For months, real estate investors and developers have been setting up multimillion-dollar Opportunity Zone funds, hoping to cash in on a federal program that offers tax incentives to investors who pour money into properties in designated low-income neighborhoods.
On Wednesday, President Trump signed an executive order to direct resources to state and local municipalities to improve basic conditions within the 8,700 designated Opportunity Zones. Businesses in the zones could also be eligible for some of these benefits.
The executive order created a task force to be led by U.S. Secretary of Housing and Urban Development Ben Carson. It will consist of 13 different federal agencies. The president said Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross will also be part of the group.
The move is designed to help businesses and local and state governments in the zones receive federal funding and backing for community needs like infrastructure, crime prevention and small business lending, said Steve Glickman, who led the Economic Innovation Group. The organization was credited with helping create the Opportunity Zones program.
In a White House that was live streamed, attendees included South Carolina Republican Sen. Tim Scott, who helped push the Opportunity Zone legislation forward; community leaders from Baltimore, where the president was supposed to hold the event until it was moved to Washington; and billionaire Bob Johnson, who founded the television network BET. Ivanka Trump also attended but did not speak.
Glickman said the executive order could also help small businesses within in the zones secure loans guaranteed by the federal government.
Many large investors have already started setting up funds to invest in Opportunity Zones, which was part of the president’s tax overhaul plan that passed late last year. The program allows developers or investors to delay and potentially forgo paying some capital gains taxes if they invest in an opportunity zone for at least 10 years.
Firms like RXR Realty, Youngwoo & Associates and Normandy Real Estate have set up funds hoping to raise hundreds of millions of dollars to be used for Opportunity Zones investments.
Former White House communications director — briefly — Anthony Scaramucci and his SkyBridge Capital wants to raise a $3 billion Opportunity Zone fund with EJF Capital. SkyBridge and EJF Capital plan to structure the fund as a REIT.
Other investors and developers are still waiting on the sidelines, looking for more specifics from the Treasury Department and the IRS before deploying capital. The first set of regulations was released in October, and the second set was expected to be released sometime this month.