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First Opportunity Zone Review Finds $75B In Capital Raised By End Of 2019

The White House's Council of Economic Advisers estimates $75B of opportunity zone capital was raised through 2019, it said in an initial assessment of the program's impacts released Monday.

Miami Gardens opportunity zone map

The 34-page report paints a glowing picture of a tax program that has faced criticism from Democrats and community advocates for the tax breaks it gives investors and still unclear social benefits to underserved communities it is meant to lift.

The release comes as the fate of the opportunity zone program in its current form hangs in the balance before November's presidential election. Former Vice President Joe Biden, the Democratic presidential candidate, and his campaign have leveled strong criticisms of the program and announced an intention to reform it

The Monday release of the report coincided with Sen. Tim Scott, a Republican from South Carolina and co-sponsor of the bill creating the program, touting its effects in a speech at the Republican National Convention.

"This initiative that [President Donald Trump] and I worked together on, is now bringing more than $75B of private sector investment into distressed communities," Scott said Monday night.

Along with its estimate of $75B in opportunity funds raised, the CEA said it estimates $52B of that is a result of the program itself, citing academic literature measuring potential effects of lowering the cost of capital on investment activity. 

Critics of the program and its shortcomings say very little was cleared up by the CEA's report, especially when it comes to information on actual investments. 

"The Trump Administration promised to establish robust reporting requirements so we could get solid data on real dollars and real impact," CalOZ co-founder Kunal Merchant wrote in an email to Bisnow. "They didn't. So nearly three years after OZ’s were established, we’re still left with a lot of 'trust me' guesswork that does little to answer legitimate questions about activity and impact."

Along those lines, Urban Institute Senior Fellow Brett Theodos said the estimate of opportunity funds raised is less of an indication of the program's impact than it might seem. 

"What's frustrating about it is that's not really even the relevant number, because that's funds raised, or allegedly, funds raised," Theodos said. "The relevant number is how much has actually been invested, and they clearly know that amount because they have access to federal tax data."

Further details are likely to come eventually in the form of a Biden administration or bill like Scott's IMPACT Act (Improving and Reinstating the Monitoring, Prevention, Accountability, Certification, and Transparency Provisions of Opportunity Zones), which has bipartisan support and was introduced in December.

"OZ’s may or may not be a great tool to generate economic activity and reduce poverty. Many of us hope they will be," Merchant said. "But we still don’t know a whole lot yet, and that not knowing is starting to get old.