Offering hope and opportunity to communities that have not fully participated in the economic recovery, Governor Phil Murphy joined yesterday with U.S. Senator Cory Booker to speak about the Investing in Opportunity Act that was passed into law as part of the 2017 Tax Cuts and Jobs Act. Senator Booker co-authored this legislation to spur investment in distressed communities that are now designated as Opportunity Zones in 18 states.
The event titled Investor Symposium on the Federal Economic Opportunity Zone Program was hosted by Choose New Jersey and held on the Newark campus of Rutgers University. Television broadcaster Steve Adubato moderated the discussion between Governor Murphy and Senator Booker which was followed by a separate panel discussion and Q&A with an audience of investors, developers and local leaders that included Newark Mayor Ras Baraka and Audible.com CEO Don Katz.
The thrust of the new legislation is to unlock millions of dollars of investments now being held and then incentivize investors to reinvest in distressed areas designated by the U.S. Department of the Treasury as Opportunity Zones. This is achieved via a temporary capital gain tax deferral, in combination with other incentives, channeling direct investment into low-income urban and rural communities.
Other key measures promoting investor participation include:
- A new way for investors to pool resources through “Opportunity Funds” that have been established specifically for investments in these designated areas,
- A concentration of capital into the Opportunity Zones designated by the Governor, and
- Encouraging long term investor commitment by offering incentives tied to longevity.
Over time the program will open up local entrepreneurial activity, bring development to blighted areas, and boost investment into local infrastructure projects and business opportunities.
Hard numbers supporting the Act were presented by speaker Steve Glickman, co-founder of the Economic Innovation Group, explaining that one in six Americans live in these distressed areas designated as Opportunity Zones, approximately 52 million people. While over 6.8 million net jobs have been created since 2000, the top 20% of zip codes accounted for 6.5 million of those jobs—resulting in America’s top 20% thriving during the current economic recovery, while 40% not seeing any benefit.
In New Jersey the Opportunity Zones are located in 75 municipalities, at least one in every county. Governor Murphy working with Senator Booker identified the Zones via round tables with mayors across the State, as well as through meetings held with the New Jersey Congressional delegation. The Department of Community Affairs is expected to be the guiding hand to the local communities as they implement the program.
Senator Booker touched upon a broad range of economic development issues, referencing the success of the Teachers Village, a mixed-use community in downtown Newark, the practical approach of offering free education that is far less costly than incarceration, the multiplier effect of minorities in cities being able to both live and work in their communities, and the ongoing challenge of the fiscal health of New Jersey.
Governor Murphy and Senator Booker concurred that this program will significantly impact New Jersey communities that will contribute to growing the State’s economic base and the necessary improvement of New Jersey’s fiscal health. Governor Murphy touted the positive aspects of New Jersey, describing it as a “value state” that is attractive to investors.
The specifics of the Opportunity Program were discussed by a panel led by Margaret Anadu of Goldman Sachs Urban Investment Group, that included Christopher A. Coes of Smart Growth America and LOCUS, Steve Glickman, Economic Innovation Group, and Evan S. Weiss of HJA Strategies.
Panelists also discussed the concern that gentrification could displace long term residents, denying the benefits of the program to those having the longest investment in the communities. Anadu felt that this could best be addressed by the local leaders becoming organized and defining the needs of their community—and then “selling” the community to the right potential investors.
