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Democrats seek information on Treasury's administration of 'opportunity zone' program

Democrats seek information on Treasury's administration of 'opportunity zone' program
© Aaron Schwartz

Democrats on a House subcommittee are seeking information about the Treasury Department's administration of the "opportunity zone" program created by President TrumpDonald TrumpBiden to hold virtual bilateral meeting with Mexican president More than 300 charged in connection to Capitol riot Trump Jr.: There are 'plenty' of GOP incumbents who should be challenged MORE's 2017 tax law, expressing concerns in particular about the department's decision to make certain census tracts in Detroit, Los Angeles and Oklahoma City eligible for the program.

The House Oversight and Reform Committee's Subcommittee on Economic and Consumer Policy "is concerned that Treasury did not exercise meaningful oversight over the governors’ selections of Opportunity Zones and may have acted as a rubber stamp," Reps. Raja KrishnamoorthiSubramanian (Raja) Raja KrishnamoorthiHouse panel investigating Trump administration purchases of ventilators There's no excuse for the government to put dangerous cars on the road Democrat rips Sackler family, Purdue doctors during House questioning MORE (D-Ill.) and Rashida TlaibRashida Harbi TlaibSix ways to visualize a divided America Jamaal Bowman's mother dies of COVID-19: 'I share her legacy with all of you' Democrats urge Biden FDA to drop in-person rule for abortion pill MORE (D-Mich.) wrote in a letter Wednesday to Treasury Secretary Steven MnuchinSteven MnuchinOn The Money: Schumer urges Democrats to stick together on .9T bill | Collins rules out GOP support for Biden relief plan | Powell fights inflation fears Mnuchin expected to launch investment fund seeking backing from Persian Gulf region: report Larry Kudlow debuts to big ratings on Fox Business Network MORE.

Krishnamoorthi is chairman of the House Oversight and Reform Committee's Subcommittee on Economic and Consumer Policy, and Tlaib is a member of the panel.

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The opportunity zone provisions were designed to help revitalize low-income communities. Under the program, investors can get capital gains tax breaks if they make investments in designated economically distressed communities.

Governors nominated eligible census tracts in their states that they wanted Treasury to designate opportunity zones, and Treasury then certified those nominations.

The opportunity-zone program was initially proposed in bipartisan legislation before it was added into Republicans' 2017 tax measure. But Democrats have become increasingly concerned that the program doesn't have enough rules, and they are worried that some of the areas that were selected to be opportunity zones shouldn't have been chosen.

Tlaib last fall introduced a bill to repeal opportunity zones, while other Democrats have backed legislation to reform the program.

Krishnamoorthi and Tlaib said in their letter that it appears that certain census tracts in Detroit, Los Angeles and Oklahoma City were designated opportunity zones even though they don't meet the definition of a low-income community under the 2017 tax law.

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The lawmakers said that those census tracts were not included on Treasury's initial list in February 2018 of areas eligible to be designated as zones, but were included in "technical corrections" to the list several weeks later. Treasury said that the corrected list added census tracts that had been inadvertently left out.

"Erroneous designation of higher-income tracts as low-income communities undermines the purpose of the Opportunity Zone program since it gives valuable tax breaks to developers that do not benefit the distressed communities the law was designed to help," the lawmakers said. "It would be especially concerning if investors that obtained tax breaks for their planned developments improperly influenced the designation process and were contributors to officials who designated areas as Opportunity Zones." 

The lawmakers also expressed broader concerns about a lack of guidelines for the nomination and certification of opportunity zones.

"Without any standards or guidelines enforced by Treasury for allocating Opportunity Zones, governors would be free to pick and choose 'winners' without fairly taking into consideration the needs of all of the various communities that make up their states," the lawmakers wrote. "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 asked for information specifically about the census tracts in Detroit, Los Angeles and Oklahoma City, as well as broader information about the corrections made to the list of eligible census tracts and Treasury's procedures for certifying governors' nominations.