On October 17, OFN’s Chief External Affairs Officer Jennifer A. Vasiloff testified at a hearing before the House Committee on Small Business Subcommittee on Economic Growth, Tax, and Capital Access. Witnesses were asked to answer the question "Can Opportunity Zones Address Concerns in the Small Business Economy?" The hearing was focused on the Opportunity Zones tax incentive that was included in the 2017 Tax Cuts and Jobs Act, its implementation, and whether it has had an impact on access to capital for small businesses. Other witnesses included Brett Theodos from the Urban Institute, Aaron Seybert from the Kresge Foundation, and John Lettieri from the Economic Innovation Group.
In OFN’s testimony, Vasiloff communicated OFN’s disappointment that the OZ tax incentive was a poor fit for the business model of most CDFIs. She also highlighted some of the small number of CDFIs that are seeking to use the Opportunity Zones tax provision to invest in operating businesses, including Community Reinvestment Fund and AltCap. She also reiterated OFN’s commitment to transparency and data collection in Opportunity Zones and our collaboration with the organizations of all the other witnesses to develop the Opportunity Zones Framework.
Finally, OFN detailed the challenges posed by the Opportunity Zones tax incentive for CDFIs, particularly with regard to small businesses, and made recommendations regarding other actions the federal government could take to better support the small business economy.
Members of the subcommittee asked about reporting requirements and data collection with all of the witnesses supporting increased reporting and oversight. There was also discussion about using the tax incentive to invest into businesses versus real estate. Operating businesses remain a challenging investment for all Opportunity Zone investors, not just CDFIs. Representative Sharice Davids (D-KS) recognized the work of AltCap in the Kansas City metropolitan area and asked the panel to talk about ways to increase community involvement and local input into the investment process.
OFN anticipates that Congress will continue to hold hearings on the Opportunity Zones provision and will continue to engage with policy makers to advocate for regulatory and legislative changes that will increase the positive community impact of Opportunity Zones, reduce the risk for displacement and gentrification, and provide accountability and transparency for Opportunity Zone investments.