Mary Scott Balys
OFN continues to pursue federal regulations to make the opportunity zone provision as effective as possible and to reduce the likelihood of displacement and gentrification resulting from opportunity fund investment. Here are a few updates we’re tracking and ways you can join our advocacy efforts:
New IRS Guidance Expected Any Day!
CDFIs and other stakeholders interested in Opportunity Zones are eagerly awaiting the release of a second round of opportunity zone regulations related to investment in and management of opportunity funds. The IRS and Department of the Treasury will likely make this second round of regulations public very soon – perhaps in a matter of days.
IRS and Treasury’s first round of guidance, which they released in October 2018, began to provide some clarity for investors and those working in communities targeted by the opportunity zone provision. However, many questions remain. Treasury officials have indicated there will be three rounds of regulations, with this second round likely to answer several outstanding questions for investors, including further guidance on how to use opportunity fund investment to help grow existing businesses operating in opportunity zones.
Although this new guidance will provide benefit to those seeking additional clarity on the provision, Treasury Secretary Mnuchin has stated that reporting and transparency requirements – issues of central importance to OFN and its members – will not be included until the third set of regulations, which may not be ready for another six months.
Help Promote the Opportunity Zones Framework for Investors
Even in the absence of a federal mandate around transparency and reporting, OFN encourages opportunity fund managers to voluntarily agree to observe the Opportunity Zones Framework, which OFN has created in partnership with the US Impact Investing Alliance, the Beeck Center at Georgetown University, and the Federal Reserve Bank of New York to identify guiding principles, a reporting framework, and a shared goal of measuring outcomes.
Help promote the Opportunity Zones Framework with opportunity fund managers, prospective investors, and government officials engaged in community development initiatives targeting opportunity zones here.
Recommended Reading: New Report on the Potential Role for CDFIs in Opportunity Zones
Of particular interest to CDFIs is a timely new report authored by Charles Tansey and Michael Swack called “The Potential Role for CDFIs in Opportunity Zones”. Prepared for Enterprise Community Investment, a leader in identifying mission-first opportunity zone strategies, this report identifies potential roles, both financial and non-financial, that CDFIs can play in responsibly supporting this new tax incentive.
While acknowledging obstacles facing CDFI participation, the authors nevertheless identify specific actions CDFIs can consider to optimize community development impact in the opportunity zone markets they serve.
Read the full report here.