SelectUSA Opportunity Zone Roundtable
Wednesday, 12, 2019 – 8:00am
[As Prepared for Delivery]
Welcome to all of you, especially those who have traveled from afar to join us here at SelectUSA this week.
As the largest consumer market on earth, the United States is THE place to do business!
We are pleased to have you here engaging with economic development and business leaders from across the nation to boost Foreign Direct Investment, which is a major driver of economic growth in many of our communities.
This morning, I have the distinct honor of introducing the Deputy Secretary of the Department of Commerce, Karen Dunn Kelly, but first I’d like to share with you a few words on our topic subject: Opportunity Zones.
As an entrepreneur who started a suite of diverse businesses and commercial real estate ventures and as one who understanding the real-life challenges and opportunity that businesses, investors, and communities face daily, I am particularly excited to kick off this important meeting by discussing the historic potential borne out of Opportunity Zones.
As Assistant Secretary for Economic Development, I see the Department of Commerce, including through the bureau I lead – the Economic Development Administration, or EDA— playing a central role in this Administration priority.
For a little background…
Opportunity Zones were created under the 2017 Tax Cuts and Jobs Act to stimulate economic development and job creation, by incentivizing long-term investments in low-income neighborhoods across the country.
Soon after President Trump signed the act into law in December 2017, Governors identified and nominated economically distressed communities in their respective states and territories for designation.
The Department of the Treasury then assessed each nominated zone and certified those that met the Opportunity Zone criteria.
This process created our nation’s 8,760 designated Qualified Opportunity Zones.
Few programs in modern American history have the potential to touch the lives of so many people as powerfully as Opportunity Zones.
Opportunity Zones are designed to spur economic development by providing tax benefits to investors.
These incentives offer capital gains tax relief for new investment in designated Opportunity Zones and work like this:
Investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF).
If the QOF investment is held for longer than 5 years, there is a 10 percent exclusion of the deferred gain. If held for more than 7 years, the 10 percent becomes 15 percent.
Additionally, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.
President Trump said it best: “We’re providing massive tax incentives for private investment in these areas to create jobs and opportunities where they are needed the most.”
Treasury Secretary Mnuchin estimates that Opportunity Zones are anticipated to spur $100 billion in private capital investment.
At EDA we have been moving full throttle ahead in support of this program and intend to maximize the beneficial impact of investment in Opportunity Zones.
In fact, since FY 2018, EDA has invested close to $30 million in 40 projects in Opportunity Zones to help communities and regions build the capacity for economic development.
We’ve done this in just the first year and a half of the program’s existence. And we are just getting started.
I'm excited to announce that EDA is taking another big step in aligning our work with this important Administration priority.
Beginning today, EDA is adding Opportunity Zones as a new fifth Investment Priority, which means that grant applications in or directly benefiting Opportunity Zones will be deemed more competitive.
By implementing this new Investment Priority, we hope to increase the number of catalytic Opportunity Zone-related projects EDA funds and spur greater public investment in these distressed areas.
Once posted to the EDA.GOV website, the investment priority would immediately apply to most existing EDA funding notices.
EDA is also working in concert with the Department and the White House and supporting Secretary Carson at HUD in the White House Opportunity and Revitalization Council, including leading up the Economic Development work stream.
Foreign investors can also play a critical role in generating economic development in Opportunity Zones and I know we’re all looking forward to hearing from you this morning.
We have top Opportunity Zones experts in the room – from those who helped draft the legislation to those who advise the President – so thank you for your interest and for being here.
Now, without further ado, I am pleased to introduce to you Deputy Secretary of Commerce Karen Dunn Kelley.
Deputy Secretary Kelley is the Department’s chief operations officer and day-to-day manager of Commerce’s $11.4 billion budget, 12 operating units, and 47,000 employees. She is the principal deputy to the Secretary of Commerce Wilbur Ross and a member of the President’s Management Council.
Deputy Secretary Kelley has 35 years of experience in the financial investment sector with a wealth of knowledge, and skill, I might add, managing people, strategy, budgets, operations, public relations, and thought leadership across the globe.
Thank you Secretary Kelly for your inspired leadership. It’s an honor to work with you!
Please join me in welcoming Deputy Secretary Kelly!