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The Senate Finance Committee chair is asking for information from several billionaire developers in order to determine if they are abusing a Trump tax cut that was supposed to be beneficial to poor communities.
Citing ProPublica’s reporting on the program, Sen. Ron Wyden, D-Ore., sent letters today to Jorge Perez of Related Group, Kushner Companies and several other developers asking for details on how they are taking advantage of what’s known as the opportunity zone program.
The program, created in President Donald Trump’s 2017 tax overhaul, provides a series of tax breaks for making investments in swaths of specially designated land around the country. The program’s bipartisan advocates contended the program would funnel money into disadvantaged neighborhoods that were otherwise starved for investment.
The program offers investors tax benefits. One of the main benefits is that any gains made on projects in these zones are tax-free for a period of time.
But ProPublicaAnd other news outlets Research showed that most investments were made to benefit the affluent. The results of a series of stories in 2019, ProPublicaReports indicated that developers across the country had successfully lobbied for favored tracts to be included in the opportunity zones program at the expense of poorer communities. Many of those tracts were located in well-off areas, or were the sites of long-planned and completed projects that were planned before the tax break. This suggests that public subsidies could flow for projects that were not going to happen regardless.
Wyden is currently examining the tax benefits. “I have long been concerned that the Opportunity Zone program may permit wealthy investors another opportunity to avoid billions of dollars in taxes without meaningfully benefitting the distressed communities the program was intended to help,” Wyden wrote in the letter.
Wyden’s letter zeroed in on one of the projects highlighted by ProPublica: An opportunity zone in West Palm Beach (Florida) that contains a superyacht marina Major Republican political donor owned the property.
“It appears that the Opportunity Zone program is already helping subsidize luxury real estate development by wealthy developers, and in many cases will allow these investors to realize the gains on their investments completely tax-free,” Wyden wrote. “Among the investments that have reportedly qualified for these generous tax breaks, are projects that include luxury apartment buildings and hotels, high-end office towers, self-storage facilities and a ‘superyacht marina.’”
Perez, who is the head of a company in development, was addressed this letter. luxury condo projectWyden asked Wyden in the West Palm Beach area for information about when the project was created; details about lobbying by public officials on the issue of the opportunity zone; and numbers regarding job creation and tax benefits.
When West Palm Beach developers were asked for a reply in 2019, they said that they weren’t motivated to seek the tax cut for their own gain and hoped to stimulate additional economic development in the surrounding area.
Wyden’s letters are designed to fill in details about how the program is unfolding. Some have called for it. outright abolitionEven supporters of opportunity zones have lamented the lack of reporting requirements that could allow experts to determine if the tax breaks are actually achieving their stated objectives.
Wyden introduced legislation in 2019 to increase reporting requirements for opportunity-zone investors and reduce the types of projects that would be eligible for tax breaks under this program. The legislation would also remove areas that were originally designated as opportunity zones that weren’t actually poor, including well-off areas of Detroit and Baltimore that ProPublicaReport on that year.
