opportunity Zones,” geographically targeted low-income areas that will be designated by governors; and
provides incentives for investors to make long-term commitments to these communities.
Supporters say the Opportunity Funds created by this legislation will provide a high-impact source for funding new businesses, developing blighted properties, investing in local infrastructure projects, financing facility construction or refurbishment, and a host of other activities to enhance the local economic ecosystem and create new opportunities for local residents.
Interestingly, while the legislation uses the New Markets Tax Credit (NMTC) program definition of a “low-income community” as the basis for defining areas eligible to be designated an Opportunity Zone, the proposal is actually designed to minimize cost to the taxpayer by not employing tax credits and public sector financing.
That said, the tools provided by the bill are expected to be complementary to the NMTC as well as the low-income housing tax credit (LIHTC), historic tax credit (HTC) and other community development programs. In fact, the Investing in Opportunity Act is the result of a collaboration announced by Rep. Tiberi last year. And in a related statement, Tiberi pledged to work to improve and expand the NMTC and LIHTC as part of the group’s efforts to further incentivize private capital investment in distressed neighborhoods.