Find way to foster opportunity
South Carolina Republican U.S. Sen. Tim Scott was an architect of legislation creating Federal Opportunity Zones to foster private investment in low-income communities via tax incentives.
Scott wrote in September: “Today, there are over 52 million Americans living in distressed communities. … My Opportunity Zones initiative, part of the 2017 Tax Cuts and Jobs Act, aims to bring long-term private investment to economically distressed communities, potentially unleashing $6 trillion in unused capital gains, by offering a deferral for investors. Opportunity Zones would unlock new private investment for communities where millions of Americans face the crisis of closing businesses, lack of access to capital, and declining entrepreneurship. This initiative goes beyond a ‘band-aid’ approach, and works to create long-term solutions in the form of restored economic opportunity, job growth and prosperity for those who need it most.”
Scott said 71% of the 8,700 designated opportunity zones qualify as “severely distressed,” and of that, the average zone has a poverty rate nearly double the national average with more than a fifth of all zones having poverty rates of 40% or higher. In South Carolina, 128 of the 135 designated opportunity tracts are considered low-income communities and there are at least two designated zones in each of the 46 counties.
Enter U.S. House Majority Whip James Clyburn of South Carolina’s 6th District. He and other Democrats in the House say there are problems with the program. They are introducing the Opportunity Zone Reform Act.
“Opportunity Zones were established by the 2017 tax law with the intention of providing incentives to investors to redeploy their capital to impoverished areas in desperate need of investment. However, over time, it’s become apparent that the lack of oversight, questionable zone designations and misguided implementation of this program has led to it becoming, in too many instances, another tax credit for investors instead of benefiting the communities that it was designed to help,” Clyburn said via press release.
The Opportunity Zone Reform Act would:
• Eliminate loopholes that could allow “sin list” investments like casinos and prohibit investments in stadiums, parking lots and luxury apartments.
• Terminate zones that are not low-income or impoverished, while allowing states to replace zones that are terminated.
• Tighten existing rules to ensure the incentive goes to productive new investments that are actually in zones, and not to projects that were already underway or investors trying to park their money tax-free.
For his part, Scott says the Democrats are attacking his legislation because of partisan politics. He acknowledges there are problems with some opportunity zones, but says the Clyburn legislation will effectively kill the program.
“This is the second misguided attempt by congressional Democrats in the last two weeks to wreck the Opportunity Zone initiative under the guise of ‘improvement.’ Make no mistake, Congressman Clyburn’s legislation … will needlessly punish low-income communities who are hoping to use Opportunity Zones to transform areas left behind,” Scott stated via press release.
Scott said initial research shows the Clyburn legislation would sunset:
• Multiple zones with a child poverty rate above 30%.
• Multiple zones with general poverty rates above 25%, some where the poverty rate is double their statewide average.
• At least one zone with a senior poverty rate above 40%.
• A zone where African-Americans compromise 20% of the community and have median household income of $16,000 a year.
“While certain, mainly Democratic, governors across the country chose their states zones in a way I do not agree with, taking a broad brush and sunsetting opportunity for hundreds of communities across the country at once is unacceptable. More than 96% of the total zones did not show any signs of gentrification at the time they were nominated, yet Mr. Clyburn (and others) seem keen to ignore this fact. This shows that my colleagues across the aisle have failed to truly study and understand Opportunity Zones as a whole, and are seeking to damage the program for purely partisan reasons,” Scott stated.
In Orangeburg, we are not interested in a partisan battle over this issue. We want to see the program result in investment that will help the City of Orangeburg, for example, meet the goal of revitalizing Railroad Corner, which is part of an opportunity zone encompassing Russell Street and other downtown areas.
“We’re hoping that companies and people that come here will look at that area and give us ideas as to what would be best to go on that corner,” Mayor Michael Butler has said.
Government can play a vital role in the revitalization and plans to do so, but private investment will be essential if Railroad Corner and vicinity is to reach its true potential. On that, Republicans and Democrats should agree.
We’re counting on Scott and Clyburn to put their heads together and find common ground on making any changes needed to keep the opportunity zones program alive. Letting it fall victim to a partisan battle will not benefit anyone.
Source: Times & Democrat
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