President Donald Trump signed an executive order Monday to push federal agencies to move into Opportunity Zones as he continues to promote the program as a key part of his re-election campaign.
The president’s order will direct some federal agencies such as the Department of Labor and Department of Housing and Urban Development to look outside of city centers and relocate their offices to designated census tracts under the Opportunity Zones program.
The federal program, created as part of Trump’s 2017 tax law, gives generous tax breaks to real estate developers and other investors for pouring money into distressed neighborhoods.
Trump suggested he will prioritize Opportunity Zones over other neighborhoods in metropolitan areas when federal agencies look to acquire or lease new space. The president, however, also noted this week that cost and security considerations will take precedence. And if an Opportunity Zone property is not suitable, then the agency is encouraged to look at other developed or undeveloped sites within historic districts.
The president’s order could spur investment in a program that has come under heavy scrutiny from watchdog groups and Congressional Democrats as a tax break for the rich.
There are about 8,700 federally designated Opportunity Zones throughout the U.S. The program was designed to increase investment in low-income areas and allows investors to forgo and potentially defer paying capital gains taxes if they invest in a Qualified Opportunity Zone Fund.
The Trump administration claims that an estimated $75 billion of private investment has gone into Opportunity Zones in the past two years, according to a report released this week.
But some of the same investments would have been made in those areas without the tax break, according to the report. The program does not require equity holders and funds to report on the impact of their investments, which makes it difficult to determine the program’s success.
Democratic presidential candidate Joe Biden has also made Opportunity Zones a part of his campaign.
In recent weeks, Biden said he would seek to reform the program and would require the Treasury Department to look into whether the money was being used for its intended purpose.
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