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IRS Hearing on Opportunity ZonesJuly 9, 2019
William Michael Cunningham
Creative Investment Research
www.creativeinvest.com
Opportunity Zone ProgramAllows persons with significant capital gains a way to escape
their responsibility for the payment of taxes. Allows mainly white
and wealthy taxpayers to avoid societal responsibility in
exchange for investments, via Qualified Opportunity Funds, in
8,700 poor communities. Fundamentally unfair, fiscally unsound. Copyright, 2019, WMC and CIR.
Not for reproduction or distribution.
Does the Opportunity Zone Program
44.74%
5.26%
50.00%
0% 10% 20% 30% 40% 50% 60%
Favor the wealthy
Favor the poor
Is neutral
Copyright, 2019, WMC and CIR. Not for reproduction or distribution.
Survey conducted by Creative Investment Research, January, 2019.
Will the Opportunity Zone Program
68.42%
10.53%
21.05%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Increase gentrification
Decrease gentrification
Have no effect on gentrification
Copyright, 2019, WMC and CIR. Not for reproduction or distribution.
Survey conducted by Creative Investment Research, January, 2019.
This approach to development uses
market-oriented processes to damage
communities of color, who are paying,
In essence, to be dislocated.
Stages of Gentrification
1Real estate investment,
prices, rents rise
2Residents of color
pushed out
3Entry ramp for
gentrification
Copyright, 2019, WMC and CIR. Not for reproduction or distribution.
0
50
100
150
200
250
300
350
Real Estate
Value Index
Index of
tenured
African
American
residents
Wage Index Jobs Index Rent Index
OZ Community Development Assumptions
Pre OZ Intermediate Long Term
0
100
200
300
400
500
600
700
Real Estate
Value Index
Index of
tenured
African
American
residents
Wage Index Jobs Index Rent Index
OZ Community Development Reality
Pre OZ Intermediate Long Term
OZ Assumptions vs. Reality
CALIFORNIA
NEW YORK
TEXAS
ILLINOIS
Infrastructure and social needs, especially in light of
the Amazon reversal.
New York
Need to integrate new populations into the state.
Texas
Need for police, community development in
minority communities.
Illinois
Massive need for infrastructure, wildfire fighting
investment.
California
OZ program diverts needed tax revenue from the public
Copyright, 2019, WMC and CIR. Not for reproduction or distribution.
Our Suggestions
BlockchainNo BenefitUse the Ethereum
blockchain to track and report Opportunity Zone investment social impact.
Prohibit the President, senators, congressmen,
and state governors from personally
benefiting.
Copyright, 2019, WMC and CIR. Not for reproduction or distribution.
Create toolsImplementMeasurementStrategy
Impact ties to level of credit
Review & improve measures
Impact Analysisplan
Requirements & evaluation criteria
Impact credit negotiation
Implement Tax StrategyEvaluate & Select Collect and Analyze Impact Data
Impact Measurement Process
Copyright, 2019, WMC and CIR. Not for reproduction or distribution.
Education $20,434
Defense $32,665
Safety $24,676
Benefits $12,525
Health $23,676
Seniors $20,575
$10
$10
$10
$5
$10
$45
Education - $10
Safety - $10
Seniors -$10
Benefits - $5
Defense - $10
Health -$45
Revenue Impacts
Seniors
Health
Benefits
Defense
Educ
Safety
0 10 20 30 40
Sa
vin
gs
Banks
Individuals
Funds
VCs
Hedge
Mutual
0 20 40 60 80 100
Av
oid
an
ce
Tax Savings & Tax AvoidanceCost of Food
5 Year Trend This Year
$ 11.15
Seniors
5 Year Trend This Year
$ 12.14
Health
5 Year Trend This Year
$ 19.20
Education
5 Year Trend This Year
$ 17.10
Rental Costs
5 Year Trend This Year
$ 10.140
10
20
30
40
50
60
70
80
90
100
Benefits Safety Seniors Defense Health Education
ROI Benchmark
Social ROI
(Cost of Tax Credit: $6,414)Top 5 Social Cost Increases
Social Cost Calculation
Copyright, 2019, WMC and CIR. Not for reproduction or distribution.
