U.S. Sen. Ron Wyden (D-OR) is launching an investigation into the Opportunity Zone Program to see if it has delivered on promises to create jobs and drive investment in low-income communities.
Wyden, chair of the Senate Finance Committee, is concerned that it may be more if a loophole for wealthy investors to avoid paying taxes. He wrote to the organizations involved in the program — SkyBridge Capital, Baker Tilly US, Cresset Partners, Hatteras Sky, PTM Partners, Related Group, and Shopoff Realty Investments — seeking information on the program.
“I have long been concerned that the Opportunity Zone program may permit wealthy investors another opportunity to avoid billions of dollars in taxes without meaningfully benefitting the distressed communities the program was intended to help. A report released by the Government Accountability Office (GAO) heightened my concern about the effects of the Opportunity Zone program. The GAO report notes that representatives of several Opportunity Funds indicated that they would have proceeded with projects in what are now designated zones without the tax incentives provided by the Opportunity Zone program…Currently, there are no safeguards or transparency measures in place to ensure taxpayers are not simply subsidizing high-end real estate investments by billionaires without demonstrating the benefit they are providing to low income-communities they claim to help,” Wyden wrote.
Wyden sought information from each on their Opportunity Zone projects, asking for data on how much was invested and how many jobs were created as a result, among other questions.
“According to public reports, it appears that the Opportunity Zone program is already helping subsidize luxury real estate development by wealthy developers, and in many cases will allow these investors to realize the gains on their investments completely tax-free,” Wyden wrote. “Among the investments that have reportedly qualified for these generous tax breaks, are projects that include luxury apartment buildings and hotels, high-end office towers, self-storage facilities, and a ‘superyacht marina.’ This so-called ‘superyacht marina’ site in Palm Beach includes ongoing construction of two luxury waterfront apartment towers with 399 units, featuring a resort-size, heated pool overlooking the intracoastal waterway; a 120-foot day dock with 12 20-foot slips for boats; VIP cabanas, and a spa and a sauna. The penthouse floors will apparently also have their own private pools. Other examples of projects being funded by this program include a 35 story tower in Portland featuring a Ritz Carlton Hotel and condos going for as much as $7.5 million, a Virgin Hotel in New Orleans, a 46 story glass-wrapped apartment tower in Houston featuring a pool with cabanas and daybeds, and a large new office tower in Miami’s already booming design district.”