Bill Overview
Title: Opportunity Zones Improvement, Transparency, and Extension Act
Description: This bill revises rules and reinstates reporting requirements relating to qualified opportunity zones (economically distressed communities where new investments, under specified conditions, may be eligible for preferential tax treatment). Specifically, the bill terminates the designation of zones that are disqualified due to median family income exceeding 130% of national median family income and permits states to identify and expand terminations of such zones. The bill also reinstates reporting requirements for qualified opportunity zones and imposes penalties for noncompliance with such requirements, extends the opportunity zones temporary deferral period for qualifying capital gain through 2028, and establishes a State and Community Dynamism Fund to support public and private investment in qualified opportunity zones.
Sponsors: Rep. Kind, Ron [D-WI-3]
Target Audience
Population: Individuals living in U.S. qualified opportunity zones
Estimated Size: 50000000
- Qualified opportunity zones exist in economically distressed areas that are scattered throughout the United States.
- The legislation pertains to areas where median family incomes are high enough that they lose designation as opportunity zones, so only opportunity zones still meeting the income criteria remain.
- The bill impacts investors who are considering channeling capital gains into opportunity zone projects due to extended deferral periods.
- The extension of deadlines allows more time for communities currently benefiting from investments to continue to do so, potentially until 2028.
- The establishment of a 'State and Community Dynamism Fund' means there will be direct financing available to a certain subset of communities.
- By reinstating the reporting requirements, communities and investors will be required to furnish more information, likely increasing transparency.
Reasoning
- Qualified opportunity zones exist in economically distressed areas that are scattered throughout the United States, affecting around 50 million people.
- The policy targets investors and communities in such zones, aiming to boost investment by extending tax deferral opportunities and increasing transparency.
- Not everyone in these communities will be aware or directly affected by such policies, as it largely concerns investors and local governments managing resources.
- The policy also impacts communities at risk of losing their opportunity zone status by reinforcing income criteria, hence possibly redirecting investment focus.
- Individuals within these zones may experience varying levels of impact on their wellbeing, depending on the local projects and investments made possible by this policy.
- Budget limits imply that not every opportunity zone will receive significant direct funding, hence the variance in impact across different zones.
- The benefit to self-reported wellbeing is likely indirect—improvements in the economic landscape may lead to better public services, job creation, etc., enhancing life satisfaction over time.
Simulated Interviews
Small Business Owner (Birmingham, AL)
Age: 45 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I hope this policy brings more investment to our community.
- It's tough sustaining a business here, and any boost in the local economy would help.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Investor (St. Louis, MO)
Age: 30 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- This policy extension means more time and prospects for investing in these zones.
- However, the compliance requirements might be challenging.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Factory Worker (Detroit, MI)
Age: 50 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 20/20
Statement of Opinion:
- If this means more jobs and training in the area, I'm all for it.
- I hope companies really see the potential here with these incentives.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
Student (Fresno, CA)
Age: 27 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 18/20
Statement of Opinion:
- I see potential in these policies helping beautify and modernize troubled neighborhoods.
- It's critical the funds and incentives are used wisely and transparently.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Retired (Camden, NJ)
Age: 60 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 16/20
Statement of Opinion:
- I've seen many promises come and go. It'd be nice if this policy truly helps our young folks find jobs.
- I am cautious but hopeful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 4 |
Community Organizer (Phoenix, AZ)
Age: 35 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 12/20
Statement of Opinion:
- This could help us attract more funds to improve infrastructure and community services.
- Transparency will ensure accountability, which is crucial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 6 | 5 |
Real Estate Developer (Buffalo, NY)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 8.0 years
Commonness: 14/20
Statement of Opinion:
- This policy reinstates crucial elements for investors like me.
- More flexibility and transparency are definite pluses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 7 | 6 |
Barista (New Orleans, LA)
Age: 22 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 17/20
Statement of Opinion:
- I don't really know much about these things, as long as they help my family and improve our neighborhood.
- Better work opportunities would certainly help.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 3 |
Homemaker (Cleveland, OH)
Age: 55 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 4.0 years
Commonness: 19/20
Statement of Opinion:
- I worry about gentrification and what it means for families like mine.
- I hope these policies consider long-standing residents first.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
City Planner (San Antonio, TX)
Age: 49 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- Excited about the Dynamism Fund which could really boost our projects.
- Transparency is critical, it will help us ensure these investments truly benefit our communities.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 6 |
Cost Estimates
Year 1: $150000000 (Low: $100000000, High: $200000000)
Year 2: $150000000 (Low: $100000000, High: $200000000)
Year 3: $155000000 (Low: $105000000, High: $205000000)
Year 5: $160000000 (Low: $110000000, High: $210000000)
Year 10: $170000000 (Low: $120000000, High: $220000000)
Year 100: $200000000 (Low: $150000000, High: $250000000)
Key Considerations
- The ability of states to redesignate zones might foster better-targeted economic aid, but could also create inconsistencies if implementation is not uniform across states.
- Extended capital gains deferral can act as a double-edged sword, promoting investments, while also delaying government revenue.
- Enhanced reporting could increase administrative burdens for communities and the government but is crucial for transparency and accountability.
- The direct support fund, while offering potential economic growth, bears risk of inefficient capital allocation without stringent oversight mechanisms.