Thank you, Presley, for that kind introduction and thank you to Aaron Grau and the Opportunity Zones Association of America for hosting what will be the first of many roadshow events across the country.
I also want to thank all of you for your work to promote Opportunity Zones to the investor community, and I look forward to the results we will deliver together for residents of Opportunity Zones.
It is always great to be back in Pittsburgh, a city I have called home for more than 30 years. And I am pleased that I get to speak today amid a backdrop of terrific economic news: Since January 2017, the American economy has added more than 6 million new jobs, the national unemployment rate fell to 3.5% in September, women’s unemployment hit its lowest level since 1953, and unemployment rates for African-Americans and Hispanic-Americans remain at or near historic lows.
We should all take great pride that the American economy is roaring. However, we should also acknowledge and work hard to address the communities that have not shared in our country’s economic prosperity for many decades.
Many communities – including some former steel neighborhoods right here in Pittsburgh – have been left behind for a very long time. These communities have lost their factories, their businesses, their jobs, and in many cases, a sense of hope that they can play a meaningful role in the great American economic story.
President Trump came into office pledging to lift up the forgotten men and women of America, and a major fulfillment of this pledge came in the fall of 2017. That’s when the President worked with Congress to include Opportunity Zones as part of the landmark Tax Cuts and Jobs Act, which he signed into law in December 2017.
This historic new federal tax incentive is stimulating long-term equity investments in low-income communities that are eager to realize their full economic potential. There are several features of the Opportunity Zones tax incentive that distinguish it from previous federal policies aimed at stimulating economic development. And these features mean Opportunity Zones are primed for success.
First, the selection of opportunity zones relied on the input of state and local authorities. Instead of using a strict one-size-fits-all formula for the entire country, the Tax Cuts and Jobs Act empowered the nation’s governors to select opportunity zone census tracts within their states.By involving state officials at the very beginning, these selections were shaped by local perspectives that provide a context beyond economic statistics.
Second, opportunity zones encourage long-term investments. The tax benefits increase the longer an investment remains within an opportunity zone. Additional benefits specifically kick in at the 5, 7 and 10-year milestones. This means that tax rewards are reserved for those investors who bring jobs and businesses that stay for the long-term.
Finally, opportunity zones encourage private sector investment. Long-term, sustainable economic growth can only come from steady flows of private sector capital and not from dependence on federal government grants. The targeted federal support of Opportunity Zones is meant to serve as the ignition for local economic engines for which private-sector capital will serve as the fuel.
These unique features of Opportunity Zones make them promising, and our Administration is working hard to eliminate any obstacles that stand in the way of investments. In December 2018, one year after President Trump signed Opportunity Zones into law, he established the White House Opportunity and Revitalization Council, which is chaired by the Secretary of Housing and Urban Development Ben Carson.The White House Opportunity and Revitalization Council is coordinating a whole-of-government approach to bring jobs, investment, and growth to underserved communities.
The entire Department of Commerce plays an integral role in supporting the Council’s mission and Secretary Ross serves as a key member of the Council. This past April, the Council released an implementation plan that created five specific workstreams on economic development, entrepreneurship, safe neighborhoods, education and workforce development, and measurement.Not surprisingly, the Commerce Department was appointed as the lead agency on the economic development workstream. And the policy centerpiece of this workstream is Opportunity Zones.
Within the Commerce Department, the Economic Development Administration or EDA has assumed a “captain” role in coordinating Department-wide activities to spark economic development in Opportunity Zones. Earlier this morning, you heard from the head of EDA, Assistant Secretary John Fleming. John’s team at EDA is meeting with governors’ teams around the country to learn how they chose their opportunity zones; and how states and the federal government can cooperate to accelerate growth in these communities. EDA has also made Opportunity Zones an official funding priority, which means more of EDA’s grants every year will be channeled to projects located within Opportunity Zones. But our Department’s efforts to support economic revitalization stretch beyond EDA.
Our Minority Business Development Agency, or MBDA, is hosting Opportunity Zone summits across the country to help minority business owners attract the capital they need to expand. This year, MBDA hosted summits in Philadelphia and Detroit. When you consider that 56% of Opportunity Zone residents nationwide identify as a racial minority, it’s clear that MBDA will play a critical role in helping minority communities take full advantage of Opportunity Zone incentives.
I would also note that economists at the Census Bureau and the Bureau of Economic Analysis are helping develop statistical tools that can measure economic progress in Opportunity Zones.
Our Department takes a team approach to our Administration goal of economic revitalization.
This morning, John Fleming and I went together to visit the Hazelwood Green development site, which is 4 miles southeast of here in Pittsburgh’s Greater Hazelwood neighborhood. The development site is located within one of 68 designated Opportunity Zones in Allegheny County. The site’s history is a quintessential example of the rise, decline, and rebirth of a Pittsburgh neighborhood. For nearly 100 years, Hazelwood was a great industrial hub. It was home to Jones and Laughlin Steel factories that employed nearly 12,000 workers during the peak years following World War II.
As you all know, the American steel industry faced difficult times over the past several decades, in large part because of lopsided trade deals and unfair foreign trade practices that the Trump Administration is working hard to address. As the American steel industry declined, so did Hazelwood: The steel plants closed operations and the industrial lots remained empty and abandoned for years.
But today that is all changing, thanks to a consortium of non-profits and developers who see the economic potential of this Opportunity Zone. At the heart of this development is Mill 19, a decaying steel mill building that has been transformed into a modern, 240,000 square foot workspace that will serve as a home to the future industries of Pittsburgh.
Tenants in the new Mill 19 include the Advanced Robotics Manufacturing Institute and the Manufacturing Futures Initiative of Carnegie Mellon University. I met with the leadership of both these institutions back in October on National Manufacturing Day. I saw firsthand how these Pittsburgh-based innovators are laying the groundwork for well-paying advanced manufacturing jobs in the future – not just for this region, but for the entire country.
I am even more pleased that this new ecosystem of manufacturing innovation is within an Opportunity Zone. Not only can Mill 19 provide new job opportunities to Hazelwood, it will also expose the promise of advanced manufacturing to an entire community that otherwise may have been left behind. Mill 19 and the Hazelwood Green development is the kind of project we want to encourage in Opportunity Zones all across the country.
When you see the amazing things happening in Opportunity Zones, like at Mill 19 and at so many other projects around the country, you can understand why I am puzzled by some of the negativity in the press surrounding Opportunity Zones.
I ask all of you to ignore this negativity and to remember that we want all investors, to pursue new long-term projects in Opportunity Zones, because when entrepreneurs bring new businesses, new jobs, new ideas, and ultimately new wealth to Opportunity Zones, we are integrating new communities into our economic picture that otherwise would have been overlooked.
When successful investors and companies give Opportunity Zones serious consideration, this is evidence of the tax incentive’s success.
I also encourage state and local leaders to continue to explore additional policies to draw investments into Opportunity Zones. John mentioned earlier the new Opportunity Zone tax credit implemented by Ohio Governor Mike DeWine, and we would love to see more policies like this take effect in Pennsylvania and around the country.
State and local initiatives can greatly multiply the federal and private sector support of Opportunity Zones. By coordinating investments and government support, we can create a snowball effect of economic momentum that delivers meaningful and sustainable economic growth to these communities.
Opportunity Zones are at the center of the Trump Administration’s agenda to ensure that many long-forgotten communities have a chance to fully share in the success of our nation’s hot economy. But our Administration can’t do it alone, and this is why all of us at the Department of Commerce look forward to working with those of you in this room.
Thank you all for being here today, and most importantly, thank you for your hard work to bring hope to our neighbors in Opportunity Zones.