President Donald Trump is creating a White House council to manage the so-called opportunity zones, a program designed to bring jobs and investments to low-income communities nationwide, as part of an incentive in the tax reform package.
On Dec. 12, Trump signed an executive order to establish the White House opportunity and revitalization council to “encourage public and private investment in urban and economically distressed areas, including qualified opportunity zones.”
The new council will be led by the secretary of Housing and Urban Development, Ben Carson, and comprised of 13 federal agencies.
During the signing, Trump called the initiative a “very big thing.”
“With the creation of today’s council, the resources of the whole federal government will be leveraged to rebuild low-income and impoverished neighborhoods that have been ignored by Washington in years past,” he said.
The council’s aim is to coordinate efforts to avoid inefficiencies. Hence, it will streamline, coordinate, and target all existing federal programs to economically distressed areas. The council will also consider legislative proposals and undertake regulatory reform to remove any hurdles.
A White House official said the agencies had already identified over 150 potential actions they could take to attract investments to the opportunity zones. The council will also find ways to measure the success of the program.
Largest Development Program
The opportunity zones project has the potential to become the nation’s largest economic-development program. Through tax incentives, it will make these poor communities attractive for investment and help smooth the uneven recovery of the country since the recession.
The investments include commercial and industrial real estate, housing, infrastructure, and startup businesses.
The program offers tax breaks to private investors. It allows investors to defer taxes on capital gains for 10 years if these gains are reinvested in a qualified opportunity fund, an investment vehicle created to assist opportunity zones. Other benefits include tax exemption on investment gains from opportunity funds, if the investment is held for more than 10 years.
U.S. investors are interested in deploying money into these zones, and several funds have already been established to target this new asset class.
The Treasury Department has certified 8,700 opportunity zones, designated by governors.
Treasury Secretary Steven Mnuchin said earlier that opportunity zones could attract $100 billion in private capital.
In October, his department rolled out rules for potential investors. The proposed rules provide guidance on how investors can qualify for the special tax breaks. The Treasury will release additional guidance before the end of the year.
The idea was first coined by the Economic Innovation Group (EIG), a nonprofit founded by Sean Parker, the founder of Napster.
Sen. Tim Scott (R-S.C.), who grew up in poverty in a single-parent household, supported the idea by introducing the bipartisan-backed Investing in Opportunity Act and made it part of Trump’s tax-reform package.
“As the kid who grew up in a single-parent household, mired in poverty, living in one of these distressed communities, I know firsthand the value of hope being brought into communities,” said Scott during the signing of the executive order.
“Under this administration—Mr. President, under your leadership—what we’ve seen happen in the last several months is unprecedented.”
According to an EIG report, more than 50 million Americans live in economically struggling communities. And these communities are far more concentrated in the southern states. In Alabama, Arkansas, Mississippi, and West Virginia, where at least one-third of the population resides in a distressed zip code.