Request for Information on Data Collection and Tracking for Qualified Opportunity Zones

Request for Information on Data Collection and Tracking for Qualified Opportunity Zones Federal Register Doc. 2019–08076

Council Exchange Board of Trade National Minority Technology Council Looking Forward Research & Development Community Outcome Fund 1750 Tysons Boulevard, Suite 1500, McLean, VA 22102

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COUNCIL EXCHANGE BOARD OF TRADE NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND

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NATIONAL MINORITY NATIONAL MINORITY TECHNOLOGY Public Comment on the development of TECHNOLOGY public information collection and tracking COUNCIL related to investment in qualified opportunity COUNCIL funds and government's role in the ongoing LOOKING FORWARD LOOKING FORWARD maintenance and administration of opportunity zones.

RESEARCH RESEARCH & &Doc. 2019–08076 Federal Register DEVELOPMENT DEVELOPMENT Developing Robust Reporting and Analytics to Measure Impact of Opportunity Funds Investing in COMMUNITY Qualified Opportunity Zone/Business Investments COMMUNITY OUTCOME FUND OUTCOME FUND 1750 TYSONS 1750 TYSONS BOULEVARD, SUITE BOULEVARD, SUITE 1500, MCLEAN, 1500, MCLEAN, VAVA 22102AL AND 22102AL AND Qualified Taxpayers with Capital Gains who make the decision to invest in Opportunity Funds may, if appropriately motivated, direct investment towards a public good. FR Doc 2019-08076 Question #7 “How do you view the role of the

Federal Government, and Tribal, State and local governments in the ongoing maintenance and administration of opportunity zones.” has merit and warrants an industry focused response.

This Public Comment serves to inform the U.S. Department of Treasury and other supporting Agencies how reforms and initiatives from government could serve to coordinate resources that will leverage private capital sourced from a new type of investment. As both the public and private sector seek to normalize the effectiveness of some type of measurement there needs to also be an emphasis on the role of government within this private sector economic development process. www.economicequalization.org

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COUNCIL EXCHANGE BOARD OF TRADE NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND

NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND 1750 TYSONS BOULEVARD, SUITE 1500, MCLEAN, VA 22102AL AND

FOSTERING ECONOMIC EQUALIZATION

The Declaration of Policy found in the Employment Act of 1946 reads as follows: “SEC.2. The Congress hereby declares that it is the continuing policy and responsibility of the Federal Government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy, with the assistance and cooperation of industry, agriculture, labor, and State and local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free competitive enterprise and the general welfare, conditions under which there will be afforded useful employment opportunities, including self-employment, for those able, willing, and seeking to work, and to promote maximum employment, production, and purchasing power.�

The Council Exchange Board of Trade represents the now over 65,000 minority technology companies located across the United States doing business around the globe. This $100 Billion industry has many individual company owners who will find themselves looking to invest in opportunity funds.

Business owners are often the taxpayers who have assets to sell that are not part of the normal service or product they produce. These capital gains could be the result of a sale of a building they own where the sale of the property yields a profit, or they may have accumulated shares in other businesses as a result of the income they derive from owning a technology company, and the sale of those shares may also result in profit and the associated capital gains tax.

No matter how the capital gains are derived two things are clear from an industry perspective. First, there will be billions of dollars invested in opportunity funds. Second, the public sector can play an essential role in supporting economic development programs that foster innovation, collaboration which leverages private capital and creates community resilience. www.economicequalization.org

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COUNCIL EXCHANGE BOARD OF TRADE NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND

NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND 1750 TYSONS BOULEVARD, SUITE 1500, MCLEAN, VA 22102AL AND

FOSTERING ECONOMIC EQU ILIZATION (CONTINUED)

Taxpayers who invest in Opportunity Funds are looking to mitigate the risk of loss as essentially taxpayers are borrowing against a future, perhaps discounted, tax burden. The Federal government should mitigate the risks associated with an opportunity fund investment and evaluate the efficacy of fund returns and prepare now to monitor the final tax repayment rate. Coordinated improvements made by opportunity funds and the capacity for local and state government to recognize and leverage federal initiatives that seek to harmonize outcomes will bring potential regional innovation. Investments spurred by the private sector includes real estate, small business and education and workforce readiness. Public sector investment incude infrastructure, housing and economic research.

The U.S. Treasury could make easily available the total capital gains declared per year, the averted tax amount due to opportunity fund investments, the amount of capital gains paid over time and the amount of taxpayer default and if available how much of the default was a result of a failed opportunity fund.

Below is a graph of capital gains over time. This graph was produced by Tax Foundation. Data Source (https://taxfoundation.org/federal-capital-gains-taxcollections-1954-2009/)

www.economicequalization.org

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COUNCIL EXCHANGE BOARD OF TRADE NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND

NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND 1750 TYSONS BOULEVARD, SUITE 1500, MCLEAN, VA 22102AL AND

FOSTERING ECONOMIC EQU ILIZATION (CONTINUED)

Treasury Secretary Steven Mnuchin told Bob Cusack, editor in chief of the Hill, as part of the Hill’s Newsmakers Series events, quote from Secretary Mnuchin from the video interview (https://thehill.com/hilltv/rising/408980-mnuchinpredicts-100b-in-cap-investment-from-new-opportunity-zones).

“I think there's going to be over $100 billion dollars in private capital that will be invested in opportunity zones, and the way it worked was each state, the governor had the right to designate multiple census tracks. The treasury had to approve them. We've already done that, so step one is done."

This is a sizable prediction of a cash infusion into the American ecosystem. As an industry trade association, we see this as a new phenomenon that will foster economic equalization in our most distressed communities. The federal government would be best served to be an example to state, local and tribal government leaders by continuously promoting collaboration while showing real examples of how the federal government can foster public-private partnerships.

Infrastructure investments from the federal government, particularly with regards to broadband, transportation, public spaces, housing and energy will be critical, particularly where these investments are coordinated with key community anchor institutions. The federal government would also serve the growth of communities and help ensure that economic equalization occurs by developing an integrated cross-agency approach to grant solicitations relating to economic development.

For an industry organization, our future desire to develop an opportunity fund is predicated on our estimation that government can see the value and convergence between economic development, entrepreneurship and workforce development. The Minority Technology Industry is one of the fastest growing industries in the United States. Minority entrepreneurs bring a wealth of opportunity to the communities they serve and opportunity funds that are focused on this growth sector will yield a high return. www.economicequalization.org

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COUNCIL EXCHANGE BOARD OF TRADE NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND

NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND 1750 TYSONS BOULEVARD, SUITE 1500, MCLEAN, VA 22102AL AND

THE RISK AND REWARD OF ECONOMIC EQUALIZA TION

The path to economic equalization is riddled with risks and threats to underserved communities across the United States. The need for good governance is evidenced by the existence of the aforementioned Request for Information (RFI); the RFI specifically seeks to establish data values, key business questions and reporting metrics in support of the Opportunity Zone portion of the Tax Act.

The Council Exchange Board of Trade has been researching the effects of proper risk management on the same communities outlined in the Tax Act. It is our firm postulate that the ability to create sustainable, measurable and defensible impact and change in these communities is rooted in a solid foundation of Governance, Risk and Compliance (GRC). The foundation of a good program begins with sound policies and standards, good data governance practices and actionable reporting with clear data lineage.

Tracking the effectiveness of the Opportunity Zones requires a clear understanding of the outcomes and goals prescribed by the enabling legislation.

Each of the identified metrics shall not only require data elements, but also a process to manage the acquisition, maintenance and storage of the metrics data and metadata necessary to paint a holistic picture. Key business questions, metrics and the reporting goals necessary to meet the Administration’s objectives shall require a committee of the stakeholders, to establish operating baselines along with a functioning team to manage all of the overhead required for continued reporting.

The complexity of the effort is compounded by the goal to monitor, track, measure, trend and facilitate opportunity zone incentives. There are 8,700 opportunity zones and currently approximately 150 Qualified Opportunity Funds all working towards the goal of measured community impact. The Council is working tirelessly to partner with Historically Black Colleges and Universities (HBCU) and Minority Serving Institutions (MSI) to serve as anchor institutions in Regional Technology-Based Economic Development Ecosystems.

www.economicequalization.org

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COUNCIL EXCHANGE BOARD OF TRADE NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND

NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND 1750 TYSONS BOULEVARD, SUITE 1500, MCLEAN, VA 22102AL AND

THE RISK AND REWARD OF ECONOMIC EQUALIZA TION (CONTINUED)

This approach allows for the mitigation of risk by combining both the Minority Technology Industry with academia to accomplish the goals set forth by the Council Exchange Board of Trade mandate to increase the revenues of our members in a measurable and sustainable manner.

It would be a limited perspective to only look at the data elements required for reporting without looking at the people, process and technology requirements necessary to not only meet those goals prescribed in the RFI, but also to operationalize the program which will be required for future reporting goals.

Investors, community members and politicians alike should relish in the fact that bringing governance to the in-scope communities would ensure that target objectives are met on a persistent basis.

In summation, the World Bank Report titled Risk and Opportunity – Managing Risk for Development, “calls for individuals and institutions to move from being “crisis fighters” to becoming “proactive and systematic risk managers.”

There is substantial evidence that recognizing and preparing for risk can pay off abundantly. For instance, many developing countries displayed resilience in the face of the recent global financial crisis because they had previously reformed their macroeconomic, financial, and social policies.” We believe that the same applies to the opportunity zones and the minority technology industry growth goals. Reference for the complete report, click below: https://siteresources.worldbank.org/EXTNWDR2013/Resources/82580241352909193861/8936935-1356011448215/8986901-1380046989056/WDR2014_Complete_Report.pdf

www.economicequalization.org

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Authors:

COUNCIL EXCHANGE BOARD OF TRADE NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND

NATIONAL MINORITY TECHNOLOGY COUNCIL LOOKING FORWARD RESEARCH & DEVELOPMENT COMMUNITY OUTCOME FUND 1750 TYSONS BOULEVARD, SUITE 1500, MCLEAN, VA 22102AL AND Karl Cureton, Chairman & CEO Lorne Joseph, Chief Risk Officer

Council Exchange Board of Trade National Minority Technology Council 1750 Tysons Boulevard, Suite 1500, McLean, VA 22102 council@nmtcimpact.org www.council.exchange

www.economicequalization.org