Opportunity Zone Association of America
Pittsburgh Opportunity Zone Catalyst Event
Welcome and Opening Keynote Address
The Power Center at Duquesne University
November 1, 2019 - 0:00am
[As Prepared for Delivery]
Thank you, Rich, for the kind introduction!
It’s great to be in Allegheny County today!
Aaron, thank you for the warm welcome!
We appreciate your commitment to educating folks on Opportunity Zones, and I thank you and the Opportunity Zone Association of America for hosting this important catalyst event in Pittsburgh today!
As many of you may know, the Department of Commerce recently sought public input on how the Federal Government can better align its various economic development programs and resources to encourage and facilitate beneficial investments in urban and economically distressed communities in Opportunity Zones.
The Opportunity Zone Association of America provided comment - one of the many we received and are currently reviewing.
Thank you for the time you took to provide this feedback!
Your comment will help us boost the impact of the collective work we are doing to improve our communities in Opportunity Zones.
I want to thank all of you here today for your participation and interest!
We have a great turnout, which speaks volumes to the importance of the Opportunity Zones initiative to investors interested in making impactful deals, economic developers working to transform distressed communities, and stakeholders in these communities.
As an entrepreneur who started a suite of diverse businesses and commercial real estate ventures in 1985 that have grown across three states and created hundreds of jobs in the private sector, I’m passionate about economic development and the role that government can play in helping foster the conditions for private sector capital investment and job creation.
Under the leadership of President Trump - our nation’s first businessperson President - the economy has come roaring back to life. Tax cuts, deregulation, and an Administration dedicated to growing business have allowed the U.S. economy to flourish.
The resulting surge in job creation, 6.3 million since the President was elected, and record low unemployment, last month, it fell to 3.5 percent, the lowest it has been since May of 1969, has put the American worker in the driver’s seat.
Because of President Trump’s policies, American companies and their workers are succeeding together.
We know, however, that there are some communities that are not prospering and are being left behind in this tremendous economy.
Created by President Trump’s 2017 Tax Cuts and Jobs Act, Opportunity Zones provide a unique investment vehicle to help our nation’s most distressed communities realize their economic potential.
Doing good while also doing well has long been a challenge for investors who rightly pursue profitable investments, but also want to improve the world they live in.
With the potential to impact the lives of so many people, including the more than 35 million Americans living in the specially-designated areas, Opportunity Zones can be a powerful driver of transformative investment and economic development in our nation’s low-income neighborhoods.
Among the many benefits, the initiative allows investors to defer tax on capital gains by investing in Qualified Opportunity Funds (QOF), vehicles organized specifically for injecting money into designated Opportunity Zones.
Additionally, the longer an investment is held in a QOF, the lower the capital gains tax liability.
Through step-up of basis – the readjustment of the value of an appreciated asset – investors receive a 10 percent exclusion of the deferred gain after five years, which grows to 15 percent after seven years.
Furthermore, if the investment is held for at least 10 years, any appreciation of the QOF investment is tax-free.
Those looking for socially conscious investing can rest assured that these Opportunity Zone investments target development in areas of the country that need it most.
Last year, the unemployment rate in Opportunity Zones was nearly 1.6 times higher than the average U.S. census tract. Similarly, the average poverty rate across Opportunity Zones exceeded 32 percent.
As a leader of an agency whose principal role is to make investments in economically distressed communities, to create jobs, promote innovation, and accelerate long-term growth, I know that this initiative fits hand in glove with our mission, the mission of the Department of Commerce, and the mission of the broader Trump Administration.
For those of you who may not be familiar with EDA, we are one of a dozen or so bureaus in the Department of Commerce, and the only federal government agency focused exclusively on economic development.
We play the critical role of facilitating regional economic development efforts in communities across the nation.
So, how do we do this?
In part through grants.
Historically, Congress appropriates in the neighborhood of $320 million to EDA annually to award grants to spur economic development in distressed communities.
These communities might be suffering due to the loss of a major employer or impacted by the downturn of a major economic sector – as we’ve seen in coal country, or they may be suddenly impacted by a natural disaster.
EDA can help support these communities as the strive to rebound by catalyzing their locally-devised economic development strategies.
EDA can help support everything from planning and technical assistance to infrastructure development.
Coincidently, since FY2018, EDA has invested nearly $311 million in 222 projects across the U.S. to support projects located in designated Opportunity Zones.
This includes nearly $3 million in seven projects in or near Opportunity Zones in Pennsylvania.
To educate and highlight our work and best practices in communities across the nation, I have been discussing Opportunity Zones during an extensive, and ongoing, White House Opportunity and Revitalization Council listening tour.
At stops in Lubbock, Texas; Lafayette, Louisiana; Canton, Ohio; Jackson, Mississippi, and elsewhere, we heard about the incredible potential of the Opportunity Zone initiative to transform distressed communities.
We saw communities developing prospectuses that highlight their assets and use local knowledge to emphasize the most impactful investment opportunities.
Importantly, we have been encouraging state and local governments to offer their own Opportunity Zone tax incentive packages to stack on top of the federal Opportunity Zone tax incentives.
There is a good example across the border in Ohio for other states to follow.
In July, Governor Mike DeWine signed into law the state’s 2020/2021 budget, which included a provision that gives investors an additional 10 percent tax credit if they invest in one of Ohio’s 320 Opportunity Zones.
We encourage Pennsylvania to initiate Opportunity Zone incentives, including tax credits, to help make the Commonwealth more competitive and attract investors to your 300 Opportunity Zones.
Later today, you will hear more about this and the Federal role in Opportunity Zones from Deputy Secretary of Commerce – and Pittsburgh native - Karen Dunn Kelly, who will deliver the keynote address at lunch.
I also want you to know that with me today is our Philadelphia Regional Office Director Linda Cruz-Carnall, and some members of her staff.
Linda and her team are available to answer any questions you may have on how EDA might be of service to you.
I encourage you to talk to them!
To conclude, we believe the sky is the limit when it comes to how the Opportunity Zones initiative can benefit investors and transform distressed communities.
That is why EDA and the Trump administration are committed to helping make the initiative a success.
Try not to let the negative, and often incorrect, media coverage on Opportunity Zones discourage you. Amazing things are happening in Opportunity Zones across Pennsylvania, including in Erie, Scranton, and right here in Pittsburgh.
We’ll be visiting Hazelwood Green later this morning to check out one of your local projects.
We look forward to working with all of you to maximize the benefits of this important and historic initiative.