Below are responses to government consultations and other relevant calls for evidence.
Read the full submission here.
This is a summary of the Sorenson Impact Center response to the U.S. Treasury’s Request for Information on Data Collection and Tracking for Qualified Opportunity Zones.
We are encouraged by the Department of Treasury’s willingness to explore appropriate data collection and reporting practices on Opportunity Zones. Measuring short-term and long-term outcomes of the Opportunity Zone work will help to avoid the pitfalls of previous tax incentives which yielded unclear results. Our comments below are made in the spirit of identifying critical information necessary to determine whether Opportunity Zones work as intended. This information will be vital for spurring the growth of the Opportunity Zone marketplace, without creating an undue reporting burden or otherwise creating barriers to capital deployment.
Our comments in the attached response directly address the following four main points:
The data required to quantify economic development and job creation in distressed communities is largely already collected by other federal agencies. The Bureau of Labor Statistics and the Department of Labor jointly collect the appropriate information to measure economic vitality in distressed communities. However, the key to ultimately determining if the Opportunity Zone incentive worked as intended is collecting information about deal flow from Qualified Opportunity Funds.
Form 8996 should be expanded to capture this deal flow information and simple impact metrics from Qualified Opportunity Funds. At a minimum, an inventory of projects and investors is required to determine the direction and magnitude of capital flow, and will be necessary for determining whether or not the incentive worked as intended. Additionally, requiring Opportunity Funds to report on simple impact metrics nudge them to be intentional about impact, without creating an undue reporting burden.
Transparency about deal flow and an aggregation of best practices is necessary to maximize investor participation. This is particularly true for investors who desire to operate in alignment with the intent of the legislation by participating in community engagement—a concept in which not all investors and Qualified Opportunity Fund managers may be conversant. The Sorenson Impact Center has piloted the Opportunity Zone Catalyst Challenge as a national-scale effort intended to collect and aggregate these best practices.
Timely information about what works in the Opportunity Zone marketplace will be critical to inform the decision making of both Opportunity Funds and communities as they seek to partner. This best practice identification effort will help to catalyze deal flow by illustrating roles that many different stakeholders are taking in Opportunity Zone projects, and providing examples of what type of projects have been successful.