Coalition Supports Opportunity Zone Improvement Bill

June 2, 2022

The Honorable Charles Schumer
Senate Majority Leader
United States Senate

The Honorable Mitch McConnell
Senate Minority Leader
United States Senate

The Honorable Nancy Pelosi
Speaker of the House
United States House of Representatives

The Honorable Kevin McCarthy
House Minority Leader
United States House of Representatives

Re: Opportunity Zones Transparency, Extension, and Improvement Act (H.R.7467/S.4065)

We write as a broad coalition of stakeholders to recommend that Congressional leadership work to enact the Opportunity Zones Transparency, Extension, and Improvement Act, a bipartisan bill introduced in the House (H.R.7467) and Senate (S.4065) on April 7, 2022.

This legislation would strengthen the Opportunity Zones (“OZ”) policy, which provides tax incentives for qualifying private capital investments in low-income communities. With such improvements, the OZ incentive will be even better positioned to play a key role in supporting economic revitalization in historically underserved communities.

Even during a time of deep partisan divisions, this policy has enjoyed broad bipartisan support from state and local leaders and federal policymakers alike. A recent GAO report shows a 20-to-1 ratio of net positive to net negative responses from state officials on the overall impact of the Opportunity Zones tax incentive.¹ This legislation builds on the policy's bipartisan history, with support from six Democrats and four Republicans at introduction.

There are more than 8,700 census tracts across the 50 states, District of Columbia, and U.S. territories that have been designated as Qualified Opportunity Zones. The vast majority of designated OZ communities are among the highest-need places across a range of socioeconomic metrics. Residents of Opportunity Zones experience an average poverty rate of 26 percent according to the 2019 census data, a median family income less than two-thirds the national level, on average, and an average life expectancy three years shorter than the national figure.

Though we are still in the early phase of the market's development, the OZ incentive is already showing its promise and fulfilling its intent to bring resources to long-overlooked communities.

Since its passage into law in December 2017, the OZ incentive has spurred the investment of tens of billions of dollars into low-income communities across the country. A report on the most recent involuntary survey of Qualified Opportunity Funds (“QOFs”) by Novogradac, a national professional services firm with OZ expertise, concluded that more than $28 billion of capital was raised by QOFs through March 31, 2022. This number likely represents only a fraction of the total amount of investment in OZ-designated communities to date. Novogadac estimates that actual OZ investment is probably three or four times this number.² It would not be unreasonable to project that close to $100 billion of equity has been raised by OZ projects thus far.

A recent webinar co-hosted by OpportunityDb and OZworks Group highlighted several community-oriented OZ case studies that clearly showcased how the policy is working. These included:

• Jose A. Torres (Monllor Capital Partners): Manages the Puerto Rico Opportunity Zone Fund, the first Qualified Opportunity Fund focused on ESG investing in Puerto Rico. Each investment made by the Fund aims to have a positive impact on the environment, economy, and people of Puerto Rico. The Fund has deployed investment capital into two companies thus far: 1) renewable energy technology company Sunbeat Energy; and 2) aquaponic vertical farming operation Fusion Farms.

• Susan Springsteen (H2O Connected LLC, a QOZB): Transforming a vacant, former steel office building in Coatesville, PA into an adaptive reuse building. The nth Innovation Center is a Qualified Opportunity Zone Business that will occupy a portion of the building, and will provide workforce training for the local community and incubate tech start-up companies.

• Stacy Cumberbatch (Blended Impact): Innovation Lab and emerging asset managers working extensively in Riverside County, CA, which has the third highest amount of OZs in the state. The firm provides ground-up technical assistance that supports local governments, project sponsors, and entrepreneurs in OZs in identifying investment goals, creating capital attraction strategies, and executing on community-driven projects.

• Donna Gambrell (Opportunity Appalachia): Democratizes access to Opportunity Zone funding by providing technical assistance, new investment, and jobs in OZs throughout Central Appalachia (OH, VA, and WV). Their portfolio is expected to close on more than $200 million of OZ projects, creating approximately 1,000 jobs in coal-impacted rural communities.

OZs should continue to be part of the discussion about economic relief and recovery in the wake of COVID-19; it is an important new tool that can be deployed to bolster communities hardest hit by the pandemic. It is also fundamentally about changing investor behavior and improving how private capital markets serve low-income communities.

The OZ incentive is well on its way toward making its intended impact in struggling communities across the country, but its effectiveness could be enhanced through improvements to the underlying statute that are proposed in the Opportunity Zones Transparency, Extension, and Improvement Act.

Enactment of this bill would significantly improve the guardrails and impact of this incentive without resulting in undue disruption to communities or market participants.

According to the Congressional co-sponsors³, this bipartisan legislation would improve Opportunity Zones by:

• Reinstating and expanding the reporting requirements that were present in the Investing in Opportunity Act (IIOA), the original stand-alone legislation that created Opportunity Zones, but were stripped out in the 2017 Tax Cuts and Jobs Act due to procedural rules.

• Ending Opportunity Zones that are not impoverished. While the vast majority of Opportunity Zones are truly impoverished areas, the legislation would sunset a small percentage of Opportunity Zone designations for tracts with a median family income at or above 130 percent of the national median family income. States would be able to designate a new tract in high-need communities for every tract sunsetted under this provision.

• Creating pathways for smaller-dollar impact investments by allowing Qualified Opportunity Funds (QOFs) to be organized as a “fund of funds” that may invest in other QOFs, providing smaller communities and projects with the financing they need.

• Providing operating support and technical assistance to high-poverty and underserved communities through a State and Community Dynamism Fund. Flexible grants will help states drive private and public capital to underserved businesses and communities.

• Extending the tax incentive for two years in order to facilitate continued investment. It took the Treasury Department nearly two years to issue final regulations governing Opportunity Zones, during which time many investors and stakeholders stayed on the sidelines awaiting clear rules for the policy. Extending the policy by an equal amount of time will help investors and communities fully use the tool as Congress intended — which is especially important now with the economy in recovery from the impacts of the COVID-19 pandemic.

We appreciate your consideration of our recommendation and welcome the opportunity to discuss these issues with you further. If you have any questions about this recommendation, please contact Chris Cooley, CEO of OZworks Group at chris@ozworksgroup.com.

Sincerely,

Christopher M Cooley, OZworks Group

Jimmy Atkinson, OpportunityDb

Rachel Reilly, Aces & Archers

Ashley D. Tison, OZ Pros

Axel Adler, Centennial Advisers

Ian Akeson

Mitchell Allen, Neu Community Inc.

Graham Allison, Opportunity Zone Development Group

Ramon Amador, Faith Remodeling Corp.

Lisa Anderson

Julian Anjorin

Ted Aust, Caliber

Kenneth Barber, Mt. Olive Community Development

Richard Daniel Barzan, Private Investor

Sarah Bass

Vic Belfiore, USG Realty Capital

Alice Benitez

John Berlet, Coastal Bend OZ Fund

Paul Berndt, ARQOF LLC

Weiming Bian, ARQOF LLC

Rhonda Binda

Nita Black, OZB Consulting, Inc.

T Chris Blackburn, Clutch Industries

Bradley Blanton, Blanton Builders Inc

Richard Blocker, Situs Opportunity Zone Fund I, LLC

Jonathan Blomiley

Robin Boccardi, Parsonex Capital Partners

Allan Boike, Almar Property Solutions LLC

Alexander Borromeo

Emily Britton-Arnold

Matthew Brooks

James I Brunger, Capital Square

Cynthia Ann Camble, CC Ink

Flaviane Campbell

Clinton Cappelle, Lodestar Services LLC.

Alfred Louise Carter, DPRA Group, Inc

Scott Chosed

Lisa Chosed

Pierre Clark, NuFutures Opportunity Capital LLC

Richard Clarke

Gary Clyne, Carbon Asset Developer Associates LLC

David Coelho, Bridge Investment Group

Shamair Coward

Lucy Crew, L Crew Inc

Diane Culpepper, Deja & Katy Realty

Stacy Cumberbatch, Blended Impact

Jack Cust, Wiss & Co

Arness Dancy, Chicagoland Black Chamber Of Commerce

Penny Darst

Debi Darter, Quinlan Economic Development Corp

John Davis, Domaine Precious Metals Partners, LLP

Sarah R Davis, Franchescas House

Rod Davis, Power City Ventures

Francisco De Armas, CIAC LLC

Ignacio M De Iraola, PIJ Partners

Jim DeCesare

Emily Dengler, Antilles LLC

John R Deterding III, Serenity Real Property Fund LLC

Dylan Neal Dias, Dias Holdings LLC

Christian D Dipalermo, MarksDiPalermo PLLC

Anurag Diwan

Eric Doebele

Dan Dolan, Dolan Homes

Mary Dunseith, Texas MIJEN

Robert A Dykstra, Life Hub LLC

Clint Edgington, Nest Opportunity Fund

Ed Ellsworth, Ellsworth LLC

Brian England

Janae Evans

Gregg Falcone

Mark Fissel

John Flavin, Concierge Capital

Fausto Flores Jr

Dr. Devin Flowers, Devin Flowers, Inc.

Kevin Fomengia, Pathway OZ Management

John I. Forry, East West Advisory LLC

Tricia Fraser

Eric Scott Furnal, Cobblestone Capital Advisors

Frankie Galano

Jake Gardner

Frederick Alex Garfinkel, Green Diamond 360

H. Kerry Garner, Redfish Lodge Partners, LLC

Gabriel Genauer

Gregory W. Genovese, USG Realty Capital

Gary Gentemann, Accredited Investor Property Owner

Jeffery Gibson, Coldwell Banker Resort Realty

Ted Goodman, Pima Inc.

Zachary Grendi

Steen Grundahl, Cre Capital Group

Kurt Paul Gunderson

Jody Lynn Gunderson

James A Hagans

John Hall, Pennsylvania Alliance For Stem Education

Cory Hansen, Puertal

Tom Hansen

Paul H Harms

Jimmy Harris, H6 Energy

Robin Harrison, The FOLD

Amir Haskic, Green Team Realty

Scott Hawksworth

Jessica Heatly

Randolph B. Henderson, Amir Realty

Lu'na Hernandez, Downtown AC QOZB

Sharline Hill

H Winston Hines, HWH Properties

Victoria Huchmala, QOZ Marketplace

John P. Jackson

Surendra Jain, Napean capital Group

Bahram Javaheri, SBJ Qualified Opportunity Fund I, LLC

Hassan Jawad, Middlepointe Investment Group, LLC

David W. Jefferson, TekDek Inc.

Alicia R. Johnes

Alan L Johns, A & K Real Estate Holdings, LLC

Michael Johnston

Jayson Jones, Ardent LLC

Matt Josephs, LISC/National Equity Fund

Meeta Kamani

Thomas J Keane

John Keller, Manning & Associates CPAs LLC

Adam Kent, Real Estate Equities Group LLC

Amir Khan

Shawn Kieley

Niamh Kilcoyne

Audie Kincaid, Flint Community Revitalization Group

John Kinsey

Annette Lynn Kirisci

Ed Knight, City Of Pittsfield

John Alan Kojima, Honokea OZ Fund, LLC

David Kratochvil, Vista Capital

Kim J. Kuhle, Veterans Victory

Tanya Kuppamala

Renee La-Viscount

Brandon Lacoff

Kimberly J Lake, CapZone Impact Investments LLC

Harshad Lakhani, SEPA OZF LLC

Marni Leikin

Charles Lesnick, Lesnick OZ Fund

John Li

Alexandre Little

Marisha Loren

Katrina Love, Let's Pray Tuskegee

Deliah Manigault

Robert Margolis, TM Associates

Gregory Martin, Martin & Associates

Melanie Materazzi, Melrich Capital Fund

Matthew McBride

Daniel J McCormick, City Of Hampton VA

Delmar V McKinney II, Eagle Wealth Management Group

Powers B Miller, MusicTown Development Group LLC

Leonard O Mills, Verte Opportunity Fund

Peter H. Monaghan, Endeavor Property Group

Chris Montgomery

Jeffrey Moore

Mary P. L. Mortier, Our Town Belfast

Lawrence Moser, Moser Realty

Christian X. Mosquera, Atlas National Corporation

William Neal, Green Leaf Real Estate Services

David O'Brien, Asset Strategy Advisors

Conleth O'Flynn

Michael R. O'Mara, Ozone Capital Markets, LLC

Daniel O'Sullivan, Old Harbor Management LLC

Judy Onghai And Michael Onghai, American OZ Fund

Michael Noah Onstad, Northern Star Opportunity Fund

Eugene Oppman, Carver Theater

Brandon Osborne, Aequus Capital LLC

Brandon Scott Osborne, Aequus Ventures LLC

David Ostenfeld, OCW Group, LLC

Bill & Ms. Lolly Overton, Coastal Bend OZ Fund

John R Parke III, HISWAY Financial Group

R. E. Parker, Coyote Capital Management

Amit Patel

Viren Patel, RWC Hospitality LP

Zahn Patin, The Wonder Group

Mo Peracha, My Community Legacy Initiative

Bevan Phillipe

Brett Phillips

Francis J. Pitt, Gaugamela Holdings, LLC

Raeanna Pitzer, POZ Management LLC

Stoney L Pitzer, POZ Management LLC

Greg Pope, One Delta County: An Economic Alliance

James Edward Potts

Maxwell Radley

Coni S Rathbone, Dunn Carney LLP

Deborah Razo, Woman's Real Estate Network

Chrystal Redding, Redding Law Firm

Rachel Reilly, Aces & Archers

Robert W. Richard, Commerce Park Realty LLC

Julie Rigrish, Purdue University-Center For Regional Dev.

Ian Riley

Maria Rivera,

Kenneth Scott Roberts, Kenneth S. Roberts

Edwin A. Rodriguez

Ernesto Rolon, Invest Puerto Rico

Nicholas Rosenthal

Andre Royal, Suddenly Sleepy

John Rubino

Scott D. Rubins, M&K Getaways OZ LLC

Dana Russikoff, One River Development LLC

Paul S Saint-Pierre, PSP ADVISORS LLC

Reynaldo Santana, ESG Housing Inc

Twonda Saunders, E.B. Thomas Investment Group, LLC

Brad Schmidt

Jacob Schroeder, Ascend Consulting

Said Sedghi

Jay Sexter

Gabe Shibly

Tim Shields

Brett D Siglin

Ijahnee Simmons

Richard F. Simonetti

Cara Simpson, Opportunity Virginia

Tom Skinner, Redbrick

Jenn Smith, O'Connor Realty — Detroit

Stuart L Smits, 7 Generations LLC

Robert Soules, Bob Soules-Commercial Properties, Inc.

Susan L Springsteen, H2O Connected LLC

Gilbert Starble, Hartwood Hospitality Labs

Regina Goyette Staudacher, Winthrop & Weinstine

Charles Steele, Javelin Securities LLC

Rudolph V Stefanitsis Sr, Air Burst Capital

Ron Stenger

Stephanie Stenger, Springfield Land

Francis L Sterling

Brent Styler, Coiner Country Store

Patrick R. Sughroue, The Business Law Group

Jimmy Wayne Swanigan, Swanigan Real Estate Dev.

Jean-Francois Tamby

Nancy Tani

Katherine A Taylor

Shawn Taylor, Oregon OZ Fund LLC

Wilson Terrero, ACDY

Andrea Tew

Louis Howard Thomas, Jefferson Parish Task Force

Mark Tinonga, AWS

Justine E. Tobin, Tobin & Company Investment Banking

Shadfar Toranji

Jose A. Torres, Monllor Capital Partners LLC

Gene R Troiano

John Turner, JLOZ Investments

Lamar Underwood

Zafrullah Usama

John Vachon, Urban Synergy

Viki Van Arsdale

Ryan VanDyke, Flint Community Revitalization Group

Suresh Vegesna

Jacob Walsh, Common Owner Portals

Richard Walsh, Browen QOF LLC

Kirk Walton, Gryphon Private Wealth Management LLC

Carl Weatherley-White, Advantage Capital Management

Amanda Webster

Lee Webster, FENBLIK

Tim Wells

Kira Wheat, HHM CPAs

Michael Williams

Eric C Williams, Eric C Williams, Architect

Mike Wofford, Global Transaction Services Group, Inc.

Mark Wood

Tess Young, Ambrose Companies LLC

Charles Zanaty, Redtape

Anne Zavaglia, Beacon Hill Investment Advisory

cc:
Sen. Ron Wyden, United States Senate Finance Committee
Sen. Mike Crapo, United States Senate Finance Committee
Sen. Cory Booker, United States Senate
Sen. Tim Scott, United States Senate
Rep. Richard Neal, United States House Committee on Ways and Means
Rep. Kevin Brady, United States House Committee on Ways and Means
Rep. Ron Kind, United States House of Representatives
Rep. Mike Kelly, United States House of Representatives
Brian Deese, National Economic Council
Cecilia Rouse, Council of Economic Advisers
Lily Batchelder, Department of the Treasury
Susan Rice, Domestic Policy Council
Marcia Fudge, Department of Housing and Urban Development