U.S. GOVERNMENT PUBLISHING OFFICE

30–384 WASHINGTON : 2018

S. HRG. 115–297 

THE PROMISE OF OPPORTUNITY ZONES 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

MAY 17, 2018 

Printed for the use of the Joint Economic Committee 

( 

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JOINT ECONOMIC COMMITTEE 

[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress] 

HOUSE OF REPRESENTATIVES 

ERIK PAULSEN, Minnesota, Chairman 

DAVID SCHWEIKERT, Arizona 

BARBARA COMSTOCK, Virginia 

DARIN LAHOOD, Illinois 

FRANCIS ROONEY, Florida 

KAREN HANDEL, Georgia 

CAROLYN B. MALONEY, New York 

JOHN DELANEY, Maryland 

ALMA S. ADAMS, PH.D., North Carolina 

DONALD S. BEYER, JR., Virginia 

SENATE 

MIKE LEE, Utah, Vice Chairman 

TOM COTTON, Arkansas 

BEN SASSE, Nebraska 

ROB PORTMAN, Ohio 

TED CRUZ, Texas 

BILL CASSIDY, M.D., Louisiana 

MARTIN HEINRICH, New Mexico, Ranking 

AMY KLOBUCHAR, Minnesota 

GARY C. PETERS, Michigan 

MARGARET WOOD HASSAN, New Hampshire 

COLIN BRAINARD, Executive Director 

KIMBERLY S. CORBIN, Democratic Staff Director 

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C O N T E N T S 

OPENING STATEMENTS OF MEMBERS

Hon. Erik Paulsen, Chairman, a U.S. Representative from Minnesota .............. 1 

Hon. Martin Heinrich, Ranking Member, a U.S. Senator from New Mexico ..... 3 

WITNESSES

Hon. Tim Scott, a U.S. Senator from South Carolina .......................................... 5 

Mr. John W. Lettieri, Co-Founder and President, Economic Innovation Group 

(EIG), Washington, DC ........................................................................................ 7 

Ms. Terri Ludwig, Chief Executive Officer, Enterprise Community Partners, 

New York, NY ...................................................................................................... 9 

Mr. Maurice A. Jones, President & CEO, Local Initiatives Support Corporation (LISC), New York, NY ................................................................................. 11 

SUBMISSIONS FOR THE RECORD

Prepared statement of Hon. Erik Paulsen, Chairman, a U.S. Representative 

from Minnesota .................................................................................................... 32 

Prepared statement of Hon. Cory A. Booker, a U.S. Senator from New Jersey . 35 

Prepared statement of Hon. Martin Heinrich, Ranking Member, a U.S. Senator from New Mexico .......................................................................................... 36 

Prepared statement of Hon. Tim Scott, a U.S. Senator from South Carolina .... 37 

Prepared statement of Mr. John W. Lettieri, Co-Founder and President, Economic Innovation Group (EIG), Washington, DC .............................................. 39 

Prepared statement of Ms.Terri Ludwig, Chief Executive Officer, Enterprise 

Community Partners, New York, NY ................................................................. 47 

Prepared statement of Mr. Maurice A. Jones, President & CEO, Local Initiatives Support Corporation (LISC), New York, NY ............................................ 55 

H.R. 828 submitted by Representative Maloney ................................................... 64 

Response from Mr. Lettieri to Questions for the Record Submitted by Senator 

Klobuchar .............................................................................................................. 67 

Response from Ms. Ludwig to Questions for the Record Submitted by Senator 

Klobuchar .............................................................................................................. 68 

Response from Ms. Ludwig to Questions for the Record Submitted by Senator 

Heinrich ................................................................................................................ 69 

Response from Mr. Jones to Questions for the Record Submitted by Representative Maloney ............................................................................................. 72 

Response from Mr. Jones to Questions for the Record Submitted by Senator 

Klobuchar .............................................................................................................. 73 

Response from Mr. Jones to Questions for the Record Submitted by Senator 

Heinrich ................................................................................................................ 76 

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THE PROMISE OF OPPORTUNITY ZONES 

THURSDAY, MAY 17, 2018 

CONGRESS OF THE UNITED STATES, JOINT ECONOMIC COMMITTEE, Washington, DC. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

216, Hart Senate Office Building, the Honorable Erik Paulsen, 

Chairman, presiding. 

Representatives present: Paulsen, Maloney, Handel, Adams, 

LaHood, Delaney, and Comstock. 

Senators present: Heinrich, Peters, Hassan, and Sasse. 

Staff present: Theodore Boll, Colin Brainard, Gerardo Bonilla, 

Daniel Bunn, Kim Corbin, Barry Dexter, Alaina Flannigan, Connie 

Foster, Natalie George, Colleen Healy, Matt Kaido, Allie Neill, and 

Alex Schibuola. 

OPENING STATEMENT OF HON. ERIK PAULSEN, CHAIRMAN, A 

U.S. REPRESENTATIVE FROM MINNESOTA 

Chairman Paulsen. We will call the hearing to order. 

Good morning, and welcome to today’s hearing on The Promise 

of Opportunity Zones. America’s new economy is finally taking off. 

The Congressional Budget Office, CBO, now projects 3.3 percent 

growth for 2018, the highest annual growth rate since 2005, up 

from a meager 1.9 percent it estimated prior to the Tax Cuts & 

Jobs Act and regulatory reforms. And while all Americans benefit 

from faster growth, we can, and should, take special care of those 

communities who are in greater need of support. Some communities, both urban and rural, are having a particularly difficult 

time. 

The new tax law contains a provision that deserves more public 

attention, one that is designed to help lower-income areas. The law 

provides a capital gains tax incentive to encourage long-term, private investment in communities that have had difficulty attracting 

jobs and new business. Unlike past targeted incentives, the areas 

are selected by governors, who know the unique needs of their communities, instead of by the Federal Government. 

Opportunity Zones have been a bipartisan, bicameral initiative. 

The House author of the original legislation, The Investing in Opportunity Act, is former representative Pat Tiberi who chaired this 

Committee until January of this year. We are honored to have the 

Senate author with us, as well today, Senator Tim Scott of South 

Carolina. 

Opportunity Zones hold the promise of flexible, innovative solutions. And flexibility is important, because the reasons some areas 

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lag economically vary across communities and regions. A factory 

central to a town’s economy may have closed, leaving workers and 

searching for new skills and jobs, that is if they haven’t given up 

entirely. 

The area may have underperforming schools. They may lack access to capital. Excessive taxes and regulation may have made it 

difficult to start or maintain a business. The community may be 

struggling with rampant drug and alcohol abuse. This is why ‘‘one 

size fits all’’ Federal spending programs or incentives to invest only 

in particular activities are not well-suited to address each community’s unique set of challenges. 

This is why also Opportunity Zones, which allow the private sector and local communities to innovative and collaborate on the best 

solutions, have much greater potential for meeting those unique 

needs. 

John Lettieri, one of our distinguished witnesses today, put it 

well in a recent op-ed in The Hill. He noted that previous locationtargeted programs had an ‘‘overly prescriptive top-down approach 

that left no room for local experimentation.’’ 

Opportunity Zones, on the other hand, will bring ‘‘the best possible mix of investments in new and expanding businesses, infrastructure and energy projects, commercial real estate, affordable 

housing and more.’’ 

Opportunity Zones also hold the promise of local knowledge and 

engagement. They are chosen by governors, who know their communities well, and not by Federal planners with a formula-based 

spreadsheet. 

Across the country, there are about 8,700 Opportunity Zones. My 

own State of Minnesota is hoping to attract additional long-term, 

private investment into 128 census tracts that were recently selected as Opportunity Zones. 

State and local leaders can also help their communities in thriving by collaborating and removing unnecessary barriers to starting 

a business such as overly prescriptive occupational licensing or 

local zoning ordinances. Opportunity Zones also hold the promise 

of access to a large amount of untapped capital. Investors who reinvest capital gains from another investment into these zones temporarily defer taxes. 

And these investments are pooled in Opportunity Funds so that 

no single investor has to have specialized knowledge about how 

and where to invest since those decisions can be made by the experts who manage the funds. 

The longer investments are held in Opportunity Zones the more 

the capital gains relief grows, a strong incentive to invest in a community for the long-haul. And this also encourages fund managers 

to invest—in enterprises that will yield the most success and prosper for a community—prosperity. 

With an estimated $6 trillion in unrealized capital gains and no 

upfront State or Federal costs, the potential investments flowing 

into struggling communities is almost limitless. We have a highly 

knowledgeable panel of witnesses here today, who have been engaged in the Opportunity Zone initiative and whose observations 

and insights I very much look forward to hearing. 

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Before I introduce the witnesses, though, I now recognize our 

Ranking Member Senator Heinrich for his opening statement. 

[The prepared statement of Chairman Paulsen appears in the 

Submissions for the Record on page 32.] 

OPENING STATEMENT OF HON. MARTIN HEINRICH, RANKING 

MEMBER, A U.S. SENATOR FROM NEW MEXICO 

Senator Heinrich. Good morning, Chairman Paulsen, and 

thank you for holding today’s hearing. I want to recognize my colleagues Senator Booker and Senator Scott for their important work 

to create a new incentive to invest in communities with high poverty and persistent unemployment. 

Mr. Chairman, my good friend Senator Booker, could not be here 

this morning but provided a statement and asked that it be entered 

into the record. 

Chairman Paulsen. Without objection. 

[The prepared statement of Senator Booker appears in the Submissions for the Record on page 35.] 

Senator Heinrich. It is good to have my colleague from South 

Carolina here with us today, and we look forward to his testimony. 

And I want to thank you and Senator Booker for your leadership 

on this issue. 

Even today, more than ten years after the recession began, the 

recovery still has not reached many communities, both rural and 

urban. In New Mexico, our statewide unemployment rate is almost 

50 percent higher than the national average. And in some areas, 

it’s much higher. 

Across the country, there are more than 50 million Americans 

living in distressed communities. There’s enormous talent in these 

communities, but we have underinvested in it. 

While the Chairman and I disagree on the underlying Republican 

tax bill, a partisan bill that continues to leave working Americans 

behind, we do agree that Opportunity Zones hold the promise to direct some much needed financial investment to places like New 

Mexico. 

Opportunity Zones are an important addition to the tool kit. 

They can support investments in affordable housing and small 

businesses while spurring job creation, and they can help lift living 

standards in neighborhoods across the country. 

The new Opportunity Funds have the potential to attract highnet-worth investors, who previously have not invested in low-income communities. 

Thanks to the long bull market, many investors are sitting on 

substantial unrealized capital gains that we can put to work generating housing, jobs, and growth. 

What distinguishes Opportunity Zones from other Federal efforts 

to stimulate growth in distressed communities, such as the New 

Markets Tax Credit, is flexibility. There are few investment constraints. Funds can invest as much as they want. There’s no competition to receive the benefit. 

But with this flexibility, there is risk that the social impact will 

not be as great as we would like it to be. To achieve broad public 

benefits, projects should be part of a community strategy to create 

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jobs, boost entrepreneurship, increase affordable housing, and promote economic development. 

Investors should also tap the vast expertise that exists in private, public, and non-profit sectors about how to make high-impact 

community investments. And we were fortunate enough to have 

some of that expertise here with us today. 

I’ve seen first-hand the important work Enterprise and LISC, together with their partners, has done in New Mexico, providing affordable housing projects and creating jobs in Gallup and Las 

Cruces and Santo Domingo Pueblo, for that matter. And Opportunity Zones can help us do even more. 

Poverty is stubborn; one in five children grows up in poverty in 

this country, a number that hasn’t moved much in a generation. In 

New Mexico, three in ten children grow up in poverty. And in some 

of our counties, close to half of all children live in poverty. Growing 

up poor has lasting impacts on a child’s development, affecting successes in the classroom and educational and employment outcomes 

later in life. 

In addition to expanding proven credits and programs like the 

Earned Income Tax Credit and Head Start, we need new approaches. Two-generation models can increase opportunities for 

families living in poverty by simultaneously targeting children and 

parents with programs and supports to boost economic security and 

improve the health and well-being of the whole family. 

Opportunity Zones offer an additional path to spur economic development. Before the new zones are implemented, we have time 

to think through some guardrails that can help ensure that the intent of the legislation is fully realized; and closely monitoring implementing and establishing appropriate guardrails, either through 

rules or additional action by Congress, can go a long way towards 

ensuring that Opportunity Zones bring new economic activity to 

communities that desperately need it. This is a big opportunity. I’d 

like to see us seize it. 

Thank you to the witnesses for being here today, and I look forward to each of your testimonies. 

[The prepared statement of Senator Heinrich appears in the Submissions for the Record on page 36.] 

Chairman Paulsen. Well—and thank you Senator. And as we 

begin with our witnesses today, I want to, first, acknowledge the 

Honorable Tim Scott. Senator Scott is with us, who worked with 

your colleague, Senator Booker, whose testimony has been entered 

into the record also. 

Senator Scott is a South Carolina native and was sworn in as a 

United States Senator from South Carolina in January of 2013 to 

complete the term of retiring Senator Jim DeMint. Senator Scott 

was elected to a full term in the U.S. Senate in January 2017. And 

prior to the U.S. Senate, he served in the U.S. House of Representatives, the South Carolina State House, and the Charleston County 

Council. 

Before he entered public service, Senator Scott built a successful 

small business of his own, and is a co-author with former Ohio 

Representative, Pat Tiberi, of the original Opportunity Zone legislation. 

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We welcome your expertise and you being here today. I know you 

have to leave a little early, so we’ll listen to you and introduce the 

rest of the witnesses after you conclude. 

With that, Senator Scott, you’re recognized for five minutes. 

STATEMENT OF HON. TIM SCOTT, U.S. SENATOR FOR SOUTH 

CAROLINA 

Senator Scott. Thank you, Chairman and to the Ranking Member, as well. I appreciate you guys having this hearing. 

In large part, because of the tax cuts in jobs, our economy is 

booming. We’re in the middle of the third largest economic expansion since 1854; yes, 1854, and by the time we’re done, it will be 

the second longest economic expansion. 

Record revenues entered our Treasury in April. Unemployment 

rates are at 3.9 percent; a million folks have come back to the 

workforce; wages are up 2.9 percent over last year. African-American unemployment is the lowest record in four decades, since they 

started taking notes in 1972; 800,000 new jobs have been created 

since the passage of this legislation. 

Because of tax reform, millions of Americans have seen increases 

in benefits wages or bonuses. According to a survey by the manufacturers, 72 percent of manufacturers plan to increase wages or 

benefits this year; 77 percent plan to hire more employees. Additionally, the NFIB says optimism for small businesses is at a 45- 

year high; poor sales at record lows. 

Many components of the Tax Reform Bill have yet to be implemented. And this is really good news, because as I speak, the 

Treasury Department is finalizing guidance for Opportunity Zones. 

And here’s why that’s so important. 

Fifty-two million Americans live in distressed communities. I 

have personally been raised in one of those distressed communities, 

and I will tell you that the potential in those Opportunity Zones 

is incredibly high. But too often, too little of these Opportunity 

Zones find themselves manifesting in these distressed communities. 

And the question that, I think, of the Investing in Opportunity 

Act answers is: How do we attract private sector capital back into 

distressed communities? 

The answer is, in part, by deferring the capital gains tax, if you 

will, make a long-term investment in those distressed communities. 

This is incredibly important, because the goal is not to make shortterm investments where investors have an opportunity to have a 

great return. This goal, the goal of the legislation, is to make sure 

that those residents living in the Opportunity Zones, those businesses located in the Opportunity Zones, the property that could be 

rehabilitated in the Opportunity Zones, benefits from a long-term 

view of making a community better without the gentrification. And 

there are a number of models from Atlanta to Spartanburg, South 

Carolina, and North Charleston, South Carolina, where we can see 

that the approach become reality. 

It’s also a win, win, win. Local mayors had major input in making sure that the governors’ recommendation came from the experts closest to the people. And those of us serving in Congress, we 

all know that’s it’s amazing that our approval ratings are at 13 

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percent. That includes our family, our cousins, our brothers, our 

best friends from high school. 

But local officials have a much higher approval rating. The closer 

the government is to the people, the more the people trust that 

government. And when it comes to investing in opportunity and 

Opportunity Zones, having the mayors’ input, with the governors’ 

assistance, makes this a win-win on the local level and the State 

level. But what makes it a win on the Federal is that our hands 

are not there; that the red tape and the challenges that come with 

Federal Governmental oversight are not there. We can have great 

confidence in our cities, in our states, to do the right thing for all 

of our citizens. And by having a Federal program that simply encourages, in a sense, capital to take a second look at communities 

that they would not normally take a second look, this is really good 

news for residents. 

My hope is a simple one: That as we see the manifestation and 

the creation around the country of Opportunity Zones that we will 

be having another joint meeting in a year, in two years, so that we 

can measure the progress made in reasonable time and that we can 

celebrate in a bipartisan fashion of the Opportunity Zone while it 

was a part of the Republican package for tax cuts and jobs, it is 

not a partisan legislation. It is not even a bipartisan legislation. It 

was American legislation for American people stuck, sometimes 

trapped, in a place where it seems like the lights grow dimmer, 

and the future does too. Let’s turn those lights on and make the 

future bright. 

[The prepared statement of Senator Scott appears in the Submissions for the Record on page 37.] 

Chairman Paulsen. I want to thank Senator Scott again for 

taking the time to appear before the Committee. And I know you 

may join us for a little bit, and I know you have to also run. 

I also want to, once again, acknowledge Senator Booker’s testimony that has been entered into the record. And with that, we’ll 

begin the introduction—introduce our witnesses. 

First, we have with us, Mr. Maurice—I apologize—we have Mr. 

Lettieri who is with us, John Lettieri, who is the Co-Founder and 

President of the Economic Innovation Group. 

Mr. Lettieri leads EIG’s policy development, economic research 

and legislative affairs efforts. He has worked in both the public and 

private sectors with policymakers, entrepreneurs, investors and 

global business leaders. Prior to EIG, Mr. Lettieri was the VicePresident of Public Policy and Government Affairs for the Organization for International Investment. 

Additionally, he served as a foreign policy aide to former U.S. 

Senator Chuck Hagel during his time as a senior member of the 

United States Senate Foreign Relations Committee. Mr. Lettieri is 

a graduate of Wake Forest University, where he studied political 

science and global commerce. 

Also is Ms. Terri Ludwig, who is the Chief Executive Officer of 

Enterprise Community Partners, Incorporated, which is a national, 

non-profit, that creates affordable homes and strengthens communities across the United States. 

From 2002 to 2009, Ms. Ludwig served as president and chief executive officer of the Merrill Lynch Community Development Co. 

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Prior to Merrill Lynch, she was the president and CEO of ACCION 

New York, the largest non-profit, microlender in the United States. 

In 2011, Forbes Magazine named Ms. Ludwig to its first ever 

‘‘Impact 30 List,’’ a roster of 30 of the world’s leading social entrepreneurs. Ms. Ludwig holds a Bachelor’s Degree from the University of Illinois at Urbana-Champaign and a Master’s Degree from 

Harvard University’s John F. Kennedy School of Government. 

And Mr. Maurice Jones is President and CEO of the Local Initiatives Support Corporation, LISC, a non-profit that connects public 

and private resources with struggling communities. 

Immediately prior to joining LISC, he served as the Secretary of 

Commerce for the Commonwealth of Virginia. Mr. Jones also 

served as Deputy Secretary for the U.S. Department of Housing 

and Urban Department, HUD. Prior to that, he was Commissioner 

of Virginia’s Department of Social Services and Deputy Chief of 

Staff to former Virginia Governor Mark Warner. 

Mr. Jones earned a Bachelor’s Degree from Hampden-Sydney 

College, a Master’s Degree in International Relations from Oxford 

University, and in 1992, he graduated from the University of Virginia Law School. 

We look forward to each of your testimony, each of your witnesses’ testimony today. And with that, we’ll begin with Mr. 

Lettieri. You’re recognized for five minutes. 

STATEMENT OF MR. JOHN LETTIERI, CO-FOUNDER AND 

PRESIDENT, ECONOMIC INNOVATION GROUP (EIG), WASHINGTON, DC 

Mr. Lettieri. Well, thank you. 

Chairman Paulsen, Ranking Member Heinrich, Members of the 

Committee, it’s a pleasure to be with you today. 

I’m the Co-Founder and President of the Economic Innovation 

Group, a bipartisan research and advocacy organization. EIG 

worked closely with the lead sponsors to help develop and champion the bipartisan Investing in Opportunity Act, which served as 

the basis for the Opportunity Zones provision in the Tax Cuts and 

Jobs Act of 2017. Since it became law, we’ve worked closely with 

a wide array of stakeholders nationwide to support the effective implementation of this new policy. 

The Opportunity Zones initiative is the most ambitious Federal 

attempt to boost private investment in low-income areas in a generation, one with a potential to drive billions of dollars of new investment to these communities over the coming decade. 

The fundamental purpose of this incentive is to encourage longterm equity investment. And in pursuing this goal, Congress established a framework flexible enough to support a broad array of investments and encourage creative local implementation. 

I want to draw particular attention to two of its most important 

features. First, this is a highly flexible incentive, one that can be 

used to meet a wide range of needs in low-income areas. This structural flexibility extends to Opportunity Funds, the intermediaries 

that will raise and deploy capital into the zones, which can be 

structured to engage a wide variety of investors. 

Second, this is a nationally scalable incentive. And by this—I 

mean—there is no fixed cap on the amount of investment that can 

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be channeled into Opportunity Zones, nor is there a limit on the 

number of zones that can receive investments in any given year. 

This scalability derives from the fact that investors receive no 

up-front subsidy or allocation from the Federal Government. And 

these ingredients are essential, because they unlock the vast creativity and problem-solving potential of communities and the marketplace in ways that simply would not be possible under a more 

prescriptive framework. The unique structure of this incentive has 

the potential to unlock an entirely new category of investors and 

create an important new asset class of investments. 

Our analysis of Federal Reserve data found an estimated $6.1 

trillion of unrealized capital gains held by U.S. households and corporations as of the end of 2017. So even a small fraction of these 

gains reinvested into Opportunity Zones would constitute the largest economic development initiative in the country. 

How were Opportunity Zones selected? 

Well, Congress assigned Governors the critical role of selecting 

Opportunity Zones—empowering states to develop selection criteria 

in ways that reflected their unique local characteristics, while 

working within a broad national framework. 

The result has been a vibrant nationwide effort involving thousands of State, local, and county officials, foundations and philanthropies, economic development groups, investors and entrepreneurs, and more. 

The core challenge for Governors was identifying communities 

that struck the right balance between need and opportunity, places 

where this incentive could have the greatest impact. And as of this 

hearing, EIG has been able to collect and analyze data from 42 

states, representing roughly 87 percent of the national total of designations, 27 million people reside in tracts selected thus far; 57 

percent of whom are non-white, 23 percent of the tracts lie outside 

of a metropolitan area. And Governors have gone far beyond the 

statue in selecting for need. The designated tracts have an average 

poverty rate of nearly 31 percent, and a median family income 

equal to only 59 percent of the area median. 

While some are concerned that governors would simply target already rapidly improving areas, less than 4 percent of the selected 

census tracts have experienced high levels of socioeconomic change 

from 2000 to 2016, according to data from they Urban Institute. In 

contrast, 69 percent of the population resides in an area that 

Treasury’s CDFI Fund considers severely distressed. 

So what should states do to make Opportunity Zones successful? 

While this is a Federal incentive, it’s success in any given community will ultimately depend on State and local leadership. Every 

State needs a strategy to ensure strong coordination between the 

public, private, and philanthropic sectors. 

Governors and mayors should build on the incentive in a variety 

of ways, including by ensuring their own State tax codes conform 

to the Federal incentive. Wherever possible, they should align 

workforce development programs to support local residents, ease 

restrictive land use regulations, reduce onerous occupational licensing burdens, and provide practical support to connect investors 

with communities. 

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For its part, Congress should move quickly to address technical 

corrections necessary to making Opportunity Zones work as intended, and the Administration should ensure every relevant agency is accountable to support the needs of Opportunity Zones in concrete and measurable ways. 

Ultimately, the core measure of success is whether Opportunity 

Zones establish a stronger connectivity between communities and 

the equity capital needed to seed new industries, revitalize local assets, and improve access to opportunity. 

I want to close with a note of cautious optimism. Implementation 

of Opportunity Zones is already bringing new energy, ideas, and 

much needed attention to one of this country’s most vexing challenges. But while the scale of potential is enormous, it’s important 

to underscore that Opportunity Zones are not guarantee zones. We 

must keep sight of the fact that reviving struggling communities is 

a long-term, complex undertaking, and the work is just beginning. 

So I thank you for holding this hearing today, and I look forward 

to answering your questions. 

[The prepared statement of Mr. Lettieri appears in the Submissions for the Record on page 39.] 

Chairman Paulsen. Thank you, Mr. Lettieri. 

And next we’ll hear from Ms. Ludwig, you’re recognized for five 

minutes. 

STATEMENT OF TERRI MS. LUDWIG, CHIEF EXECUTIVE 

OFFICER, ENTERPRISE COMMUNITY PARTNERS 

Ms. Ludwig. Thank you. 

Chairman Paulsen, Ranking Member Heinrich, and Members of 

the Committee, good morning. Thank you for your leadership in 

convening this hearing. 

Thoughtful bipartisan discussion on implementing Opportunity 

Zones is essentially so that this important new tax incentive fulfills 

its founding goal, to revitalize our Nation’s communities and further economic growth. 

I’m Terri Ludwig. I’m the CEO of Enterprise Community Partners, and I’ve worked in financial services, capital markets, real estate, and community reinvestment for 30 years. 

Enterprise’s perspective on Opportunity Zones is based on our 

deep expertise as a national leader in affordable housing and community development finance and specifically as an investor and 

lender deploying capital in communities. 

For more than 35 years, Enterprise has amplified the impact of 

investment in homes and communities by engaging the right partners, directing public and private capital to the right places, and 

offering non-partisan guidance and support to government leaders. 

We’ve invested $36 billion in equity, grants, and loans, in all types 

of communities, in all 50 states. We’ve built or preserved 529,000 

homes, helped create diverse thriving communities, and touched 

millions of lives. 

We foster economic mobility and opportunity through a high-impact investment portfolio that includes not only affordable homes, 

but also health clinics, schools and access to healthy foods, and access to public transportation. 

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I’m honored to share Enterprise’s views on realizing the public 

policy goal that gave rise to Opportunity Zones: bolstering inclusive, stainable economic growth. This new tax incentive has immense potential to transform communities, grow small businesses, 

and better residents’ lives, provided that investments are aligned 

with local priorities and needs. 

Enterprise has strong expertise in aggregating private capital 

and deploying it through programs like Low-Income Housing Tax 

Credit and New Markets Tax Credit. We’re eager to realize the potential of Opportunity Zones to complement these established public-private partnerships. 

Enterprise is exploring Opportunity Fund models that would foster inclusive economic growth and prosperity for residents and 

businesses. Our goal is to demonstrate that the capital can be deployed to deliver compelling financial returns and social returns. 

Any fund we create would incorporate best practices drawn on 

our work over the past 35 years; these include investments that develop and preserve affordable housing, create living-wage jobs, support minority- and woman-owned businesses and expand transportation and infrastructure. 

We’ve been working very closely with governors, mayors, investors, and community-based organizations on Opportunity Zones. 

We’ve gathered and shared data, disseminated critical information, 

and provided technical assistance. 

And what we’ve seen is that while communities are excited about 

this catalyst for economic development, they’re also concerned that 

private investment could unintentionally displace the very residents and businesses that the tax benefit is intended to support. 

Enterprise believes that there is an important role for Federal, 

State, and local government to play in the implementation of this 

tax incentive. This will ensure that investments advance local policy priorities and needs and offer sustained benefit to all members 

of the community, not just a few. To support this, we offer two 

main recommendations for the effective implementation of Opportunity Zones. 

First is promoting the transparency of the Opportunity Fund activities in order to drive accountability and assess impact on communities. Specifically, we recommend requiring that Opportunity 

Funds report to Treasury on transaction-level data and that this 

information be made available to the public. Doing so will allow 

Congress to evaluate whether the tax benefit is meeting its intended policy goals. 

Second, the Department of Treasury should use its statutory authority, from Congress, to issue regulations to prevent abuse. Enterprise suggests that the definition of abuse includes investments 

that adversely affect low-income residents, for example, by eliminating affordable homes. Such guardrails will help ensure that current residents and benefits—and businesses benefit from economic 

growth in their communities. I’ve provided more detail on these 

recommendations in my written testimony and look forward to addressing those in Q and A. 

To conclude, we are enthusiastic about the promise that Opportunity Zones hold for urban, rural, and all types of communities nationwide. If implemented with transparent reporting requirements 

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and an explicit commitment to prevent abuse, Opportunity Zones 

could have a transformative impact on distressed communities and, 

most importantly, on the lives of the people who live there. 

Thank you for your willingness to openly explore the benefits and 

the risks of this new tax incentive. Enterprise would be pleased to 

work with you further on these issues and on our recommendations 

to realize the great opportunity inherent in Opportunity Zones. 

[The prepared statement of Ms. Ludwig appears in the Submissions for the Record on page 47.] 

Chairman Paulsen. Thank you, Ms. Ludwig. 

Mr. Jones, you are recognized for five minutes. 

STATEMENT OF MR. MAURICE A. JONES, PRESIDENT AND CEO, 

LOCAL INITIATIVES SUPPORT CORPORATION (LISC), NEW 

YORK, NY 

Mr. Jones. Thank you. 

Chairman Paulsen, Ranking Member Heinrich, and Members of 

the Committee. I’m pleased to join you this morning to discuss Opportunity Zones. 

My organization, Local Initiative Support Corporation, or LISC, 

championed the Investing in Opportunity Act legislation that became the foundation for this initiative, and we are pleased that it 

was enacted last December as part of the Tax Cuts and Jobs Act. 

Over the course of LISC’s nearly 40 years of work, its comprehensive approach to community development and its broad national reach have made it a valuable leader in the fight to improve 

quality of life in communities across the country. 

LISC’s greatest success over these years has been working with 

underresourced communities and their residents to help them 

make progress. Today, the growing inequality, concentrated poverty, and racial inequity that our country is experiencing make the 

work that we and our partners do as urgent as ever. 

LISC attempts to catalyze opportunity by working at the local 

level to foster resilient, safe, and healthy communities in which individuals have financial security, economic choices, and a high 

quality of life. 

With roots that are local, a national breadth, and a comprehensive set of products and services, we fight to close the opportunity 

gap in America, through our strong network of over 2,300 community-based partners. 

LISC often relies on public/private partnerships to engage in the 

type of comprehensive community development work that is needed 

in low-wealth communities. It’s precisely because we’ve seen, firsthand, the impacts that tax incentives can have on spurring revitalization, most notably the Low-Income Housing Tax Credit and the 

New Markets Tax Credit, that we believe Opportunity Zones hold 

a great deal of potential. 

We are planning to focus our Opportunity Zones investments in 

three areas where we see the greatest potential to benefit community residents. 

First, we will provide growth capital for companies that are creating job opportunities for Opportunity Zone residents. We will inject equity capital to catalyze the growth of manufacturing, advanced manufacturing, healthcare, and companies in other growing 

LAP51NQ082 with DISTILLER

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sectors that are providing quality job opportunities that are accessible to community residents. 

Secondly, we will invest in new real estate developments and rehabilitation of existing underutilized buildings within targeted 

communities to attract businesses, bringing quality jobs to underinvested communities and their adjacent neighborhoods. 

And, finally, we will increase the stock of quality affordable and 

workforce housing in Opportunity Zones. We hope to raise capital 

for these investments from mission-aligned investors, including corporations located in Opportunity Zones, and from the growing impact investment community, in particular, high-net-worth individuals, which would represent an entirely new pool of investor capital 

for community development finance. 

Since there’s no cap on the amount of investor capital that can 

be invested in Opportunity Funds, we believe that the Opportunity 

Zones incentive can spur billions in private investment activity in 

the country’s most distressed census tracts and play a major role 

in closing the existing opportunity gap that is leaving these communities behind. 

In particular, a large portion of our work occurs in rural communities, which are especially underinvested. So we are very pleased 

that preliminary results show that 22 percent, at least, of the Opportunity Zones will be in these very communities. 

I would like to conclude my remarks by offering a few suggestions of how we can ensure that Opportunity Zones maximize prospects for investors, while simultaneously maximizing benefits for 

low-wealth communities and their residents. 

First, I believe that Congress should consult closely with the 

Treasury Department during the next phase of rulemaking to identify whether there are areas that my require statutory fixes, particularly those that will provide clarity to investors and improve 

the flow of investments into Opportunity Zones. 

Second, I believe the Treasury and the IRS should play a more 

active role in the implementation and administration of Opportunity Zones; specifically, we need regulations and guidance that 

not only provide investors with the clarity and certainty necessary 

to make investments in Opportunity Zones, but also protect against 

program abuse and help ensure the integrity of the program. They 

should also play a role in collecting and disseminating information 

about the activities of opportunity funds. 

Finally, individual states and municipalities should work with 

the private sector to ensure that Opportunity Zone investments 

provide the most benefit to low-wealth communities and their residents. 

I’d like to thank you for this opportunity, and I look forward to 

answering your questions. Thank you. 

[The prepared statement of Mr. Jones appears in the Submissions for the Record on page 55.] 

Chairman Paulsen. Thank you, Mr. Jones. 

As we begin the questioning period, I just remind all Members 

to keep their questions to five minutes. And just let me begin. And 

I’ll start with you, Mr. Lettieri, and we can just go right down the 

line. 

LAP51NQ082 with DISTILLER

13 

But, you know, the inclusion of Opportunity Zones in the Tax 

Cuts and Jobs Act, it deserves more public attention. And a lot of 

our colleagues aren’t fully aware of it, as well. Because it encourages private investment to flow into low-income communities selected by the states. 

Now, I believe that Opportunity Zones hold huge and great 

promise to help those that are less fortunate and then achieve 

more self-sustaining economic development. And based on the testimony we’ve heard today, I think that my belief is well-grounded. 

Let me just ask all of you this: What makes Opportunity Zones 

more likely to succeed than the location-targeted programs that 

have been used in the past for this type of goal? And also do you 

believe that there are other market oriented reforms at the state 

and the local level that enhance the chances of success? 

Mr. Lettieri, do you want to begin? 

Mr. Lettieri. Yes. Thank you for the question. 

I’ll focus on two primary areas. Opportunity Zones were designed 

as a compliment to other tools. It was designed to be a new and 

responsive tool in the broader tool kit for community development. 

As I mentioned in my testimony, the fact that it is flexible to a 

wide variety of use cases to be able to support a wide variety of 

types of businesses, itself, is a major plus, because what we see in 

a lot of communities is a variety, a variety of needs. We’ve spent 

a lot of time analyzing the needs of distressed areas around the 

country. and no two communities look alike. 

And so if you have a very narrow prescriptive use case on the 

front end, it means you’re limiting the aperture of places that can 

really put that to use in the community. 

And you see this reflected in the selection process, where governors have different needs in mind, State by State, as they go 

about the selection process, and they’ve emphasized different 

needs. For some, it’s rural entrepreneurship; for some, it’s affordable housing; for some, it’s access to transit; for some, it’s just new 

business formation, where a lot of the struggle continues to be for 

low-income areas. So that flexibility is key. 

The scalability that I mentioned, as well. When you don’t have 

a scarce resource to allocate, year by year, you’re talking about 

something that can be nationally impactful simultaneously, without having to pick winners and losers on the front end, in terms 

of who can deploy the capital. 

That’s not to say that those models are useless; it’s to say that 

they’re not sufficient. And so having this alongside of those other 

types of tools is particularly powerful. And as I’m sure that others 

on the panel can speak to, the inner activity between Opportunity 

Zones and other tools could also be one of its strongest assets. The 

fact that it’s flexible enough not to just meet a wide variety of 

needs, but to be compatible with a wide variety of other tools. 

Chairman Paulsen. Yeah. 

Ms. Ludwig. 

Ms. Ludwig. Sure. I would echo that I support what was just 

said. And I believe that what does distinguish this from other programs is that inherent flexibility. And while we all appreciate the 

tools that are out there, I think it’s very clear that the need is 

enormous. 

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14 

And so I believe this is an additional tool which allows us the 

flexibility to invest in various asset classes, being able to also pool 

resources, not only just with a single investor, but being able to 

pool resources across asset classes and types of investors. And that 

would allow us to both diversify risk and opportunities and bring 

more private capital. And I also agree that with further guidelines, 

we believe a lot of this will pair with Low-Income Housing Tax 

Credits, New Markets, and essential tools like this, so. 

Chairman Paulsen. And, Mr. Jones, you also, I think, mentioned about we want to prevent abuse and to have Treasury step 

in and offer some additional comments. But in knowing that the 

local flexibility is key, what are some other oriented reforms that 

State and local folks can do to measure—— 

Mr. Jones. Sure. 

Chairman Paulsen [continuing]. Or enhancing the opportunity 

here? 

Mr. Jones. Yeah. Let me answer both of your questions and just 

add I agree with what my colleagues have said. Two additional 

things; this is a focus on equity capital, and that is key for the 

places that we’re trying to be of service to. We need grant capital, 

we need equity capital, we need debt capital. The exclusive focus 

here on trying to get more equity in these communities is a key additional attribute. 

The second piece of it for me on the more likely key to success— 

and, by the way, I think the others are succeeding, as well. We just 

need more tools. 

But the second piece of this is this focus on trying to bring in 

what is now an underperforming asset class in the community development space, and that’s high-net worth individuals, folks who 

have capital gains to deploy here. 

This—our largest incentive right now is probably the Low-In- come Housing Tax Credit. That’s a $9 billion industry. This is potentially 2, 3, 4, or 5 times greater than that. 

At the State and local level, look, I think the biggest thing that 

I could see there that would be most helpful is making sure that 

the states work with municipalities and the private sector, to market these places that we’re trying to get investments into. 

This is not going to be an automatic piece here. We’re going to 

have to work hard to market rural America so that folks know that 

there’s both demand and investable opportunities there. 

Chairman Paulsen. Great, thank you. 

Mrs. Maloney, you’re recognized for five minutes. 

Representative Maloney. Thank you very much, Chairman 

Paulsen, for this is an incredibly interesting hearing. 

The US economy is generally doing well and, for that, we should 

all be very, very thankful. But as many of us know, the economic 

recovery is not everywhere. There are parts of the country that are 

experiencing the benefits of the recovery and other parts of the 

country that are being left behind. And in these areas, unemployment is still high, and wages are stagnant. 

In the area of New York that I represent, the geographical difference between the haves and the have-nots can be a couple of 

blocks. It can literally be across the street. So I am very drawn to 

the potential of Opportunity Zones to help close that gap between 

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these two very different worlds. And I welcome the application of 

a market mechanism to what has seemed like an intractable— 

problem for cities and states. This is an out-of-the-box idea that deserves very careful consideration. 

Language establishing Opportunity Zones was inserted into the 

new tax law, and I wish we had had time to see this language and 

talk about it before it happened, particularly because the language 

that appeared in the final bill differed from what was introduced. 

But that’s water under the bridge, and our job now is to explore 

the potential of these Opportunity Zones and to do all that we can 

to help reach their full potential. 

My first question is for Ms. Ludwig. The bipartisan Investing in 

Opportunity Act or as Senator Scott said, ‘‘The American Act,’’ is 

not anything, it’s just for America, there is some text that is different from what Senators Scott and Cory Booker introduced. The 

section on a report to Congress, I’d like to thank Mr. Jones and Ms. 

Ludwig for mentioning in their testimony, that this language is 

missing from the final bill. 

That section requires the Secretary of Treasury to submit a report to Congress on Opportunity Zones five years after enactment 

of the legislation. And I’ll provide a bare-bones synopsis. I think it’s 

important. 

The original bills required an assessment of investments held by 

qualified Opportunity Zone Funds, the amount of assets in those 

funds. It also requires, and I quote, ‘‘The report shall also include 

an assessment of the impacts and outcomes of the investments in 

those areas on economic indicators, including job creation, poverty 

reduction and new business starts and other metrics as determined 

by the Secretary.’’ 

And, in short, it seems that the new tax law was missing the language requiring these reporting requirements. And I’d like to submit, with unanimous consent, that original language, into the 

record—— 

[H.R. 828 appears in the Submissions for the Record on page 64.] 

Chairman Paulsen. Without objection. 

Representative Maloney [continuing]. And ask Ms. Ludwig: As 

an advocate for affordable housing, can you tell me why you support strong reporting requirements and, in the best of all worlds, 

would you encourage Congress to pass a law mandating reporting 

requirements? 

I know that it was in the conference report such language that 

does not have the force of law. I know that Treasury is very supportive, but we know that administrations change. It’d be good, I 

think, to have that concrete reporting language requirement for 

oversight and to prevent, as Mr. Jones mentioned, any type of 

fraud or abuse. 

Your comments, please. 

Ms. Ludwig. Yes. Thank you. 

I would agree. I believe the conference report signaled that there 

was broad agreement on the need to, first of all, have reporting 

mechanisms, both for transparency, but also for the eventual ability to assess impact. And I think this is a program where there is 

tax benefit, and so I believe accompanying with that there should 

be the transparency and accountability that comes with this. I 

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think the conference report did a great job of outlining it. So I certainly support those impact measurements. 

And I think the only way that we’ll be able to look back and sit, 

as Senator Scott said, ‘‘a year from now, two years from now or five 

years from now’’ and determine the success of this program and 

hopefully the expansion of this and celebrate the success is by having the data to look at where we are. 

Representative Maloney. Mr. Lettieri and Mr. Jones, do you 

agree with her statement to have it; yes or no, because I have a 

final question that is very important to me. 

Would you support—— 

Mr. Jones. Yes, you need the information. 

Mr. Lettieri. Yes. 

Representative Maloney. Okay. Thank you. 

In New York, the biggest way to impact economic develop has 

been transportation; the ability to move in and out of neighborhoods. If you have good transportation, i.e., subway, then it just explodes with economic development. 

And would you support, Mr. Jones, given your background in this 

area, broadening this to include transportation? 

I must say, I was very interested in President Trump’s statements during the campaign on infrastructure support, which have 

not materialized in the budgets that we’ve had moving forward. So 

expanding this, would, if the mayor and the governors supported 

it as a major economic force, I just know from my experience in city 

government, State government, Federal Government, in terms of 

economic development, that has been the major force that has 

spurred small businesses, activity, economic growth—— 

Mr. Jones. Yes. 

Representative Maloney [continuing]. Would you support expanding it to include infrastructure? 

Mr. Jones. Absolutely. Infrastructure, transportation, and 

broadband in the rural areas. 

Representative Maloney. Okay. That’s great. I don’t believe 

the current legislation allows that; is that correct? 

Mr. Jones. Actually, I think it could. 

Representative Maloney. It’s not really—I think it could 

be—— 

Mr. Jones. It’s not explicit, but it could. That could be an investment activity. Absolutely. 

Representative Maloney. I’m very excited about it. Thank you, 

Senator Scott, for your leadership on it. 

Chairman Paulsen. Thank you, Representative Maloney. 

And Representative Handel, you’re recognized for five minutes. 

Representative Handel. Thank you, Chairman Paulsen. And 

thank you, Senator Scott, for your good work on this legislation. 

I’m a former county commission chairman, so I’m very familiar 

with enterprise zones and the very real, positive impact that they 

can have, and this seems to be a very promising enhancement and 

an addition to that tool kit to help them in this front. 

I want to talk, Ms. Ludwig, a little bit about affordable housing. 

As you know, since the mid-1980s, tax credits have been available 

for investments in low-income housing; yet, we still have a real gap 

there. 

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Can you talk a little bit about how you would characterize Opportunity Zones in relation to the Low-Income Housing Tax Credit? 

Ms. Ludwig. Certainly. First, I would say, the need for affordable housing is enormous. And we’re seeing, not only at the State, 

but also all the mayors we speak to, that’s a number one concern 

for them. 

So I would say, first of all, we need more resources. After tax reform, as we know, the Low-Income Housing Tax Credit lost value 

within that, given the tax rate. And so we will, by just nature, have 

235,000 fewer homes being able to be created by the tax credit. 

In the budget, there was an increase of 12.5 percent in the LowIncome Housing Tax Credit, but we in the would say we would like 

to continue to increase that tax credit to be able to meet those demands of affordable housing needs. It’s our hope that the Opportunity Zone Funds can pair well with the affordable housing sector 

utilizing Low-Income Housing Tax Credits; however, I would say 

that we certainly need more clarity about what is an acceptable 

real estate investment and what is not. 

It’s our assumption that rental affordable housing today will be 

acceptable, but there’s certainly the need to get more clarity to 

unlock the wallets of the investors we talk to. They’re eager to get 

started, but they need more clarity on what’s an acceptable investment. 

Representative Handel. Thank you. To follow up on that, as 

we seek to deliver that greater clarity, are there any lessons 

learned from your work that we can take from the Low-Income 

Housing Tax Credit programs and do a better job through Opportunity Zones? 

Ms. Ludwig. One of the things I think that is one of the best 

features of the Low-Income Housing Tax Credit is that it is essentially a pay-for-success model. First of all, private money puts their 

money in first. And then once units are built and it’s occupied with 

people that are in need of affordable housing and qualify, then the 

government money flows. 

Similarly, in Opportunity Zones, you’re going to have private investors come in, and that’s great to unleash that private capital. 

The reason that those private investors have been willing to do 

that in the Low-Income Housing Tax Credit is because it’s predictable, it’s clear, the reporting is there, and they have a long compliance and infrastructure that helps you know that ‘‘I’m investing in 

something that has a 15-year period of compliance, where I know 

I’m not only getting a very healthy financial return, but also my 

intended investment to create housing for social returns is getting 

done,’’ which is why I think we need clarity on the reporting, as 

well as some of the guidelines. 

Representative Handel. Okay. Thank you. 

Mr. Jones, would you like to add anything to that? 

Mr. Jones. I think what I would add is, that the Low-Income 

Housing Tax Credit, by itself, is not sufficient to generate the supply of affordable housing that we need. That’s what you’re seeing. 

And so the opportunity here is to bring in a whole new group of 

investors to affordable housing finance, through a new mechanism 

here that brings, hopefully, high net-worth individuals into the 

game. 

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Unless we get more investors in affordable housing, we will 

never be able to keep up with the supply needs. That’s what you’re 

seeing now, and that’s why this is a real opportunity for us. 

Representative Handel. All right. Great. Thank you. 

And just one comment, I am very encouraged to hear the consensus around transparency and accountability so that we can really measure impact, because I’ve seen, first-hand, that some projects 

really work and some projects do not. And this is too great of an 

opportunity for Americans for us to mess it up on the early front 

with bad projects and we need to be really laser-focused on having 

the best possible projects come through on this. 

So thank you, Mr. Chairman. I yield back, and thank you. 

Chairman Paulsen. Thank you. 

And Dr. Adams, you’re recognized for five minutes. 

Representative Adams. Thank you, Mr. Chairman. And thank 

you to Senator Scott and Senator Booker for your work on this 

issue and to individuals testifying today. Thank you so much for 

being here. 

I believe that Opportunity Zones with the right oversight and 

guardrails have the potential to help underserved communities. I 

submitted eighteen census tracts to our governor in North Carolina, Governor Cooper, to be designated as Opportunity Zones. 

I specifically targeted census tracts, in the 12th District, that had 

high unemployment rates, sometimes even those that tripled the 

national average; however, it’s clear that there needs to be more 

accountability in how Opportunity Zones are implemented. 

For example, the IRS recently announced that individual investors can become a qualified Opportunity Fund and can self-certify; 

thus, no approval or action by the IRS is required. To certify—to 

self-certify, a taxpayer merely completes a form, attaches that form 

to the taxpayer’s Federal income tax return for the taxable year. 

Ms. Ludwig, should Congress be concerned that rules like these 

can lead to abuse of Opportunity Zones and will not provide a positive impact to underserved communities? 

Ms. Ludwig. I do think it’s important for us to understand what 

is the intent behind an investor’s interest in an Opportunity Zone 

Fund. 

So I do think it is important, again, to keep the flexibility and 

the market-driven approach on this, which is different and distinctive. At the same time, demand a minimum level of accountability, 

particularly of investors to say what their intent and their intended 

investment practice will be. 

Representative Adams. Thank you. 

Franchises are also looking at the prospect of Opportunity Zones, 

and I’m eager to learn more about franchising and how franchising 

can accelerate business growth and local opportunity in the zones. 

I want to understand the prospects and the impact of franchises in 

areas that have high unemployment rates. 

Nine of my district census tracts that I’ve submitted to Governor 

Cooper had unemployment rates higher than 12 percent. As a matter of fact, some go as high as 18 percent. 

Can you tell us more about franchise businesses, that role, and 

the prospect of their success in Opportunity Zones, especially in 

Opportunity Zones with high unemployment? 

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And this question is for you, Mr. Lettieri. 

Mr. Lettieri. Thank you for the question. 

I see tremendous potential in the franchise sector for Opportunity Zones. And I think there’s tremendous potential benefit for 

the communities as well. We all are familiar with examples of people who got their first step on the ladder of opportunity working 

at a franchise. And we’ve also seen in the franchise industry recently, tremendous growth in minority-owned franchise creation. 

And so, I think, when you think about where the map of Opportunity Zones and the map of—and the categories of early investment models that can work and hit the ground running, I think the 

franchise sector offers a lot of hope there. 

Here again, I think it’s an opportunity to get folks who are in an 

industry that doesn’t necessarily have anything to do with Opportunity Zones thinking about that map in a different way and targeting certain investments and new franchise openings in a way 

that coincides with Congressional intent here, in terms of the 

places that have been targeted. 

So I think that’s an area of a lot of potential. I hope we see more 

of that activity as the clarity comes through from IRS. And I think, 

in particular, the overlap of the goal for minority-wealth creation, 

targeting communities of color, as you mentioned, many of whom 

have very high unemployment rates. You have to have an asset 

class of both investments and businesses that offer an easy point 

of entry for people who may not be starting with the most skills, 

but this is a way for them to build skills, over time. 

Representative Adams. Thank you. 

The Low-Income Housing Tax Credit is a critical tool to develop 

and preserve affordable rental housing. We are in serious trouble 

in our community in Charlotte, so many folks who need it. I want 

to be sure that Opportunity Zones can be used in a complementary 

manner with the Low-Income Housing Tax Credit, and I’d like to 

ensure the maximum growth of affordable housing. So this is to 

Mr. Jones or anyone else who wants to answer that. 

Mr. Jones. I think that’s one of the big opportunities here. We’re 

about to go down to Charlotte next week and we’re there to announce a fund that will be designed to try to bring about the development of more affordable housing in the Charlotte area. Opportunity Zones are going to, hopefully, be a great tool in bringing investors to that fund. 

Representative Adams. Great. And we look forward to working 

with you. 

Ms. Ludwig. 

Ms. Ludwig. Yes. And we were encouraged several of the states 

that we were working with said, ‘‘Let’s be very intentional about 

even the selection of Opportunity Zones to make sure that as we 

do that, that we are setting very specific strategies at the local and 

State level to preserve affordable housing,’’ which I think is a practice that needs to be widespread. 

Representative Adams. Thank you. 

Mr. Chairman, I’m out of time. Thanks very much. 

I yield back. 

Chairman Paulsen. Thank you. 

Representative LaHood, you’re recognized for five minutes. 

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Representative LaHood. Well, thank you, Mr. Chairman, for 

having this important hearing today. And obviously, these Opportunity Zones offer tremendous potential for our country, and I’m 

excited to hear the testimony here today and the different ideas. 

And Senator Scott, thank you for your leadership on this also. 

Ms. Ludwig, in your testimony, you mentioned Enterprise is exploring Opportunity Fund models that would allow you to invest 

and promote economic growth. Can you explain how these specific 

models are composed and then what characteristics does an ideal 

investment opportunity have? 

Ms. Ludwig. So thank you. We are at the beginning stages of 

creating funds. We’re talking to investors and localities about, first 

of all, what the needs are, but certainly it’s our hope that we will 

be able to create a fund that is very, certainly, first of all, real estate focused and, specifically, affordable housing. And also, we’re 

talking to investors, for example, about adaptive reuse. So going in 

and taking old warehouse buildings and turning that into workforce housing or affordable housing. How do we make sure that we 

have that piece because that is one of the most basic primary needs 

of the folks that we serve, is to have affordable housing. 

Secondly, we’re working to consider exactly what is the kind of 

small business capital that’s needed; is that early more catalyst 

money or is that growth capital? 

And secondly, we also think it’s important, we’ve heard from a 

lot of folks in smaller towns and in rural communities, that they 

also want to think about how they could couple that with an accelerator kind of function, because they want to be able to demonstrate to private investors that they cannot only catalyze new 

businesses but also support existing businesses, but have an accelerator kind of function attached to that. 

So those are two areas that we’re certainly looking at right now. 

But we hope that there will be other ways we can also support 

communities. So we’re looking for further guidance regarding 

things like infrastructure in rural communities, water, sewer, infrastructure. We think about housing as infrastructure often, but 

we want to make sure that we can come up with acceptable uses, 

as my colleague said before; broadband, are there ways that we can 

support that through an investment vehicle? 

And simply the one item that would help us be able to get into 

action about having capital flow, is certainty. Investors like certainty, to know exactly what qualifies and what doesn’t, so that we 

can get out of the box with investment dollars. 

Representative LaHood. Thank you for that. 

Mr. Lettieri and Ms. Ludwig and Mr. Jones, we’ve heard a little 

bit about enterprise zones around the country, TIF districts. If we 

look at models or platforms around the country that have been examples of where this has worked, can you talk a little bit about 

that, maybe Mr. Lettieri or Ms. Ludwig, on—I mean, is there an 

example or a model that you can point to where this has worked 

very effectively, and particularly as we look at, you know, the components of distressed communities, no high school diploma, housing 

vacancy rate, adults not working, poverty rate where those statistics have been improved and we’ve done exactly what we want to 

do here? 

LAP51NQ082 with DISTILLER

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Ms. Ludwig. Sure. 

Mr. Lettieri. I think there are elements that have worked in a 

variety of different programs. What we’ve missed is, I think to Mr. 

Jones’ point earlier, we really haven’t had a robust equity investment incentive piece in previous attempts, and especially one that 

was coupled with the type of flexible use cases that we’re talking 

about here. 

When you talk about a wide variety of needs, if you have a narrow prescriptive policy on the front end, it’s very hard for that to 

be malleable, especially over time, as communities change and develop and as the needs shift, hopefully as a result of success. 

And so where you see in the more recent post-recession period 

where you’ve had dramatic turnaround and you look at cities like 

Detroit, there are a lot of challenges still in Detroit, but part of 

that turnaround, you have to ascribe to the catalyst of a major private investment initiative happening without even the benefit of a 

lot of Federal incentive that has helped to catalyze a wide variety 

of other activities, both philanthropic and private sector alongside 

of it. 

And not every city has a motivated philanthropist or a motivated 

set of private investors who are already organized around that city. 

In fact, most places don’t. That’s the challenge. 

And so when you’re talking about aggregating the impact of 

thousands of investors from around the country and being able to 

direct that equity capital into prescribed areas where you knew the 

investors can count on the fact that there’s intentionality, the governor has chosen these places, mayors have had input, stakeholders have come together. That’s a signal to the marketplace that 

there’s some kind of intentionality behind this particular place and 

presents a rallying opportunity. 

And it’s important here that what this offers is not for any individual investor to take on the risk by him or herself. This is about 

collectivizing the assets and the ingenuity of the private sector to 

apply to those challenges. 

So that’s really where I think this differentiates from past approaches. It’s learned some lessons. And I think that’s incorporated 

here, in terms of what you see with the structure of Opportunity 

Zones that you don’t get as much of in other policies. That’s the potential, is that you’re aggregating, you’re focusing, you’re signaling 

to the marketplace that this is the right type of place to invest and 

you’re going to have partners on the ground coming alongside of 

you because of that intentionality that the governors have selected. 

Chairman Paulsen. Thank you. 

Representative Delaney, you’re recognized for five minutes. 

Representative Delaney. Thank you, Mr. Chairman. 

And I want to join with my other colleagues in thanking Senator 

Scott for his truly singular leadership on this very important piece 

of legislation. So thank you, Senator. And I also want to thank all 

of our witnesses here for their work in making this happen. 

My first question is for Mr. Lettieri. When you think about 

what’s happened, it seems like there’s been a tremendous amount 

of interest among investors since this was passed into law. And so 

that’s the good news, right? There’s plenty of investors, whether 

they be very large private investment firms or entrepreneurs who 

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are looking at this. How much do you worry that there will be just 

a lack of deal flow coming out of these communities because that 

really seems like the bottleneck, whether there’s actually enough 

technical expertise on the ground to produce the deal flow that all 

these investors are really looking for? 

Mr. Lettieri. I think that’s a great question. So among the 

things that would keep me up at night about this, this would be 

one of them, is that there’s a reason that the economy is not working well in some places. There’s both public and private sector neglect, in many cases. 

And so, again, just the designation of Opportunity Zones is not 

enough to guarantee any kind of follow-on activity. That’s why it’s 

so important that, at the State and local level, you have real 

stakeholdership, on an ongoing basis, from governors and mayors 

to develop a strategy to partner with local foundations, philanthropies, business incubators, and others who can help to raise the 

stakes and elevate the potential deal flow. 

So there’s a lot of facilitation that’s required in many places. And 

the harder hit the area, the more of that facilitation you’re going 

to need. But what I’m confident in is that if you can get that type 

of local engagement going, that these are areas that are underinvested. There’s a lot more potential than what the marketplace 

reflects. 

Representative Delaney. So any ideas you have for us, obviously we’d love to hear them specifically. 

Ms. Ludwig, when I think about turning around these areas, I’ve 

always thought about, kind of, a four-point strategy, this being one 

of them; the second being social impact bonds, pay for success, 

which I know you all are big champions of; the third being more 

infrastructure; and kind of the fourth is creating incentive for more 

demand in these markets. 

And one idea I’ve worked on is dramatically expanding 

HUBZones, which basically creates an incentive for government 

contractors to locate in these Opportunity Zones, and I think the 

overlap will be very similar. 

How do you think about that, in terms of these other programs, 

if we were to do more in those other three areas, recognize we got 

this done, how much of that would kind of accelerate the development of these Opportunity Zones? 

Ms. Ludwig. Absolutely. I think it’s going to take all of those 

things in some of the places that have been circled where they have 

very high poverty rates and need long-term investment. And so I 

feel very strongly that we’re going to need one of the things that 

you’re talking about, what you’ve seen is, public and private partnerships come together, in different formats, to bring that kind of 

capital and that long-term orientation to bear and understand that 

it’s going to take different layers. It also takes a different set of assets. 

So we talked a lot today about affordable housing, but it also 

takes schools, and it takes retail, and it takes a comprehensive approach. And so I think those different tools allow us to bring those 

together to really drive the impact. 

Representative Delaney. Right. And I’d love to hear the different panelists follow up with us about how they think we could 

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create more incentives for government contractors to actually go in 

these places. 

Mr. Jones, when I think about infrastructure, you talked a lot 

about the different kinds of portfolio of asset classes, if you will, 

that we could be putting in these markets, and I think you were 

really smart to emphasize how this is equity, which is ultimately 

what you need to expand the community, as opposed to just people 

kind of financing existing assets. 

One of the things I’m focused on is infrastructure in these communities. But one of the issues with infrastructure, if I was thinking about investing in infrastructure, whether it be maybe 

broadband or even transportation, I’d probably come to the view 

that unless I was doing it in Puerto Rico, where the whole place 

is an Opportunity Zone, I would want to invest in an infrastructure 

kind of asset that would probably touch the Opportunity Zones, but 

touch other areas. Do you see what I mean? 

So because just the way an infrastructure asset is rarely—again, 

Puerto Rico, where the whole island is an Opportunity Zones, so 

you could do any infrastructure there, and it would work. Do we 

need to do any correction to these rules, to allow someone who 

wants to come in and build rural broadband, but the way they’re 

going to roll it out only touches the Opportunity Zones and not the 

rest, how’s that going to work? 

Mr. Jones. I think that’s certainly worth looking at. Although, 

when I think about the need for, let’s say, rural broadband, most 

of the census tracts that we’re talking about are contiguous and 

would qualify. 

Representative Delaney. Got it. 

Mr. Jones. And so I think—— 

Representative Delaney. If you invest in that—if you invest in 

a company that’s got its assets in an Opportunity Zone and not in 

an Opportunity Zone, but it has to roll out that way—— 

Mr. Jones. Right. 

Representative Delaney [continuing]. Like, let’s say a transportation asset or something like that, how is that going to work? 

Does anyone have a view as to—do you allocate part of the investment to the Opportunity Zone, or how does that the work? 

Does anyone know? 

Mr. Lettieri. Yeah. I mean, the statute requires the business to 

have substantially all of its properties in the zone or zones. 

Representative Delaney. Like 90 percent of them. 

Mr. Jones. It could be in multiple tracts that are all qualified, 

but the challenge of something that straddles—— 

Representative Delaney. That’s what I’m getting at. 

Mr. Jones. That really you’re talking about—from a business 

standpoint, you’re talking about either a spinning off of a subsidiary or a separate standalone entity. There may be a variety of 

models. But you’re right, it’s trickier when it comes to infrastructure, because of the cross-jurisdictional nature. 

Representative Delaney. Yeah, because clearly, if you want to 

invest in infrastructure asset, it’s probably going to have a very big 

footprint, and it’s likely to be in and out of an Opportunity Zone. 

So any ideas you all have as to how to—because I think this is a 

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critical investment area we want to attract, how to fix that up, that 

would be great. 

Chairman Paulsen. Well—and it’s probably another example of 

an area whether you don’t want to have the investment happening 

and then think that that’s fraud or abuse or—— 

Representative Delaney. Right. no. 

Chairman Paulsen. You have to have that tie-in, so the rules 

allow that. Thank you. 

Representative Comstock, you’re recognized for five minutes. 

Representative Comstock. Thank you. Good morning and 

sorry I was running late. We had a women’s veterans event this 

morning that our women’s caucus was participating in. 

I welcome our former Virginia commerce secretary, Mr. Jones. 

Thank you for being here today. 

And I guess this is, I’m sure you’re aware of our regional area 

in Virginia and Mr. Delaney’s area in Maryland are under consideration for Amazon. And the Wall Street Journal recently reported 

that some large cities were denied by Amazon as a location for 

their second HUD quarters. And now some of them are planning 

improvements in response to better track firms in the future. 

So things like local transit, workforce training in particular, was 

a big thing. So as we tried to look particularly in the technology 

area in making sure what my constituent Steve Case calls ‘‘The 

rise of the rest.’’ He’s going round the country and really talking 

about we know we have talent out there in the technology area. 

So is there a lesson? What are some of the best policies you’re 

seeing in place, and how can this be used to get the 21st Century 

technology jobs into these distressed areas? Because often, whether 

it’s cyber security or some of these other skills, you do not need to 

be going to college for four years, not that that’s disqualifying in 

any means. 

But Capital One has done some cyber security training programs 

with disadvantaged populations that have huge success in others. 

So how can we use the Opportunity Zones to capitalize in the area 

of technology for these populations? 

Mr. Jones. So let me just start, and then my colleagues can 

chime in. 

One of the things that Amazon has been asking about in all the 

places that it has been looking is: What’s your plan to ensure that 

we have enough supply of housing, affordable housing? 

And so, what you’re finding is that these technology companies 

know that if they’re going to attract and keep talent, and, frankly, 

if they’re also going to keep goodwill in the places where they go, 

they’ve got to be concerned about things like housing and workforce 

training and transportation and their impact on them. 

And so Opportunity Zones do provide a tool for places like Northern Virginia and Maryland and D.C. to actually collaborate on an 

affordable housing plan for an Amazon investment. 

So, yeah, I think Opportunity Zones can definitely be one of 

these things that you use to make sure that you address those 

issues that now all these technology companies are having to wrestle with, particularly their impact on the cost of living in those 

places. 

Representative Comstock. Right. 

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Ms. Ludwig. Thank you. Building on that, I completely agree 

that is of primary importance. And I would also say that it’s our 

hope that Opportunity Zone Funds will be created to specifically 

help entrepreneurs that are bringing cutting-edge technologies to 

bear to change whether it’s the effectiveness, the efficiency, the cost 

structure of the work that we do, the new ideas and the innovation 

that we think needs to be brought to bear, to help catalyze change 

in communities. 

In order to do that, I think it’s very important that we consider 

how we could use Opportunity Zones funding for minority-owned, 

for women-owned businesses, which as we know, have received just 

such a limited supply of equity capital. This is—— 

Representative Comstock. Particularly in the technology area. 

Ms. Ludwig. Particularly in the technology area—— 

Representative Comstock [continuing]. Was 90, 95 percent 

white male. 

Ms. Ludwig. Exactly. So how do we do that and use this in a 

way that catalyzes that kind of business and that innovation and 

creativity that is there that needs to be unleashed? 

I also feel that it’s an opportunity for folks who understand our 

communities deeply, to have them be part of those solutions and 

to give them capital to respond, which I think is the intent of this. 

Mr. Lettieri. I want to build on that, because as you look at the 

map of Opportunity Zones, many of these places have anchor institutions, knowledge centers, universities that spin off 

commercializable technology and IP. It’s just that it doesn’t stay in 

the Opportunity Zones. It goes to the Bay area, to Boston, New 

York. 

And part of that, a big part of that is proximity to funders. So 

now you have an asset class of investors who actually have an incentive to keep you in close proximity to the community and help 

you scale there. 

One of the best things we can do for Opportunity Zones communities is to help infuse them with the technologies and industries 

of the future. We know that’s where the economy’s going. And if 

they’re devoid of those types of industries, they’re going to constantly be playing catch-up with the rest of the country. 

Capital is a really important facilitator for that. And with that 

comes the stakeholdership of expertise and mentorship by investors, who then care not just about the business, but the community 

itself, because the two are so closely related. 

So I think about a place like Johns Hopkins in Baltimore and the 

potential there, in the life sciences and technology arena, you have 

tremendous anchor institutions in places that have high need. I 

think making sure we get that connectivity right is one of the right 

potentials of Opportunity Zones. 

Representative Comstock. Thank you. I see time is up here. 

So thank you. 

Chairman Paulsen. Thank you Representative Comstock. 

I know Senator Sasse just came in. Did you get yourself situated 

there? 

Senator Sasse. It will take a little bit of time to get oriented. 

Chairman Paulsen. And maybe as you just get oriented real 

quick, because you may be our final questioner here. 

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But real quick, I was going to follow up on some of what Representative Comstock was asking about. Are there other large investment—someone had mentioned—Ms. Ludwig, you had mentioned the funds. When will we know if the funds are emerging— 

or I can’t remember who mentioned it—but when will we know if 

these funds are sort of beginning to—when they’re out there? 

You know, how long will it be before we sort of have a track 

record of, sort of, following when the funds are going to be materialized? 

Ms. Ludwig. Sure. I’ll ask my colleague to maybe talk on the 

technicalities of the timing. But I do think that given people are 

going to be self-certifying, we can’t see that necessarily exactly. 

What I would say is that we do see investors or folks that want 

investment, people that are starting to say—well, the investors, 

they want to be coming into funds. We’re seeing that kind of activity today. And they’re asking us, How can you help us to create a 

fund that would meet our needs, whether it’s at the local level, national level, or State level? 

Secondly, we’re seeing people that are asking, ‘‘Does this investment meet those needs?’’ And they’re trying to start to create their 

pipelines. Particularly in the rural areas, they’re saying that in 

order to really compete, we know we’re going to have to start developing pipeline very quickly to compete. And so that’s what we’re 

seeing already today. And it is our hope to be very soon starting 

to acquire assets that could go into a fund. 

Chairman Paulsen. Mr. Lettieri, do you just want to add real 

quick? 

Mr. Lettieri. I do. We’re very early in the implementation process. So the fund creation is going to happen in waves, in my view. 

You’re going to have some folks who, today, they know that their 

model works within the statute. They don’t need a lot of additional 

clarity. They have knowledge of the deal flow in these communities. 

They can hit the ground running. I think the folks we have on this 

panel are great examples of tons of expertise in these communities. 

They know what types of needs are not being fully met, and they 

know the types of funders to target. 

Then there’s a second wave who are going to need a lot more 

clarity. We could have it in a couple months, but we don’t have it 

today, from Treasury and the IRS. And as that comes in, a whole 

other wave, I think, a broader aperture of folks that may not traditionally be in community development may find their way into it 

as more clarity from the IRS comes through. 

And then as the market matures over time and the infrastructure of Opportunity Zones that’s created to facilitate that investment to elevate additional deal flow, then you’ll see a third wave 

of investors emerge, as well. 

So I think this is a long-term process. I think this year is going 

to be a critical period, as it always is for implementation. But the, 

if it goes well, I think you’re going to see fund creation really into 

the outer years as more and more knowledge of things develops. In 

the investor community, only a small fraction of investors are even 

aware that this exists. So we won’t really know the full answer to 

that until that awareness increases. 

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Mr. Jones. I would just add to what my colleague said. I think 

the other factor that will influence how quickly funds get up and 

running is how aggressive at the local level, again, states and other 

folks are out there promoting the zones, marketing these places as 

places where there’s both demand and investable opportunities. 

So what you may see in terms of speed of the development of 

funds may depend as much on how aggressive we are in states, as 

anything else. Because that said, at the end of the day, where the 

feet on the street will exist will be the dispositive issue on this. 

Chairman Paulsen. Okay. Thank you. 

Senator Sasse, you’re recognized for five minutes. 

Senator Sasse. Thank you, Mr. Chairman. Thank you to the 

three of you for being here. 

Mr. Lettieri, I’d like to look at some of the issues behind—the 

broader need for these economic empowerment zones. In 2018, organization highlighted three particularly disturbing trends. First, 

the new start-up rate is at record lows, having dropped by 50 percent since the late 1970s. 

Second, our committee is becoming more consolidated in larger 

firms. For example, the total number of firms in the U.S. from 2007 

to 2014, despite population and economic growth, overall dropped 

by more than 180,000 firms. 

And third, economic growth is largely clustered in the most populous metro regions in the country and incredibly unevenly distributed across the great Plains in the Midwest. 

First, could you explain sort of the background story behind that 

third issue? Why is this consolidation happening? 

Mr. Lettieri. Thanks for the question. 

The consolidation is more a function of those major hubs being 

resilient than it is of them pulling away in real terms from everybody else on the creation side. 

And by that I mean, the overall number of new business starts 

in the country has dropped dramatically, particularly with the 

onset of the Great Recession, and it has not rebounded. So the latest data that we have now shows almost no recovery in new business formation rates. So we’re in uncharted territory on that front. 

The places that have been the most resilient amidst that national decline have been the largest differentiation with the rest of 

the country. But it’s not because they’re doing better than ever, it’s 

because everyone else is doing worse than ever, in terms of the creation side of the economy. 

So that presents a real challenge for low-income areas. Obviously, they’re among the hardest hit on the creation side of the 

economy. The new business formation rates there are particularly 

low. You see this as a regional story. The Midwest being one of 

those regions, whether it’s cities or rural, you have particularly low 

formation rates. 

And that’s something that—it’s obviously a bigger challenge than 

what this alone can solve. But a big part of the connective tissue 

is access to capital. And so we don’t fully understand why it’s happening, but it’s unmistakable in the data. We’re living in a very different environment, in terms of economic dynamism. 

Senator Sasse. Would either of the other two of you like to add 

to that? 

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Ms. Ludwig. No. 

Mr. Jones. I think the other piece to add to that is a lot of this 

clustering also reflects where the talent is right now—or let me put 

it another way: where the prepared talent is for the economic opportunities. And I know where we’re working. We’re working in 

places where 70 percent or so of our residents have high school diplomats or GEDs. But we are testing them when we’re doing our 

workforce work, and what we’re finding is 70 percent of them are, 

despite having those credentials, are probably—they have 

competences in literacy and math at the sixth to eighth grade levels. 

So this goes back to a point we made early. For this to really 

work, it’s not an isolated tool. Workforce development, economic development, these incentives have to come together to create a strategy for a particular place. And the most important strategy is get 

the talent prepared for the opportunities. You do that, and the opportunities will come to you. 

Senator Sasse. And, Mr. Jones, if you were ‘‘King for a day,’’ 

and you could a put a bunch of chips on one of three bets, K–12, 

educational preparedness, workforce training and redevelopment 

for people post age 18 or sort of mobility incentives to try to think 

about the inequality across geography, where would you spend 

most of your chips? 

Mr. Jones. Now you’re going to get me trouble, sir. 

[Laugher.] 

Senator Sasse. That is not my intent, Mr. Jones. 

[Laugher.] 

Mr. Jones. But I like the notion of being ‘‘King for a day.’’ 

[Laugher.] 

I would put my—— 

Senator Sasse. It’s way better than legislature. 

[Laughter.] 

Mr. Jones. Honestly, I would put my bet on preparing people for 

the 16 million middle-skilled jobs that this country has to fill between now and 2025 that require solid secondary education and 

post-secondary licenses and certifications and apprenticeships. 

That’s where I would put my bet, because if you ask employers 

where they’re having the hardest time filling jobs, and these are 

good-paying jobs, it’s welders, it’s coders, it’s medical technicians, 

it’s electricians it’s plumbers, it’s construction. That’s where I 

would put my bet, because it’s also quicker. And our need for a prepared workforce is today. And that is what’s most needed for the 

competitiveness of the country. 

So if I were king, that’s where I’d put my bet. 

Senator Sasse. Ms. Ludwig. 

Ms. Ludwig. Yes, the king, the kingship. I would say that 

the—— 

Representative Comstock. Or the queenship will. 

Ms. Ludwig. I was thinking queenship, but it felt strong. 

You know, earlier in this testimony, we talked about one in five 

children in our country living in poverty, on average. And in many 

of the communities that were circled by the Opportunity Zones, it 

was three of ten or even half the children in poverty. 

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So I sit here today thinking that we need to pay it forward. We 

need to invest in education and workforce. And so, yes, we have to 

make our choices, but I think when I’m talking today to educators, 

they can’t get their kids educated, because there’s not enough housing. Doctors can’t keep their patients healthy, because there’s not 

enough housing and education. 

These things all play together, so I do think that it’s really important that we work with private sector, with the government to 

establish the public-private partnerships that recognize that these 

problems are connected, and we need to work together to drive outcomes in a really clear, comprehensive way. 

And I think you’ve hit on some of the most important priority 

areas that we can invest in, and I think our future truly depends 

on it. 

Senator Sasse. I won’t try to get any of you in trouble on this 

by having to agree with me, but I think implicitly you’re arguing, 

given that our entitlement programs are overwhelmingly focused 

on senior citizens and we have, compared to life expectancy, the 

earliest retirement of any in civilization ever. 

There’s some pretty serious misalignment between where we’re 

investing and what we need. The Senate has just called a vote, and 

the Chairman is going to gavel me out, so thank you three for your 

work. 

Ms. Ludwig. Thank you. 

Chairman Paulsen. Thank you, Senator. 

I’d like to thank all of you for taking the time to be here and appear before the Committee today. This testimony has been wonderful. And I just want to remind you that should Members wish to 

submit questions for the record, the hearing record will remain 

open for five business days. And with that, our Committee is adjourned. 

Ms. Ludwig. Thank you. 

Mr. Jones. Thank you. 

[Whereupon, at 11:27 p.m., Thursday, May 17 2018, the hearing 

was adjourned.] 

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SUBMISSIONS FOR THE RECORD 

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I call this hearing to order. 

Good morning and welcome to today’s hearing on ‘‘The Promise of Opportunity 

Zones.’’ 

America’s new economy is finally taking off. The Congressional Budget Office 

(CBO) now projects 3.3% growth for 2018, the highest annual growth rate since 

2005, up from the meager 1.9% it estimated prior to the Tax Cuts and Jobs Act and 

regulatory reforms. 

While all Americans benefit from faster growth, we can and should take special 

care of those communities who are in greater need of support. 

Some communities, both urban and rural, are having a particularly difficult time. 

The new tax law contains a provision that deserves more public attention, one 

that is designed to help lower-income areas. 

The law provides a capital gains tax incentive to encourage long-term private investments in communities that have had difficulty attracting jobs and new businesses. 

Unlike past targeted incentives, the areas are selected by governors, who know 

the unique needs of their communities, instead of by the Federal Government. 

Opportunity Zones have been a bipartisan, bicameral initiative. The House author 

of the original legislation, the Investing in Opportunity Act, is former Representative Pat Tiberi, who chaired this Committee until January of this year. We are honored to have the Senate author with us today, Senator Tim Scott of South Carolina. 

Opportunity Zones hold the promise of flexible, innovative solutions. 

Flexibility is important because the reasons some areas lag economically vary 

across communities and regions. 

A factory central to a town’s economy may have closed, leaving workers searching 

for new skills and jobs, that is, if they haven’t giving up entirely. 

The area may have underperforming schools. 

They may lack access to capital. 

Excessive taxes and regulation may have made it difficult to start or maintain a 

business. 

The community may be struggling with rampant drug and alcohol abuse. 

This is why one-size-fits-all Federal spending programs or incentives to invest 

only in particular activities are not well suited to address each community’s unique 

set of challenges. 

This is also why Opportunity Zones, which allow the private sector and local communities to innovate and collaborate on the best solutions, have much greater potential for meeting those unique needs. 

John Lettieri, one of our distinguished witnesses today, put it well in a recent oped in The Hill. He noted that previous location-targeted programs had an ‘‘ . . . overly prescriptive, top-down approach that left no room for local experimentation.’’ 

Opportunity Zones, on the other hand, will bring, ‘‘ . . . the best possible mix of 

investments in new and expanding businesses, infrastructure and energy projects, 

commercial real estate, affordable housing, and more.’’ 

Opportunity Zones also hold the promise of local knowledge and engagement. 

They are chosen by governors who know their communities well and not by Federal 

planners with a formula-based spreadsheet. 

Across the country, there are about 8,700 Opportunity Zones. 

My own State of Minnesota is hoping to attract additional long-term private investment into 128 census tracts recently selected as Opportunity Zones. 

State and local leaders can also help their communities in thriving by collaborating and removing unnecessary barriers to starting a business, such as overly prescriptive occupational licensing or local zoning ordinances. 

Opportunity Zones also hold the promise of access to a large amount of untapped 

capital. Investors who reinvest capital gains from another investment into these 

zones can temporarily defer taxes. 

Investments are pooled in Opportunity Funds so that no single investor has to 

have specialized knowledge about how and where to invest since those decisions can 

be made by experts who manage the funds. 

The longer investments are held in Opportunity Zones, the more the capital gains 

relief grows—a strong incentive to invest in a community for the long haul. 

This also encourages fund managers to invest in enterprises that will yield the 

most success and prosperity for a community. 

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With an estimated $6 trillion in unrealized capital gains and no up-front State 

or Federal cost, the potential for investment flowing into struggling communities is 

almost limitless. 

We have a highly knowledgeable panel of witnesses today who have been engaged 

in the Opportunity Zone initiative and whose observations and insights I very much 

look forward to hearing. 

Before I introduce the witnesses, I now recognize our Ranking Member, Senator 

Heinrich, for his opening statement. 

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1 Economic Innovation Group, The New Map of Economic Growth and Recovery (May 2016), 

http://eig.org/recoverymap. 2Mark Muro & Jacob Whiton, Geographic Gaps Are Widening While U.S. Economic Growth 

Increases, Brookings Institution (Jan. 23, 2018), https://www.brookings.edu/blog/the-avenue/ 

2018/01/22/uneven-growth. 3 Id. 

4 Alan Berube & Cecile Murray, Renewing America’s Economic Promise Through Older Industrial Cities, Brookings Institution (Apr. 2018), https://www.brookings.edu/research/older-industrial-cities. 5 Economic Innovation Group, The 2017 Distressed Communities Index 9 (2017), http:// 

eig.org/wp-content/uploads/2017/09/2017–Distressed-Communities-Index.pdf. 

PREPARED STATEMENT OF HON. CORY A. BOOKER, A U.S. SENATOR FROM NEW JERSEY

Thank you very much, Mr. Chairman. 

The Opportunity Zones program, based on the Investing in Opportunity Act that 

I introduced with Senator Tim Scott in 2015, creates a powerful new tool for promoting lasting economic development in the places that need it most. The purpose 

of the legislation was ambitious: incentivize private investors to invest their inactive 

capital in high-impact projects in economically distressed communities—in places 

like Camden and Newark in my home State of New Jersey. In doing so, we can unleash a wave of transformative investment and revitalize hard-hit rural and urban 

communities across the country. 

I’m grateful to the witnesses at today’s hearing for participating in this initial review. Only with careful oversight can we ensure that this new tool is used to fulfill 

the important goals that Congress intended—to bring investment and opportunity 

to the hardworking Americans who live in economically distressed communities. 

While some parts of the country have seen great economic gains in recent years, 

many communities have struggled, and the gains have been uneven. By many measures, the decade since the Great Recession has been the most geographically unequal economic recovery of the modern era1: from 2010 to 2016, metropolitan areas 

with more than a million residents accounted for two-thirds of the growth in the 

country’s economic output, and almost three-quarters of net job creation nationwide.2 Many smaller metropolitan areas and rural areas have seen much slower 

growth, or declines, in output and employment.3 The economic pain has been especially acute in many smaller cities that were once powered by a strong manufacturing base, as well as in communities of color.4 All told, today, one in six, or 50 

million people, live in economically distressed communities.5 These communities 

struggle with a lack of investment, business growth, and job growth, leaving millions of Americans unable to share in our national economic growth. 

The Opportunity Zones program advances the fundamental ideal that every community should be able to realize its full entrepreneurial potential, and that as our 

economy grows, all Americans should benefit—not just those at the top. Today, 

American investors have trillions of dollars sitting on balance sheets in the form of 

unrealized capital gains that can be reinvested to stimulate growth in high-need 

communities. Through a set of targeted incentives, the program encourages re-investment of this inactive capital in high-impact projects in State-selected ‘‘Opportunity Zones,’’ supporting new businesses, local infrastructure projects, construction 

or rehabilitation of facilities, and redevelopment of blighted properties in economically distressed communities. 

Now, as we implement the Opportunity Zones program, we must take appropriate 

steps to ensure that its incentives support projects that benefit the residents of economically distressed communities, in line with the legislative intent. In particular, 

the Treasury Department should use its regulatory authority to ensure that Opportunity Funds realize their potential to transform communities and benefit local residents. With appropriate guardrails, the Treasury Department can ensure that Opportunity Fund investments are targeted to truly high-need communities and in 

projects that support inclusive economic development. 

The investment incentives created by this program represent a remarkable opportunity to catalyze entrepreneurship and promote long-term investment in economically distressed communities. I look forward to working with the Treasury Department, private investors, community leaders, and other stakeholders to ensure the 

Opportunity Zones program serves these crucial goals. 

Thank you very much, Mr. Chairman. 

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PREPARED STATEMENT OF HON. MARTIN HEINRICH, RANKING MEMBER, JOINT

ECONOMIC COMMITTEE

I’d like to thank Chairman Paulsen for holding today’s hearing. I also want to recognize my colleagues Senator Booker and Senator Scott for their important work to 

create a new incentive to invest in communities with high poverty and persistent 

unemployment. 

Mr. Chairman, my good friend Senator Booker couldn’t be here this morning, but 

provided a statement and asked that it be entered into the record. It is good to have 

my colleague from South Carolina here with us today—Tim, I look forward to your 

testimony, and I want to thank you and Cory for your leadership on this issue. 

Even today, more than 10 years after the recession began, the recovery still hasn’t 

reached many communities—both rural and urban. In New Mexico, our statewide 

unemployment rate is almost 50 percent higher than the national average, and, in 

some areas, it’s much higher. 

Across the country, there are more than 50 million Americans living in distressed 

communities. There’s enormous talent in these communities, but we’ve underinvested in it. 

While the Chairman and I disagree on the underlying Republican tax bill, a partisan bill that continues to leave working Americans behind, we do agree that Opportunity Zones hold the promise to direct some much-needed financial investment 

to places like New Mexico. 

Opportunity Zones are an important addition to the toolkit. They can support investments in affordable housing and small businesses while spurring job creation. 

And they can help lift living standards in neighborhoods across the country. 

The new Opportunity Funds have the potential to attract high-net-worth investors 

who previously have not invested in low-income communities. 

Thanks to the long bull market, many investors are sitting on substantial unrealized capital gains that we can put to work generating housing, jobs, and growth. 

What distinguishes Opportunity Zones from other Federal efforts to stimulate 

growth in distressed communities, such as the New Markets Tax Credit, is flexibility. 

There are few investment constraints. Funds can invest as much as they want. 

There is no competition to receive the benefit. 

But with this flexibility, there is risk that the social impact will be not as great 

as we would like. 

To achieve broad public benefits, projects should be part of a community strategy 

to create jobs, boost entrepreneurship, increase affordable housing, and promote economic development. 

Investors should also tap the vast expertise that exists in the private, public, and 

non-profit sectors about how to make high-impact community investments. And we 

are fortunate to have some of that expertise here with us today. 

I’ve seen firsthand the important work Enterprise and LISC, together with their 

partners, have done in New Mexico providing affordable housing and creating jobs 

in Catron, Gallup, Las Cruces, and in Santo Domingo Pueblo. 

And, Opportunity Zones can help us do more. 

Poverty is stubborn. One in five children grows up in poverty in this country, a 

number that hasn’t moved much in a generation. 

In New Mexico, three in ten children grow up in poverty, and in some of our counties, close to half of all children live in poverty. 

Growing up poor has lasting impacts on a child’s development, affecting success 

in the classroom and educational and employment outcomes later in life. 

In addition to expanding proven credits and programs like the Earned Income Tax 

Credit and Head Start, we need new approaches. 

Two-generation models can increase opportunities for families living in poverty by 

simultaneously targeting children and parents with programs and supports to boost 

economic security and improve the health and well-being of the whole family. 

Opportunity Zones offer an additional path to spur economic development. 

Before the new zones are implemented, we have time to think through some 

guardrails that can help ensure the intent of the legislation is realized. 

We should monitor how much money is flowing where, who is making the investments, and what kinds of projects are being funded. 

We need the engaged involvement of community development experts. The folks 

who do this important work every day see this as a tool that can be harnessed for 

social good, and their sustained engagement is critical. 

We need to make sure that rural and tribal communities are getting a fair share 

of the funds. The designation of zones so far splits about 75/25 urban to rural. 

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That’s a good start. But the key questions will be: are investments getting made 

in rural zones and on tribal lands, and what more can we do to assist these communities in building a pipeline of projects that get funded. 

Ideally, I would like to see data collected on job creation, poverty reduction, and 

new business formation across zones. These numbers would tell us a great deal 

about the impacts of the newly created zones. 

Ultimately, transparency wins the day. Knowing more allows us to do more. 

Closely monitoring implementation and establishing appropriate guardrails either 

through rules or additional action by Congress can go a long way toward ensuring 

that Opportunity Zones bring new economic activity to communities who desperately 

need it. 

This is big opportunity, let’s seize it. Thank you to the witnesses for being here 

today. I look forward to your testimony. 

STATEMENT OF HON. TIM SCOTT, A U.S. SENATOR FROM SOUTH CAROLINA

I want to first thank the Joint Economic Committee, Chairman Paulsen, and 

Ranking Member Heinrich for holding this important hearing. 

Every day, we are seeing more and more great news about the current economic 

expansion in America, a trend that is breaking records and exciting economists and 

citizens alike. 

This is currently the third-longest economic expansion since 1854, and on track 

to be the second-longest on record. 

After a strong jobs report was released for the month of April, we should not only 

celebrate all of the exciting components of our booming economy, but also look forward to the continuation of this growth and success. 

The Tax Cuts and Jobs Act, historic tax reform passed last December, gets much 

of the credit for the most recent economic upswing, and for good reason! 

Unemployment continues to fall, and at 3.9 percent it is currently the lowest national unemployment rate we’ve seen in 17 years. 

African-American unemployment is also at its lowest since 1972—more than four 

decades. 

Similarly, job expansion continues, with more than 800,000 new jobs added since 

the passage of tax reform and more than one million Americans of working age reentering the work force in the past two years. 

In response, wages are on the rise as well. 

Because of tax reform, millions of Americans have seen increased benefits, higher 

wages, and bonuses. 

We also got the news that of manufacturers surveyed by the National Association 

of Manufacturers, 72 percect say they plan to increase employee wages or benefits, 

and 77 percent plan to hire more workers. 

This is in addition to the Small Business Optimism Index reaching record highs, 

and the number of small businesses reporting poor sales falling to a near record low. 

And the best part—this is before many components of the tax reform package 

have truly kicked in. 

This past Tax Day marked the last Tax Day under the old system—which means 

great news for American families next year. 

And even as we speak today, the Treasury Department is working on the rules 

for a critical component of tax reform—the creation of Opportunity Zones. 

Today, 52 million Americans live in distressed communities . . . and it is clear 

that, despite the economic gains we have made, too many families are still being 

left behind. 

I grew up in one of those neighborhoods—places where hope has been lost, and 

too many think the lights have been turned off on a brighter future. 

If we aren’t finding ways to give these smart, hardworking folks a hand up, we 

simply aren’t doing our job. 

That’s why I first introduced my Investing In Opportunity Act, or IIOA, and why 

I worked hard to ensure it was included in the Tax Cuts and Jobs Act. 

The IIOA creates thousands of Opportunity Zones across the country. 

What does that mean exactly? 

Well, we have trillions of dollars in unrealized capital gains in this country—trillions of dollars sitting dormant. 

By changing the way capital gains are treated, encouraging long-term investments 

in distressed communities in exchange for a break on capital gains taxes, we believe 

we will see hundreds of billions of private dollars invested in low-income communities. 

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Governors from across the country have now submitted their states choices for 

Opportunity Zones, and the Treasury Department is working its way through the 

submissions for approval. 

This highlights a key component of these zones—they are led from the ground up. 

Communities, mayors and governors worked hard to identify where these dollars 

could do the most good—not someone here in Washington. 

And, unlike other related attempts in the past to help these communities, Opportunity Zones don’t create a new government bureaucracy, and we won’t be tying 

more hands with red tape 

The promise of these zones is immense, without question. 

Small business owners and entrepreneurs will have more access to capital to 

make their dreams come true. Charter schools could find more funding at their fingertips to ensure every child has access to a quality education. Construction and infrastructure projects that have been waiting for years could finally be started and 

completed. 

With the promise of long-term investment, those dollars will be staying in these 

communities, helping dreams come true 

That’s what we should be thinking about every day here in Congress . . . what can 

we do to restore hope in communities where it’s been lost, and ensure the American 

Dream is accessible for every family across the Nation? 

Opportunity Zones have so much potential, and I look forward to Treasury finishing the rules over the course of the next few months and getting this ball truly 

rolling. 

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RESPONSE FROM MR. LETTIERI TO QUESTIONS FOR THE RECORD SUBMITTED BY

SENATOR KLOBUCHAR

RURAL ECONOMIC RECOVERY

In Minnesota, a large number of the communities eligible for designation 

as Opportunity Zones are rural. While the rural economy is doing well in 

many parts of Minnesota, I am still seeing challenges, and I know that 

other states are seeing these challenges too. You have noted that rural 

areas may require greater engagement from the public and philanthropic 

sectors to benefit from the Opportunity Zone designation. 

• How can we best foster this engagement between the public sector, the 

philanthropic sector, and private investors and entrepreneurs in rural 

areas? 

Fostering engagement between sectors begins with strong State and local leadership. State and local leaders were heavily engaged in the designation process for 

Opportunity Zones; now the task is to ensure the momentum carries forward into 

the next phase as communities seek to recruit new investment. In particular, mayors and governors in rural areas must lead by engaging a broad set of stakeholders 

and institutions to develop the strategies necessary for long-term success in their 

Opportunity Zones. In the end, Opportunity Zones are only a tool, and they will be 

most effective in communities that root them into broader economic development 

strategies. 

There are also insights and complementary resources to glean from other Federal 

programs that can help inform and expand the impact of Opportunity Zone strategies in rural America, including: 

• State Small Business Credit Initiative (SSBCI) venture capital program; 

• Department of Commerce’s Office of Innovation and Entrepreneurship, Regional 

Innovation Strategies program; 

• USDA Rural Business Investment and Rural Business Development programs; 

and 

• Small Business Administration Small Business Innovation Research (SBIR), 

Small Business Technology Transfer (STTR), and Small Business Investment 

Company (SBIC) programs. 

See also the new MOU between the U.S. Department of Agriculture and the Small 

Business Administration on collaboration for investment in rural areas: 

www.usda.gov/media/press-releases/2018/04/04/usda-and-sba-join-forces-helpbusinesses-rural-america. 

• What else can be done to foster economic development in rural areas? 

Rural America needs greater support for entrepreneurs in order to reverse the 

sharp decline in new business formation seen in rural communities since the Great 

Recession. As a background resource, I would like to refer you to testimony I gave 

before the Senate Committee on Small Business and Entrepreneurship on April 26, 

2017, on the subject of rural entrepreneurship, which touched on a number of issues 

that are relevant in the context of Opportunity Zones (available here: http:// 

eig.org/news/u-s-senate-committee-small-business-entrepreneurship-hearing-challenges-opportunities-running-small-business-rural-america-2. 

More generally, I would put forward three categories to help organize how we 

think about fostering rural economic development: capacity, connectivity, and capital. 

Capacity: Improving a local economy requires growing the capacity of the local 

labor force, and that means investing in education and training services to make 

sure businesses have access to sufficient talent pools that can drive productivity and 

innovation. The educational attainment gap between metropolitan and non-metropolitan areas is growing. It will be very hard to establish new and lasting foundations of rural prosperity in a human capital-driven economy if this trend continues. 

Connectivity: Any local economy’s success depends greatly on connectivity and integration into the broader regional and national economies. Rural areas often face 

additional challenges due to their physical isolation as well as a lack of basic ingredients, such as high-speed internet connectivity, that many places take for granted. 

Thus, Federal policies that promote connectivity to markets, capital, and expertise 

can play an important role in boosting the viability of businesses in rural areas. 

Capital: Opportunity Zones focus specifically on unlocking equity investment, 

which is needed to drive development of high-growth potential companies that can 

help bring the innovation, diversification, and expansions needed to strengthen 

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rural communities. However, a strong, diversified economy requires more than one 

type of financing, and rural areas in particular may struggle to access the full capital continuum amid declines in community banking and other financial sector developments. Programs that help fund and support expansion of financing by community banks and credit unions, such as the Community Development Financial Institutions (CDFIs) program, can help to fill that gap and ensure more local businesses 

have access to the capital that they need, helping to fortify local economies. 

SUPPORT SERVICES AND CLUSTERING

Entrepreneurs and economists frequently talk about the ‘‘clustering’’ effect that leads start-up ventures to concentrate in particular geographic 

areas such as Silicon Valley. These favored locations then develop the social capital and support services necessary to sustain an entrepreneurial 

economy. 

• How might the Opportunity Zone program catalyze the development of 

an entrepreneurial economy in rural areas that currently lack such 

support services? 

While we should be very careful not to define success in rural economies—particularly low-income rural communities—against the performance of innovation clusters 

like Silicon Valley, some common lessons do apply. One lesson is that there is no 

substitute for the benefits of a diverse and entrepreneurial local economy. Opportunity Zones can help support rural entrepreneurs in a variety of ways, including 

by attracting equity investors directly into new and growing businesses, as well as 

by financing rural business incubators and accelerators that help provide essential 

support infrastructure in a local startup ecosystem. Here again, mayors and governors can play a key role in providing complementary resources and incentives to 

help bolster the impact of the Federal incentive in achieving entrepreneur-friendly 

local outcomes. 

• Since the Opportunity Zone program allows prospective investors to invest in any zone across the Nation without regard to the investor’s 

physical location, are you concerned that the zones may compete 

against each other in such a way that the rural zones are left behind? 

Places are already in competition for capital and talent, and such competition 

need not be a race to the bottom. Instead, Opportunity Zones can provide a healthy 

catalyst to improve local economic development policies and practices, and spur innovative approaches that put local assets to better use. In spite of national 

headwinds, many of the most dynamic and prosperous places in the country are, in 

fact, rural communities, and they provide important lessons for rural Opportunity 

Zones. 

Opportunity Zones are a powerful tool that can mobilize a new array of investors 

and a much larger scale of investment in low-income communities nationwide, but 

the incentive alone is not a substitute for a sound local economic development strategy. 

RESPONSE FROM MS. LUDWIG TO QUESTIONS FOR THE RECORD SUBMITTED BY

SENATOR KLOBUCHAR

LOW-INCOME HOUSING TAX CREDIT

The Low-Income Housing Tax Credit (LIHTC, pronounced Lie-Tech) is 

our Nation’s primary method of subsidizing the creation of low-income 

housing and new accounts for the approximately 90% of all affordable rental housing created in the United States today. This past March, I was 

pleased to join my colleagues in leading a successful 12.5 percent expansion of the credit for the next four years. Since the Opportunity Zones program targets capital gains taxes, it seems likely that real estate will be a 

natural investment target for program investors. In Minnesota, we’ve seen 

recent investment concentrated on luxury units rather than middle-class or 

affordable housing. 

• How do you expect the new Opportunity Zones program to interact 

with the LIHTC program? Do you believe that the two programs will 

help support and reinforce each other? Is there a possibility of interference between the two programs? 

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Senator Klobuchar, thank you for this question. Enterprise Community Partners 

has strong expertise in aggregating private capital and deploying it through programs like the Low-Income Housing Tax Credit, and we applaud the 12.5% expansion of the Housing Credit through 2021. We are eager to realize the potential of 

Opportunity Zones to complement proven public-private partnerships like LIHTC. 

While we are still waiting for additional Opportunity Zones guidance from Treasury and the IRS with clarification about the types of investments that are eligible, 

it appears that all rental real estate, including residential real estate, located in Opportunity Zones will constitute an eligible investment. 

Given that the lower corporate tax rate from the Tax Cuts and Jobs Act of 2017 

has reduced investor demand for the Housing Credit and therefore equity in the 

LIHTC market, Opportunity Zone investments offer the potential to fill a gap in 

critical equity investments in LIHTC projects. 

We believe that Opportunity Zones should be able to pair with the Housing Credit. The 15-year Housing Credit compliance period lines up well with the long-term 

incentives of Opportunity Zones. 

In particular, Opportunity Zones present potential to fill in the ‘‘missing middle’’ 

of the financing stack for middle-income housing (60–120% of Area Mean Income). 

This offers critical opportunity for those who do not qualify for low-income housing 

but still struggle to find housing they can afford, such as our Nation’s teachers, firefighters, and nurses. 

• What can be done to ensure that investment income in Opportunity 

Zones helps address rather than exacerbate the affordable housing crisis? 

Thank you for this question. Through our work on Opportunity Zones with governors, mayors, investors, and community-based organizations, Enterprise Community Partners has seen that, while communities are excited about this potential catalyst for economic development, they are also concerned that private investment 

could unintentionally displace the very residents and businesses that the new tax 

incentive is intended to support. This is why we recommend that Treasury have 

guidelines to ensure that investments in designated Opportunity Zones offer sustained benefit to all members of the community. 

Specifically, we recommend requiring that Opportunity Funds report to Treasury 

on transaction-level data and that this information be made available to the public. 

These steps will promote the transparency of Opportunity Fund activities, drive accountability, and allow for assessment of whether the tax benefit is meeting its intended policy goal of bolstering inclusive, sustainable economic growth. 

Secondly, we believe that Treasury should use its statutory authority from Congress to issue regulations to prevent abuse. We suggest that the definition of abuse 

include investments that adversely impact low-income residents, including investments that result in net loss of affordable homes. 

These guardrails for the implementation of Opportunity Zones will help ensure 

that current residents and businesses benefit from resulting economic growth. 

For our part, Enterprise is committed to working with State and local governments to implement policies and programs suited to local needs. Drawing on our 35 

years of expertise in affordable housing and community development finance, we are 

exploring Opportunity Fund models that would foster inclusive, sustainable economic growth and prosperity for residents and businesses. Any fund we create 

would incorporate best practices drawn from our work—including investments that 

create opportunity by developing and preserving affordable housing, creating livingwage jobs, supporting minority- and women-owned businesses, and expanding transportation and infrastructure. 

RESPONSE FROM MS. LUDWIG TO QUESTIONS FOR THE RECORD SUBMITTED BY

SENATOR HEINRICH

1) What do the designations tell us so far? Which indicators tell us whether governors chose areas that would most benefit from Opportunity Zones? 

For New Mexico, how do the economic conditions of designated Opportunity Zones compare to conditions in eligible, non-designated tracts? 

Senator Heinrich, thank you for these questions. 

What do the designations tell us so far? 

There has been tremendous variety in the places that have been designated as 

Opportunity Zones. Some Opportunity Zones are characterized by large populations 

of impoverished residents, while others have a broader mix of income levels. There 

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are Opportunity Zones that continue to struggle with long-term economic challenges, and others that are already on an upward economic trajectory. Some have 

sizable anchor institutions—hospitals, universities, etc.—while others do not. There 

are Opportunity Zones in cities of every shape and size, in suburbs, rural areas and 

tribal communities. They exist in communities with all levels of local government 

capacity, leadership and formal business community organization. 

Some of this variation is undoubtedly due to the differences in strategies that 

states chose to employ in nominating zones. But one common tendency we observed 

among many states was the need to make nominations reflect a variety of place 

types. In some cases, this meant ensuring that each county had at least one Opportunity Zone in it. In others, this meant ensuring that rural or tribal communities 

were represented in the process. Whatever the strategy, the design of the Opportunity Zones nomination process led many (if not most) states to adopt an approach 

favoring variety rather than focusing on a single metric or dimension (e.g., choosing 

the tracts with the largest number of Opportunity Fund-eligible investments in 

them). 

We do not yet know how this variety may affect Opportunity Fund portfolios. Certainly, it means there will be a wide variety of possibilities for investments, including investment strategies favoring real estate improvements and those that focus on 

business investments. But the variety of places that have been designated as Opportunity Zones and the uncertainty surrounding Opportunity Fund investment profiles 

will pose a significant challenge for states and larger municipalities who hope to 

align Opportunity Fund investments with local business and community development needs. It will also be difficult to identify coherent strategies that apply across 

Opportunity Zones in larger jurisdictions—strategies such as coordinated public investments or State/local tax incentives that work well in one Opportunity Zone may 

not work well in another with different conditions. Instead, the needs and investment opportunities in each Opportunity Zone will need to be considered and understood. Given the nearly 8,800 Opportunity Zones that have been designated, this 

will take time and resources that states and municipalities may not be prepared or 

able to invest on the timescale needed to coordinate well with Opportunity Fund investments. 

We continue to analyze these census tracts to better inform an investment strategy, but it is clear that there will not be a one-size-fits-all approach to Opportunity 

Zones. 

Which indicators tell us whether governors chose areas that would most benefit 

from Opportunity Zones? 

The answer to this question will be highly dependent on the types of investments 

Opportunity Funds end up pursuing and in which Opportunity Zones these investments are made. In general, we believe that access to affordable housing, access to 

jobs that pay a living wage, sufficient transportation options, and good health and 

education outcomes are critical metrics that indicate the overall well-being of a community. The potential benefits of Opportunity Fund investments will depend on the 

alignment of the investments with the needs in the Opportunity Zone. There is no 

single set of metrics that will tell us which Opportunity Zones stand to benefit the 

most from general investments. 

For example, Opportunity Funds emphasizing affordable housing creation and 

preservation may provide the greatest benefit in areas where real estate values are 

already high or expected to grow. Opportunity Funds focusing on real estate investments may provide greater benefits to local residents through returns to increased 

land and home values in Opportunity Zones with greater homeownership rates. Investment portfolios focusing on businesses expected to create additional jobs may 

provide greater benefits where there are more residents with relevant skills or 

where robust workforce development programs exist. 

However, we expect much of the activity in Opportunity Zones will be influenced 

by: 

1) the ability of individual businesses and landowners to create attractive 

investment options; and 

2) the leadership and institutional capacities at the neighborhood and local 

government levels to ensure that Opportunity Fund investments are aligning with other neighborhood and community development strategies. 

This means in part that the degree of benefit to Opportunity Zone communities 

will be driven by factors that are not reflected in the demographic and economic indicators we typically use to assess communities. 

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For New Mexico, how do the economic conditions of designated Opportunity 

Zones compare to conditions in eligible, non-designated tracts? 

Overall, eligible Low-Income Communities in New Mexico that were not designated as Opportunity Zones have similar characteristics to the Low-Income Communities that were designated as Opportunity Zones. They have similar racial profiles, similar home values, and similar levels of renter cost burden. That said, there 

are a few key differences between designated tracts and ‘‘eligible but not designated’’ tracts in New Mexico: 

1. New Mexico Opportunity zones have higher poverty rates than eligible 

but not designated Low-Income Communities (23% and 16%, respectively). 

2. New Mexico Opportunity Zones have lower median family incomes than 

eligible but not designated Low-Income Communities ($56,000 and $62,000, 

respectively). 

3. The designation strategy in New Mexico favored tracts with more jobs— 

the average New Mexico Opportunity Zone has more than 2.5 times the 

number of jobs of the average eligible but not designated Low-Income Community. 

4. New Mexico Opportunity Zones have a greater presence of affordable 

housing—51% of New Mexico Opportunity Zones contain Federally supported affordable housing units compared to 42% of eligible but not designated tracts. 

5. A greater-than-proportional share of tracts that intersect with tribal 

areas were designated (29% of designated tracts intersect compared to 21% 

of eligible but not designated Low-Income Communities). 

2) What Federal, State, or local policies would ensure there is a pipeline 

of startups and small businesses ready to take advantage of equity capital 

investments incentivized under this provision? 

State, regional and local governments can play a pivotal role in steering investments towards the Opportunity Zones and projects that best serve the community’s 

identified needs. For example, governments may consider: 

1. Establishing a government-run Opportunity Fund. Many governments 

have existing ties with the financial sector and are ready to engage investors and fund managers. Moreover, some cabinet level agencies are welladept at managing large funds and financing the types of projects that may 

qualify for Opportunity Fund investments. This demonstrated experience 

and track record of responsible financing and underwriting could attract additional investors. 

2. Developing and implementing a process for collecting and preparing a 

project pipeline for potential investors. Having a portfolio of projects to 

share with investors demonstrates an ability to deploy capital quickly—a 

key component of the tax incentive. For example, the State’s Housing Finance Agency or Labor Department would be well-positioned to develop a 

pipeline of affordable housing developments or new business start-ups, respectively, that are ripe for investment and meet investment requirements. 

3. Engaging philanthropy, the health care sector, and other key stakeholders who can provide additional financial incentives to de-risk Opportunity Fund investments. Governments can also play a key role in mitigating risk to investors by contributing or matching their own dollars, for 

example, through existing programs that provide small business loans or 

gap financing for affordable housing. 

4. Evaluating the tax code, including any State-level capital gains tax, to 

determine whether any additional tax relief can be provided to attract investors while also steering Opportunity Fund investments toward identified 

projects. For example, a State could provide additional tax relief to investors who invest in a government-run Opportunity Fund or whose dollars 

are used to finance affordable housing. 

Because Opportunity Zones are a market-driven tax incentive it will be critical 

for State and local governments to incent investment in Opportunity Zones that 

may struggle to attract private capital. 

At this point, however, the biggest barrier for this capital is the uncertainty 

around eligible investments. Treasury should provide clarifying guidance and examples around investing in rental real estate, health care facilities, schools, infrastructure, and other critical resources. This will provide the needed certainty for State 

and local governments to recruit specific investments best-suited for their population and economy. 

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RESPONSE FROM MR. JONES TO QUESTIONS FOR THE RECORD SUBMITTED BY

REPRESENTATIVE MALONEY

1) Managers of Opportunity Zone funds presumably would want to maximize profits. What financial incentives do they have to invest in affordable 

housing vs. other real estate investments? What would be needed to steer 

Opportunity Zone funds to affordable housing? 

The Opportunity Zone program provides an incentive for private investors to invest funds in businesses and real estate projects in low-income communities, without distinction as to the type of business or project funded. As with any investment, 

we anticipate that investors in Opportunity Funds will evaluate businesses, housing, and economic development projects based on return and product type, with a 

typical investor looking for a higher rate of return and a standard level of risk. 

We think that the Opportunity Zone incentive can be an effective tool for financing affordable housing, particularly housing targeting families between 60–100% of 

median income in high-cost markets. Many of these families are considered ‘‘severely rent burdened’’—paying more than 50% of their income in rent each month. 

We think the program can attract investors for this needed middle income housing. 

It may also be possible to use Opportunity Zone incentives to target housing serving families lower down on the income ladder, but this will likely involve twinning 

the Opportunity Zone incentives with other Federal, State or local resources, or further tax abatement. Investing in affordable housing for families making less than 

60% of area median income is most frequently done through the Low Income Housing Tax Credit, which has been a highly successful program. Current LIHTC investments are generally held by investors (frequently regulated financial institutions 

that are seeking Community Reinvestment Act considerations) who may or may not 

be able to utilize Opportunity Zone tax benefits. However, with the added benefits 

of the deferral and reduction in capital gains taxes, it is expected that a LIHTC 

project twinned with Opportunity Zone benefits may provide higher yields and bring 

some new investors to the table. 

To attract investors in Opportunity Zone projects that are targeted to affordable 

housing, particularly for those on the lower end of the income spectrum, there will 

need to be additional sources of subsidized capital. We believe that it will be incumbent upon states and localities to incentivize these investments. For example, states 

and localities could design companion incentives (tax or otherwise) to enhance the 

returns on affordable housing located in Opportunity Zones, thereby attracting more 

Opportunity Funds to invest in affordable housing. States and localities can also 

steer resources such as HOME funds and CDBG funds to projects in Opportunity 

Zones that meet certain affordability requirements, or provide tax abatement in return for targeting units for 80% and below AMI families. 

2) Are you concerned that the Opportunity Zone program could lead to 

increased gentrification? What kind of oversight is needed to make sure 

that Opportunity Zone spending benefits residents of the targeted census 

tracts? 

The way the Opportunity Zone incentive is structured, investors will get a modest 

return through deferral of initial capital gains taxes, but a potentially huge return 

with the forgiveness of any additional capital gains that result upon exit from the 

Opportunity Fund investment. This means investors may be incentivized to seek out 

the deals with the highest long-term yields, which may not be the projects that 

bring about the most impact for the community or its residents. And without any 

Federal or State agencies overseeing the selection of projects and investment plans, 

there is no direction to necessarily pursue higher-impact community development 

investments. One could therefore see this program leading to displacement of lowerincome community residents, either because the neighborhoods themselves get 

‘‘overheated’’ with investment capital, thereby lowering the supply of ‘‘naturally occurring affordable housing’’ or because the structure of the incentive rewards investors seeking the higher yields offered by market rate or even luxury housing. 

We believe that the Treasury/IRS could play a more significant role in oversight 

of the program, in order to mitigate against these kinds of outcomes. We believe it 

was the intent of Congress to at a minimum create a safeguard against potentially 

bad actors abusing the program, but also to potentially offer Treasury a mechanism 

for screening Opportunity Funds in an even more substantive manner; as evidenced 

by the fact that the TCJA’s accompanying Conference Report stated that ‘‘the certification process for a qualified opportunity fund will be done in a manner similar to 

the process for allocating the new markets tax credit.’’ 

New Markets Tax Credits are allocated through an annual competitive application 

process, one which helps ensure that the most qualified entities are provided with 

credit allocations, and that the scarce credits are directed to the highest and best 

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uses. While it is not feasible to hold competitions among Opportunity Funds in the 

manner that entities apply for NMTCs, Treasury could certainly consider employing 

some of the best practices from its NMTC review process into its Opportunity Fund 

certification review. For example, through the NMTC allocation process, entities are 

encouraged to commit to more rigorous outcomes as a condition of receiving an allocation, and then are held to these commitments as part of their allocation agreement. These include, among others: 

• targeting investments in areas of severe economic distress; 

• offering below-market rates and terms to their borrowers; 

• investing more than the minimally required 85% of the NMTC investment proceeds into their low-income communities; 

• financing (if applicable) affordable housing; and 

• making ‘‘innovative’’ investments, including investments in small businesses. 

In addition to these provisions, which become a compliance requirement of the 

NMTC allocation agreements, applicants also receive higher scores for being able to 

demonstrate a likelihood of achieving significant community impacts, such as: creating high-quality jobs; providing goods and services to low-income community residents; financing minority-owned businesses; and ensuring environmentally sustainable outcomes. 

As noted previously, LISC does not suggest imposing a competitive scoring and 

selection process on the certification of Opportunity Funds. This would be an unwise 

use of resources (both Federal and private sector) and would cause considerable 

delays in program implementation at a time when Treasury needs to move quickly 

to publish regulations and guidance to provide investors with certainty that their 

investments in Opportunity Funds will qualify for the tax incentive. 

However, as provided for in the Conference Report, we do think it would be appropriate for the Treasury Department to require Opportunity Funds to identify, at the 

time of certification, at least one outcome from a list of desirable outcomes that they 

will commit to achieving with their investments. The desirable outcomes could be 

drawn from the NMTC selection items above, or could be broadened to include additional items that may be more relevant to the intentions of the Opportunity Zone 

program, for example, providing working capital and equipment capital to start-up 

businesses. Applicants would indicate their chosen outcomes through self-certifications at the time of the certification application, which could then be reviewed 

during a compliance audit after the investments have been made. 

RESPONSE FROM MR. JONES TO QUESTIONS FOR THE RECORD SUBMITTED BY SENATOR

KLOBUCHAR

BROADBAND DEPLOYMENT

The promise of the Opportunity Zone program is to bring private investment capital to areas of our country that have been left behind. For this 

laudable goal to be achieved, these distressed areas need to have the basic 

infrastructure in place to support private economic activity. I believe 

broadband deployment is the infrastructure challenge of our generation. 

As co-chair of the Senate Broadband Caucus [with Senators Capito, King, 

Heinrich, and Boozman], I believe we must also provide direct Federal investments in rural communities to close the digital divide. 

• How will improving access to rural broadband foster economic opportunity in Opportunity Zones? 

LISC believes that access to broadband is critical to the economic health of rural 

communities, particularly those that have struggled with disinvestment and have 

been, or are likely to be, designated as Opportunity Zones. Businesses everywhere 

today need access to the internet to reach customers and sell their products. It is 

increasingly difficult, if not impossible, to attract businesses, retain businesses, or 

grow businesses in areas that lack access to fast and reliable internet services. 

There is clearly a digital divide when it comes to rural versus urban communities. 

According to the Federal Communications Commission, approximately 98% of the 

U.S. population living in urban areas has access to both high-speed terrestrial and 

mobile services, as compared to just under 69% of the U.S. population in rural communities, and just under 64% of the population living on tribal lands. This translates into about 14.5 million families in rural and tribal communities that do not 

have access to both broadband services. 

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Communities that do not have broadband services are certainly going to have 

trouble competing for investments from the private sector, both in isolation and with 

incentives such as Opportunity Zones. Having access to broadband is critical for the 

long-term success of businesses operating in rural communities. In a recent webinar 

hosted by the National Telecommunications and Information Administration (NTIA) 

of the Department of Commerce, Lionel ‘‘Bo’’ Beaulieu, Director of Purdue University’s Center for Regional Development, cited research studies that have shown a 

positive relationship between rural broadband adoption and: 

• economic growth (Steinberg, 2009); 

• attraction of new firms (Kim and Orazem, 2017); 

• retention and growth of existing small businesses (Shideler and Badasyan, 

2012); 

• increase in annual value-added sales (Canzian, Poy, and Schuller, 2015); 

• higher individual incomes (Whitacre, Gellardo, and Stover, 2014); and 

• higher number of entrepreneurs (Conley and Whitacre, 2016). 

The broader health of communities can also be improved with access to 

broadband. The NTIA reports that ‘‘going digital’’ can save schools as much as $600 

per year per student on textbooks, that ‘‘telehealth’’ reduces hospital admissions by 

25% and decreases length of stays by 59%, and that access to broadband increases 

home values by 3.1%. 

In short, it is very hard for communities to succeed in attracting private sector 

investments, and in reaching their full economic and quality of life potential, without access to reliable broadband internet. 

• What role does Federal support play in promoting broadband deployment in rural areas? 

As is often the case with major infrastructure investments, the Federal Government plays a critical role in promoting broadband deployment in rural areas. There 

are many Federal programs that directly finance the development of broadband infrastructure, including multi-billion dollar programs administered by the United 

States Department of Agriculture (e.g., Telecommunications Infrastructure Loans 

and Loan Guarantees; Rural Broadband Access Loans and Loan Guarantees) and 

the Federal Communications Commission (e.g., Connect America Fund). Equally as 

important, there are numerous other programs at these and other agencies that 

focus not only on infrastructure, but also on adoption, digital literacy, public access, 

research and planning, as well as some targeting specific sectors (health, libraries, 

schools, etc.). It is important that the Federal Government continue to strongly support and robustly fund all of these initiatives to ensure that rural communities can 

compete for investments and attract high-quality jobs. 

WORKFORCE DEVELOPMENT

Even if investment capital were to flow into distressed communities, 

businesses and new ventures would not be able to expand or start without 

the ability to find workers. I hear from companies throughout Minnesota 

that report they can’t fill job openings, especially for more technically demanding trades and professions. We’ve got to address this skills gap by 

strengthening our technical education and by helping young women and 

men decide early to pursue training that will equip them for jobs in the 

manufacturing sector. 

• How should we do that? What role should the Federal Government 

play? 

LISC believes that, first and foremost, the Federal Government can join the private sector in encouraging students (and their parents), as well as members of the 

workforce, to pursue jobs and careers in the manufacturing and advanced manufacturing sectors. We need to increase demand for these jobs. The Federal Government 

definitely has a role to play here. 

LISC is acutely aware of the difficulties that businesses and certain industries 

have in recruiting talent to fill positions. Research indicates that 53% of all jobs in 

today’s labor market are middle skilled, and only 43% of U.S. workers have the appropriate training to fill the available positions—according to the National Skills 

Coalition; in Minnesota those numbers are 50% and 45%, respectively. This is a formidable challenge, but it is not insurmountable. As outlined below, we believe that 

there are several things that the Federal Government can do to help address this 

issue. 

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Fully Fund Workforce Innovation and Opportunity Act (WIOA) Programs 

Congress should adequately fund our nation’s workforce system by robustly funding the WIOA Title I programs, including increasing the funding for WIOA adult 

education grants and the WIOA career and technical education State grants. These 

essential programs and funding streams form an infrastructure that provides people 

with fundamental career services, education and training, and supports necessary 

to get good jobs and stay employed. WIOA programs are inextricably linked to the 

skills conversation because they are often the systemic points of entry for the talent 

we are interested in routing to middle-skill, living-wage careers. 

Support Policies That Incorporate Proven Innovations in Contextualized Skills 

Training 

The Federal Government should find ways to incentivize states and localities to 

adopt innovative approaches to contextualized skills training for the hard-to-serve/ 

hard-to-employ population. Skills gaps often prevent unemployed or underemployed 

residents from accessing training and credentialing programs that can lead to living-wage jobs. 

At LISC, we believe that a solution lies in bundled/integrated career service delivery and matching employers in need of workers with a specific skill set to job seekers who have been trained in those skills. A little more than a decade ago, LISC 

began supporting Financial Opportunity Centers (FOCs)—which provide employment and career counseling alongside one-on-one financial coaching and education 

and low-cost financial products that help build credit, savings, and assets. They also 

connect clients with income supports like food and utility assistance. The cornerstone of the FOC model is providing these services in an integrated way, rather 

than as stand-alone services, and with a long-term commitment to helping clients 

reach their goals. 

Our Bridges to Career Opportunities (BCO) model builds upon the FOC model 

and helps individuals ramp up foundational literacy and math skills, get technical 

training, and pursue certifications for a particular industry while receiving supports 

like financial coaching to set long-term goals and help manage expenses during 

training. These programs connect clients to ‘‘middle skills’’ jobs with a career pathway, and help local employers staff up with employees who can get the job done. 

By blending this training with financial coaching, clients take the reins of their economic and professional lives. 

Our FOC and our BCO work was scaled and replicated thanks to a Social Innovation Fund (SIF) award from the Corporation for National and Community Service 

(CNCS). Although SIF funding has been eliminated in the past two fiscal years, we 

encourage Congress to find ways to fund pilots that support data-driven innovation 

in the ever-evolving workforce sector. Additionally, we encourage Congress to adopt 

policies that create a workforce system that supports vulnerable populations as they 

attempt to upskill. Robustly funding the SNAP Employment and Training Program 

in the Farm Bill—with an emphasis on innovation as opposed to dated work requirements—and updating the Temporary Assistance for Needy Families Program 

(TANF) support contextualized skills training is highly encouraged. 

Align Career Pathways and Postsecondary Educational Systems 

We need to more thoughtfully align our workers and community college students 

to the business sector. There are a few legislative proposals that support this alignment. The Perkins Career and Technical Education Act should be reauthorized and 

updated so that secondary and postsecondary Career and Technical Education 

(CTE) programs support local workforce development strategies. If adopted, the 

JOBS Act (S. 206) would allow Federal workers to use Federal Pell grants to pursue 

industry-specific credentials. Legislative action in these two areas are just the beginning of potential opportunities to support new approaches in postsecondary education. Additionally, we encourage you to look at the proposals outlined in the National Skills Coalitions 2018 Skills for Good Jobs Agenda. There is significant overlap with LISC’s emerging policy agenda in the workforce space, and the National 

Skills Coalition is a trusted partner and ally in this work. 

Support Policies That Fund and Incentivize Apprenticeships 

Contextualized skills training should also be supported via apprenticeships. LISC 

is a participant in the Campaign to Invest in America’s Workforce (CIAW) coalition 

and would like to echo CIAW’s recommendation to increase the $95 million investment in apprenticeship programs at the Department of Labor. Additionally, there 

are several pending authorization bills that provide a framework and resources for 

incentivizing apprenticeship opportunities: 

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• The bipartisan PARTNERS Act (H.R. 4115) supports partnerships between 

businesses and other local workforce stakeholders to help small- and mediumsized businesses develop and run work-based learning programs; • The BUILDS Act (S. 1599) leverages new funding for construction-related 

projects and requires the Secretary of Labor to award grands for promoting industry or sector partnerships to encourage industry growth and competitiveness 

and improve worker training, retention, and advancement; and • The Investing in American Workers Act (S. 2048) would incentivize employers 

to dedicate more resources to worker training. This legislation creates a tax 

credit to benefit employers who demonstrate a commitment to upskilling their 

workers. Employers who invest more capital in training in one year than they 

have in the previous three years would be eligible for a tax credit that equals 

20% of their increased spending. 

These are just a few examples of opportunities to incentivize apprenticeships. 

• Is there a way to encourage investors in Opportunity Zones to invest 

in workforce training programs that will help the local workers? 

While it may be challenging for the Opportunity Zones investments themselves 

to be focused on workforce training programs, given the structure of the tax incentive, we do believe that opportunity funds may look to invest in businesses that provide training and upskilling products and services at competitive rates to enterprises already present in, or willing to locate to, an Opportunity Zone. Furthermore, 

we believe that there can be opportunities to align workforce programs and incentives with Opportunity Zone investments. 

For example, one such area that may be worth exploring, on the Federal level, 

is aligning Opportunity Zones with the Work Opportunity Tax Credit (WOTC). As 

you know, WOTC is a Federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to 

employment. Currently, residents living in Empowerment Zones and rural Renewal 

Communities are included in the criteria for WOTC target groups. We should explore whether adding residents from Opportunity Zones to the designated target 

groups provides any benefit, and consider revising WOTC to incentivize employers 

to invest in contextualized skills training. Similarly, on the local level, we may also 

want to encourage Workforce Investment Boards (WIBs) to align their activities 

with businesses located in, or seeking to locate in, Opportunity Zones. 

In the meantime, LISC is looking for other ways to bring our workforce training 

initiatives into Opportunity Zones. For example, due in part to the FOC/BCO funding and capacity-building support that LISC has provided to Community Action Duluth, the City of Duluth, and its partners, Community Action Duluth and SOAR Career Solutions, were recently awarded a $326,216 State of Minnesota Department 

of Energy and Economic Development Pathways to Prosperity grant to fund 

healthcare and construction training to serve low-income people, people of color, 

those with criminal records, and those with disabilities. This work is being done 

with a strong focus on bringing private sector employers to the table to help build 

skills and career opportunities. We are hoping to align these kinds of efforts with 

businesses located in Opportunity Zones. 

In Saint Paul, the Port Authority is currently working with the East Side Employment Exchange (which includes several of LISC’s FOC/BCO partners), Metro State 

University, Saint Paul College, and others on workforce development efforts. The 

Port owns a number of the East Side Opportunity Zone properties that are ready 

for larger employers with workforce needs. The Port could potentially play a financing role in the development of these opportunities within Opportunity Zones, and 

the philanthropic/corporate funders are seeking to accelerate the alignment with 

workforce investments. 

RESPONSE FROM MR. JONES TO QUESTIONS FOR THE RECORD SUBMITTED BY SENATOR

HEINRICH

1.) What can be done to boost capacity in rural communities and on tribal 

lands to help these areas attract investment and realize the benefits of Opportunity Zones? Are there strategies for State and local governments or 

community organizations to generate greater deal flow to rural and tribal 

areas? 

A key to boosting capacity in rural communities and on tribal land in order to 

help these areas attract investment and realize the benefits of Opportunity Zones 

is to invest in and support the community-based organizations (CBOs) that work in 

and near Opportunity Zones. These CBOs are familiar with the demands of their 

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communities and regions and understand where opportunities lie to meet those demands. Focused capacity building tools ensure a CBO can drive activity and maximize the benefits of an OZ designation. 

At LISC, through its national program Rural LISC, we provide a trifecta of capacity building tools to rural CBOs: technical assistance, low-cost and patient capital, 

and targeted grant investments to help build capacity within rural communities. 

LISC’s approach is to: 

• Develop the leadership capacity of rural CBOs to advance the work on the 

ground; 

• Work with and through rural CBOs in underinvested communities to provide 

residents with the skills and credentials to compete successfully for quality income and wealth opportunities; 

• Invest in businesses, housing and other community infrastructure to catalyze 

economic, health, safety and educational mobility for individuals and communities; 

• Strengthen existing alliances while building new collaborations to increase the 

impact and progress of people and places; and 

• Drive local, regional and national policy and system changes that foster broadly 

shared prosperity and well-being through advocacy, in partnership with rural 

CBOs. 

A prime example of the power of building rural capacity is evident in rural New 

Mexico. Rural LISC has provided partner organization Tierra del Sol Housing Corporation with $383,129 in capacity building grants, $220,000 in zero predevelopment 

financing, and $400,000 in low-cost loans in recent years. This investment has resulted in 436 affordable homes built. Tierra del Sol has been able to leverage that 

investment from LISC at a rate of 23:1, securing $23 million in additional funds to 

further their work in New Mexico. Rural CBOs are masters at leveraging funding, 

when provided with opportunity and predevelopment financing. 

The role of the Federal Government in supporting capacity building programs for 

CBOs cannot be overstated. Two of the most critical programs for this purpose are 

HUD’s Section 4 Capacity Building for Community Development and Affordable 

Housing Program (‘‘Section 4’’), which includes a rural set aside; and the USDA’s 

Rural Community Development Initiative (RCDI). These programs provide funding 

to support the growth and sustainability of non-profit housing and community development organizations, and can be used to help rural non-profits secure the staffing 

or technical assistance needed to be competitive in attracting investments into Opportunity Zones. 

However, as effective as they are, these programs can only satisfy a very small 

portion of the needs of rural non-profit CBOs. State and local governments should 

consider funding capacity building efforts to help bridge the gaps of Federal funding. 

State and local governments can also encourage and support greater project generation by directing their resources such as CDBG and State housing funds to proposed 

Opportunity Zone projects. Finally, local governments must recognize the need and 

value of investing time and streamlining entitlements for opportunity zone deals, to 

ensure proposed developments are not bogged down or lost due to lengthy entitlement processes and extensive regulations. 

Æ 

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