I 

116TH CONGRESS 

1ST SESSION H. R. 5042 

To amend the Internal Revenue Code of 1986 to reform rules related to 

qualified opportunity zones. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 12, 2019 

Mr. CLYBURN (for himself, Ms. ADAMS, and Mr. CLAY) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reform 

rules related to qualified opportunity zones. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Opportunity Zone Re5 form Act’’. 

6 SEC. 2. MODIFICATION OF TRACTS QUALIFIED TO BE DES7 IGNATED AS QUALIFIED OPPORTUNITY 

8 ZONES. 

9 (a) DISQUALIFICATION OF CERTAIN CENSUS

10 TRACTS.— 


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1 (1) CENSUS TRACTS WITH HIGH MEDIAN FAM2 ILY INCOME.—Paragraph (1) of section 1400Z–1(c) 

3 of the Internal Revenue Code of 1986 is amended to 

4 read as follows: 

5 ‘‘(1) LOW-INCOME COMMUNITIES.— 

6 ‘‘(A) IN GENERAL.—Except as provided in 

7 subparagraph (B), the term ‘low-income com8 munity’ has the same meaning as when used in 

9 section 45D(e). 

10 ‘‘(B) EXCEPTION.— 

11 ‘‘(i) IN GENERAL.—Such term shall 

12 not include any census tract if the median 

13 family income for such tract exceeds 120 

14 percent of the national median family in15 come (as determined based the most recent 

16 data published by the Bureau of the Cen17 sus on the date of the enactment of the 

18 Opportunity Zone Reform Act). 

19 ‘‘(ii) SPECIAL RULE.—Clause (i) shall 

20 not apply to any census tract if— 

21 ‘‘(I) the poverty rate for such 

22 tract is at least 20 percent, and 

23 ‘‘(II) less than 10 percent of the 

24 population of such tract is enrolled in 

25 an institution of higher education (as 


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1 defined in section 101 of the Higher 

2 Education Act of 1965).’’. 

3 (2) CONTIGUOUS CENSUS TRACTS.—Section 

4 1400Z–1 of such Code is amended by striking sub5 section (e) and redesignating subsection (f) as sub6 section (e). 

7 (b) TREATMENT OF PREVIOUSLY DESIGNATED

8 TRACTS.—Section 1400Z–1 of such Code, as amended by 

9 subsection (a)(2), is amended by adding at the end the 

10 following: 

11 ‘‘(f) TREATMENT OF CERTAIN CENSUS TRACTS.— 

12 ‘‘(1) IN GENERAL.—Except as provided in sec13 tion 1400Z–2(d)(2)(D), any census tract (other than 

14 a census tract in Puerto Rico) which is not a low15 income community and which was designated as a 

16 qualified opportunity zone before the date of the en17 actment of the Opportunity Zone Reform Act shall 

18 not be treated as a qualified opportunity zone on or 

19 after such date of enactment. 

20 ‘‘(2) REPLACEMENT ZONES.— 

21 ‘‘(A) IN GENERAL.—A State may des22 ignate a low-income community as a qualified 

23 opportunity zone to replace a census tract the 

24 status of which as a qualified opportunity zone 

25 was terminated by reason of paragraph (1). 


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1 ‘‘(B) SPECIAL RULES.—For purposes of 

2 this subchapter— 

3 ‘‘(i) the determination period with re4 spect to a designation under subparagraph 

5 (A) shall be the 90-day period beginning 

6 on the date of the enactment of such Act, 

7 as extended under subsection (b)(2), and 

8 ‘‘(ii) the period for which any such 

9 designation is in effect shall be the period 

10 beginning with the date such designation 

11 takes effect and ending with the last day 

12 of the 10th calendar year beginning on or 

13 after the designation date as a qualified 

14 opportunity zone for the census tract 

15 which it is replacing as such a zone by rea16 son of the termination under clause (i).’’. 

17 (c) TREATMENT OF EXISTING INVESTMENTS.—Sec18 tion 1400Z–2(d)(2)(D) of such Code is amended by add19 ing at the end the following new clause: 

20 ‘‘(iv) SPECIAL RULE FOR INVEST21 MENTS IN CERTAIN CENSUS TRACTS.— 

22 ‘‘(I) IN GENERAL.—For purposes 

23 of applying this paragraph, the use of 

24 property in a qualified census tract 

25 shall be treated as use of property in 


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1 a qualified opportunity zone if the 

2 original use of such property occurred 

3 before November 6, 2019, or in the 

4 case of property acquired before such 

5 date, the property was substantially 

6 improved before the close of the 30- 

7 month period beginning with the 

8 month of the acquisition. 

9 ‘‘(II) QUALIFIED CENSUS

10 TRACT.—For purposes of this clause, 

11 the term ‘qualified census tract’ 

12 means any census tract which is not a 

13 low-income community and which was 

14 designated as a qualified opportunity 

15 zone before the date of the enactment 

16 of the Opportunity Zone Reform 

17 Act.’’. 

18 SEC. 3. MAINTENANCE OF GEOGRAPHIC BOUNDARIES OF 

19 QUALIFIED OPPORTUNITY ZONES. 

20 Section 1400Z–1(e) of the Internal Revenue Code of 

21 1986, as redesignated by section 2(a)(2), is amended by 

22 adding at the end the following new sentence: ‘‘Such des23 ignation shall apply to the geographic area as in effect 

24 at the time such tract is designated without regard to 


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1 whether adjustments are made to the boundaries of the 

2 census tract so designated.’’. 

3 SEC. 4. MODIFICATION OF PROHIBITION ON CERTAIN 

4 TYPES OF TRADES OR BUSINESS AS QUALI5 FIED OPPORTUNITY ZONE BUSINESSES. 

6 (a) IN GENERAL.—Section 1400Z–2(d)(3)(A)(iii) of 

7 the Internal Revenue Code of 1986 is amended by striking 

8 ‘‘in section 144(c)(6)(B)’’ and inserting ‘‘subsections 

9 (a)(8)(B) or (c)(6)(B) of section 144 or section 147(e)’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 this section shall take effect on November 6, 2019. 

12 SEC. 5. OTHER MODIFICATIONS RELATED TO QUALIFIED 

13 OPPORTUNITY FUNDS. 

14 (a) APPLICATION OF QUALIFIED OPPORTUNITY

15 ZONE BUSINESS RULES TO TRADES OR BUSINESSES

16 CONDUCTED BY QUALIFIED OPPORTUNITY ZONE

17 FUNDS.— 

18 (1) IN GENERAL.—Section 1400Z–2(d)(1) of 

19 the Internal Revenue Code of 1986 is amended to 

20 read as follows: 

21 ‘‘(1) IN GENERAL.—The term ‘qualified oppor22 tunity fund’ means any investment vehicle— 

23 ‘‘(A) which is organized as a corporation 

24 or a partnership for the purpose of investing in 

25 qualified opportunity zone property (other than 


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1 another qualified opportunity fund) that holds 

2 at least 90 percent of its assets in qualified op3 portunity zone property, determined by the av4 erage of the percentage of qualified opportunity 

5 zone property held in the fund as measured— 

6 ‘‘(i) on the last day of the first 6- 

7 month period of the taxable year of the 

8 fund, and 

9 ‘‘(ii) on the last day of the taxable 

10 year of the fund, and 

11 ‘‘(B) any trade or business of which is a 

12 qualified opportunity zone business.’’. 

13 (2) EFFECTIVE DATE.—The amendments made 

14 by this subsection shall take effect as if included in 

15 section 13823 of Public Law 115–97. 

16 (b) CLARIFICATION OF SUBSTANTIALLY ALL.— 

17 (1) IN GENERAL.—Section 1400Z–2(d) of the 

18 Internal Revenue Code of 1986 is amended— 

19 (A) by striking ‘‘during substantially all’’ 

20 each place it appears in paragraphs 

21 (2)(B)(i)(III), (2)(C)(iii), and (2)(D)(i)(III) 

22 and inserting ‘‘for not less than 90 percent’’, 

23 (B) by striking ‘‘substantially all of the 

24 use’’ in paragraph (2)(D)(i)(III) and inserting 

25 ‘‘not less than 90 percent of the use’’, and 


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1 (C) by striking ‘‘in which substantially all’’ 

2 in paragraph (3)(A)(i) and inserting ‘‘in which 

3 not less than 90 percent’’. 

4 (2) EFFECTIVE DATE.—The amendments made 

5 by this subsection shall take effect as if included in 

6 section 13823 of Public Law 115–97. 

7 (c) CERTAIN PROPERTY EXCLUDED FROM QUALI8 FIED OPPORTUNITY ZONE BUSINESS PROPERTY.— 

9 (1) IN GENERAL.—Section 1400Z–2(d)(2)(D) 

10 of the Internal Revenue Code of 1986 is amended— 

11 (A) in clause (i), by inserting ‘‘(other than 

12 self-storage property, parking property, stadium 

13 property, or disqualified residential rental prop14 erty)’’ after ‘‘tangible property’’, and 

15 (B) by adding at the end the following new 

16 clauses: 

17 ‘‘(iv) SELF-STORAGE PROPERTY.—The 

18 term ‘self-storage property’ means property 

19 designed and used for the purpose of rent20 ing or leasing individual storage space to 

21 occupants who are to have access to such 

22 space for the purpose of storing and re23 moving personal property. 

24 ‘‘(v) PARKING PROPERTY.—The term 

25 ‘parking property’ means any property 90 


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1 percent or more of the square footage of 

2 which is used for parking or for the in3 gress or egress of vehicles. 

4 ‘‘(vi) STADIUM.—The term ‘stadium 

5 property’ means any facility (or appur6 tenant real property) which, during at 

7 least 5 days during any calendar year, is 

8 used as a stadium or arena for professional 

9 sports exhibitions, games, or training. 

10 ‘‘(vii) DISQUALIFIED RESIDENTIAL

11 RENTAL PROPERTY.—The term ‘disquali12 fied residential rental property’ means any 

13 residential rental property unless 50 per14 cent or more of the residential units of 

15 such property are both rent-restricted 

16 (within the meaning of section 42(g)(2)) 

17 and occupied by individuals whose income 

18 is 50 percent or less of area median in19 come.’’. 

20 (2) EFFECTIVE DATE.—The amendments made 

21 by this subsection shall take effect as if included in 

22 section 13823 of Public Law 115–97. 

23 (d) TREATMENT OF LEASED PROPERTY.— 

24 (1) IN GENERAL.—Section 1400Z– 

25 2(d)(2)(D)(i)(I) of the Internal Revenue Code of 


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1 1986 is amended by inserting ‘‘or under a lease 

2 (other than a lease from a related person) entered 

3 into after December 31, 2017,’’ after ‘‘December 31, 

4 2017,’’. 

5 (2) EFFECTIVE DATE.—The amendment made 

6 by this subsection shall take effect as if included in 

7 section 13823 of Public Law 115–97. 

8 (e) CORRECTION RELATING TO ORIGINAL USE OF

9 QUALIFIED OPPORTUNITY ZONE BUSINESS PROPERTY.— 

10 (1) IN GENERAL.—Section 1400Z– 

11 2(d)(2)(D)(i)(II) of the Internal Revenue Code of 

12 1986 is amended by striking ‘‘in the qualified oppor13 tunity zone’’. 

14 (2) EFFECTIVE DATE.—The amendment made 

15 by this subsection shall take effect as if included in 

16 section 13823 of Public Law 115–97. 

17 (f) MODIFICATION OF DETERMINATION OF SUBSTAN18 TIAL IMPROVEMENT OF QUALIFIED OPPORTUNITY ZONE

19 BUSINESS PROPERTY.— 

20 (1) IN GENERAL.—Section 1400Z– 

21 2(d)(2)(D)(ii) of the Internal Revenue Code of 1986 

22 is amended by inserting ‘‘(including land)’’ after 

23 ‘‘adjusted basis of such property’’. 


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1 (2) EFFECTIVE DATE.—The amendment made 

2 by this subsection shall take effect as if included in 

3 section 13823 of Public Law 115–97. 

4 SEC. 6. PUBLIC LIST OF QUALIFIED OPPORTUNITY FUNDS. 

5 The Secretary of the Treasury (or the Secretary’s 

6 delegate) shall maintain and make publicly available on 

7 the internet and at the offices of the Internal Revenue 

8 Service— 

9 (1) a list of investment vehicles that are cer10 tified as qualified opportunity funds (as defined in 

11 section 1400Z–2(d)(1) of the Internal Revenue Code 

12 of 1986) pursuant to the rules established under 

13 section 1400Z–2(e)(4)(A) of such Code, and 

14 (2) the name, address, and the uniform re15 source locator (URL) for the website for such fund. 

16 SEC. 7. GAO REPORT. 

17 (a) IN GENERAL.—Not later than each applicable 

18 date, the Comptroller General of the United States shall 

19 submit to Congress a report on the effectiveness of the 

20 provisions of subchapter Z of chapter 1 of the Internal 

21 Revenue Code of 1986 in achieving the policies of such 

22 provisions. 

23 (b) MATTERS INCLUDED.—The reports submitted 

24 under subsection (a) shall include an analysis of— 


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1 (1) the distribution of investments of qualified 

2 opportunity funds among qualified opportunity 

3 zones, 

4 (2) the distribution of such investments across 

5 different industries or investment purposes, 

6 (3) the impact of the designation of an area as 

7 a qualified opportunity zone on— 

8 (A) economic indicators, including employ9 ment, new business start-ups, and poverty re10 duction, 

11 (B) housing costs, and 

12 (C) income distribution among residents of 

13 such zones, 

14 (4) the economic benefits provided by such des15 ignations compared to economic costs, and 

16 (5) to the extent practicable, the impact of the 

17 provisions of such subchapter Z on low-income com18 munities that have not been designated as qualified 

19 opportunity zones. 

20 (c) DEFINITIONS.— 

21 (1) APPLICABLE DATE.—The term ‘‘applicable 

22 date’’ means— 

23 (A) the date that is 5 years after the date 

24 of the enactment of this Act, and 


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1 (B) the date that is 10 years after the date 

2 of the enactment of this Act. 

3 (2) OTHER TERMS.—Any term used in this sec4 tion which is also used in subchapter Z of chapter 

5 1 of the Internal Revenue Code of 1986 shall have 

6 the meaning given such term under such subchapter. 

Æ 


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