Update from The Hill

The RevOZ team has been hard at work with policy makers seeking to ensure that the full potential Opportunity Zone program is achieved.  To that end, three of our principle partners (Alex Bhathal, Ryan Parkin, and Tom Parnell) have been shuttling between California and Washington DC for meetings with key influencers. 


On December 13, Tom met with Shay Hawkins of Senator Tim Scott’s office to discuss outstanding issues with the opportunity zone program and the upcoming proposed regulations that the US Treasury is set to release.  Senator Scott was the Republican Co-Sponsor of the bill in the Senate, so his office's expertise is among the highest in the district.

Upon arrival, the Capitol building was buzzing with discussions about opportunity zones—the program which was little known when it was first released has now began to garner much more attention in wake of President Donald Trump’s order to steer greater amounts of federal spending to opportunity zones. Our meeting with Mr. Hawkins only came a day after President Trump commented his plans for future federal funding on the program.

On the day of our meeting, it was obvious that President Trump’s order on the program had been heard throughout Washington D.C. and was on the top of mind for our government--Senator Scott and the US Secretary of the Treasury, Steven Mnuchin were having breakout sessions with Senators to discuss the same regulations and issues that we sought to discuss. It was both an interesting and great opportunity to discuss the program with the Senator’s office on such a day, it allowed us to get an real time, insider view on how Congress, US Treasury, and the rest of our government viewed the program, and their vision for the program’s future.

On January 11th, our founding partners, Alex Bhathal and Ryan Parkin, had the chance to hold a second meeting in Capitol Hill with the people who are most engrained with the Opportunity Zone legislation—members of US Treasury. The Hill was quieter than the last time we visited—with the shutdown still in effect, there were significantly less government employees to create the “buzz” we last experienced in D.C.



This time the RevOZ team had a chance to discuss the upcoming Opportunity Zone regulations with members of US Treasury who have had a heavy-hand in the creation of the soon to be released regulations. US Treasury gave our team insights on the upcoming regulations that we were not able to get during our first meeting. Below are just a few of the issues we discussed—


(1)    Interim Gains/Recycling of Capital:

There is uncertainty on how taxpayers will be treated when an Opportunity Fund sells an underlying asset. Will taxpayers be immediately taxed on the gain recognized by the Opportunity Fund or will there be a mechanism implemented to defer the gain on the sale of underlying assets if is reinvested into other qualifying assets within a certain period of time?

(2)    Financed Distributions:

An issue many tax advisors have been scratching their head about is how the government is going to treat financed distributions to the investors of an Opportunity Fund. If the next set of regulations allow for distributions from financing tax free, then this would be a big win for investors.

(3)    Opportunity Zone Exits:

Another concern of many is how investors will be taxed on the Fund’s exit from the market. This lack of clarity has delayed and discouraged the creation of multi-asset funds. We are hopeful that there will be answers in the next set of regulations that resolve this issue.

(4)    Timing:

The entire O Zone industry is waiting for the next set of regulations.  Original expectations were that the proposed regulations would be issued at the end of 2018, and then revised to end of January.  It’s unfortunate that the shutdown has likely caused another two week delay in the process and we expect official answers closer to the end of February.

Please contact us if you would like further insights into these issues and how they may affect investing strategies in Opportunity Zones.  We believe that our knowledge in the space is as robust and current as any industry stakeholder.

Lisa Merage