The group openly discussed the potential burdens of reporting requirements, including impact reporting in Opportunity Zones. “There’s a lot that we can do to make this work,” said Thomas, who was recognized as one of the Top 25 OZ Influencers in Opportunity Zone Magazine this year. “While there is currently no requirement embedded in the law to track this, the intent of the initiative is to help do the good it’s intended to do.”
“The government has been trying to adjust the rules and has been responsive from industry to enable capital to move through the flow, but if you don’t measure something, it’s not going to happen. The EB-5 program easily tracks impact, so why couldn’t Opportunity Zone developers? It doesn’t cost a lot of money and we’ve developed objective reporting technology with Howard W. Buffett,” added Thomas.
In a previous conversation about Opportunity Zones we had with Buffett, professor at Columbia University and president of Global Impact, he said that from a “moral perspective, tracking impact is the right thing to do because of the potential benefits to project management that may further improve community conditions. But, there are also clear business incentives to take impact measurement and management seriously at the project level, at the fund level, and even at the investor portfolio level.”
During the panel, a question was posed by Jimmy Atkinson of OpportunityDb about why reporting requirements were removed from the original OZ legislation proposed by Senator Tim Scott and Senator Cory Booker.
“Reporting requirements were included in the original Opportunity Zones concept, but removed from the Tax Cuts and Jobs Act due to the Senate’s parliamentary rules. There has always been strong bipartisan support for reporting measures, and EIG continues to advocate for proposals like those included in the IMPACT Act that will reinstate and expand the original reporting requirements,” said EIG’s Director of Impact Strategy Rachel Reilly, who recently presented during an Opportunity Zones webinar hosted by JTC Americas.
According to Shay Hawkins, president of Opportunity Funds Association and former senior tax and economic policy advisor to Sen. Scott, he helped draft what he describes as “basic” reporting requirements by the Treasury, including economic indicators such as job creation, poverty reduction, and new business starts. “The Byrd Rule, which is named for former Senator Robert Byrd (D-WV), prevents policy provisions with no impact on revenue from being included in a reconciliation bill, and allows the Senate to pass a budget related bill with just 51 votes. If any provision violates the Byrd rule, or any aspect of a provision, it can be challenged on the Senate floor, and if the parliamentarian agrees, the whole provision is eliminated.”
“The Senate Democrats made it clear that they would challenge the transparency and reporting provision I drafted into the OZ provision, so I pulled them to save OZs overall. I figured we could get bipartisan support for more impact reporting later after the drama of tax reform, which we did as the Sinema-Scott-Grassley bill was introduced in December,” added Hawkins.
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