Krishnamoorthi and Tlaib Investigate Potential Abuses in Treasury Department’s Opportunity Zone Program
Washington, D.C. (June 24, 2020)—Today, Rep. Raja Krishnamoorthi, the Chairman of the Subcommittee on Economic and Consumer Policy, and Subcommittee Member Rashida Tlaib sent a letter to Secretary of the Treasury Steven Mnuchin requesting documents about the Opportunity Zone program established by the Tax Cuts and Jobs Act.
“In particular, we are concerned about possible abuses in the Department’s designation of certain census tracts as Qualified Opportunity Zones in Detroit, Los Angeles, and Oklahoma City. These areas appear unqualified for the program, and raise questions about whether Treasury’s designations were done to benefit individuals or entities with a personal or political connection to President Trump,” said the Members.
Opportunity Zones “are designed to spur economic development and job creation in distressed communities.” The statute targeted distressed communities by making census tracts eligible as Opportunity Zones if they have high rates of poverty or sufficiently low average incomes. The Department’s role is to certify lists of eligible tracts selected and nominated by the states. Designation as an Opportunity Zone provides an incentive for community development projects by reducing or eliminating capital gains taxes for investments in Opportunity Zones.
The Subcommittee is concerned that the Treasury Department designated tracts in Detroit, Los Angeles, and Oklahoma City as “low-income communities” even though they do not appear to meet the statutory income qualifications for low-income communities, according to data from the 2015 American Community Survey (ACS):
- Detroit Tracts 26163517200, 26163517000, and 26163520800;
- Los Angeles Tracts 06037206020 and 06037206031; and
- Oklahoma City Tract 40109103200.
The Subcommittee is also concerned that Treasury did not exercise meaningful oversight over the governors’ selections of Opportunity Zones and may have acted as a rubber stamp.
“Unconstrained discretion in the hands of the officials involved in nominating and certifying tracts as Opportunity Zones poses obvious risks,” added the Members. “We are worried that the voices of some communities may not have been heard during the nomination process and were left out of the final selections.”
The Subcommittee requests the Treasury Department respond by July 13, 2020.
Click here to read today’s letter.