President Trump’s recent executive order offers a full-throated endorsement of the Qualified Opportunity Zone Program. The Order, signed on December 11, 2018, establishes the White House Opportunity and Revitalization Council. The Council covers 13 federal agencies and is led by Ben Carson, United States Secretary of Housing and Urban Development. The Council will work to prioritize opportunity zones in a variety of federal efforts, including grant funding, loan guarantees, infrastructure spending, and crime prevention.
The Order itself establishes a White House Council to carry out the “Administration’s plan to encourage public and private investment in urban and economically distressed areas, including qualified opportunity zones. The Council shall lead joint efforts across executive departments and agencies to engage with State, local, and tribal government to find ways to better use public funds to revitalize urban and economically distressed communities.”
The Council will meet regularly and, within one year of the Order, recommend changes to Federal statutes, regulations, policies, and programs, as well as a list of best practices, to promote public and private investment in urban and economically distressed communities, including opportunity zones.
In keeping with the Trump Administration’s anti-regulation platform, part of the Council’s mission is to minimize all regulatory and administrative costs and burdens that discourage public and private investment in opportunity zones.
With the support of the Administration, along with the added publicity, the already high enthusiasm surrounding opportunity zones is certain to increase. As funds continue to organize and solicit investors, such a boost from the President should only add to investors’ willingness to move capital into distressed communities. It remains to be seen, but with the Administration’s explicit aversion to regulation, this Order could act as a regulatory greenlight that may prod some wavering investors off the fence.
The Qualified Opportunity Zone Program was created by the Tax Cuts and Jobs Act of 2017, and provides tax incentives for investing in under-served areas designated as “Opportunity Zones.” In October 2018 the IRS and Treasury released the first round of proposed rules for the program; on January 10, the IRS is scheduled to hold a public hearing on it. Though the regulations are not final, the agencies have stated that the proposed rules are effective in order to facilitate participation in the program immediately. A second round of proposed rules are expected in January 2019.