WASHINGTON, D.C. – U.S. Senator Martin Heinrich (D-N.M.), Ranking Member of the Joint Economic Committee, delivered the following statement at today’s hearing entitled, “The Promise of Opportunity Zones.” In his remarks, Senator Heinrich emphasized the promise of the program to bring unprecedented levels of private investment into communities who have not received it. Senator Heinrich also laid out the potential pitfalls of the program if appropriate guardrails are not established.

Below are his remarks as prepared for delivery:

“I’d like to thank Chairman Paulsen for holding today’s hearing. I also want to recognize my colleagues Senator Booker and Senator Scott for their important work to create a new incentive to invest in communities with high poverty and persistent unemployment.

Mr. Chairman, my good friend Senator Booker couldn’t be here this morning, but provided a statement and asked that it be entered into the record. It is good to have my colleague from South Carolina here with us today – Tim, I look forward to your testimony and I want to thank you and Cory for your leadership on this issue.

Even today, more than 10 years after the recession began, the recovery still hasn’t reached many communities—both rural and urban. In New Mexico, our statewide unemployment rate is almost 50 percent higher than the national average, and in some areas, it’s much higher.

Across the country, there are more than 50 million Americans living in distressed communities. There’s enormous talent in these communities, but we’ve underinvested in it.

While the Chairman and I disagree on the underlying Republican tax bill, a partisan bill that continues to leave working Americans behind, we do agree that Opportunity Zones hold the promise to direct some much needed financial investment to places like New Mexico.

Opportunity Zones are an important addition to the toolkit. They can support investments in affordable housing and small businesses while spurring job creation. And they can help lift living standards in neighborhoods across the country.

The new Opportunity Funds have the potential to attract high-net worth investors who previously have not invested in low-income communities.

Thanks to the long bull market, many investors are sitting on substantial unrealized capital gains that we can put to work generating housing, jobs, and growth.

What distinguishes Opportunity Zones from other federal efforts to stimulate growth in distressed communities, such as the New Markets Tax Credit, is flexibility.

There are few investment constraints. Funds can invest as much as they want. There is no competition to receive the benefit. 

But with this flexibility, there is risk that the social impact will be not as great as we would like. 

To achieve broad public benefits, projects should be part of a community strategy to create jobs, boost entrepreneurship, increase affordable housing, and promote economic development.

Investors should also tap the vast expertise that exists in the private, public, and non-profit sectors about how to make high-impact community investments. And we are fortunate to have some of that expertise here with us today.

I’ve seen firsthand the important work Enterprise and LISC, together with their partners, have done in New Mexico providing affordable housing and creating jobs in Catron, Gallup, Las Cruces, and in Santo Domingo Pueblo.

And, Opportunity Zones can help us do more.

Poverty is stubborn. One in five children grows up in poverty in this country, a number that hasn’t moved much in a generation. 

In New Mexico, three in ten children grow up in poverty, and in some of our counties, close to half of all children live in poverty. 

Growing up poor has lasting impacts on a child’s development, affecting success in the classroom and educational and employment outcomes later in life.

In addition to expanding proven credits and programs like the Earned Income Tax Credit and Head Start, we need new approaches.

Two-generation models can increase opportunities for families living in poverty by simultaneously targeting children and parents with programs and supports to boost economic security and improve the health and well-being of the whole family.

Opportunity Zones offer an additional path to spur economic development.

Before the new zones are implemented, we have time to think through some guardrails that can help ensure the intent of the legislation is realized.

We should monitor how much money is flowing where, who is making the investments, and what kinds of projects are being funded.  

We need the engaged involvement of community development experts. The folks who do this important work every day see this as a tool that can be harnessed for social good, and their sustained engagement is critical.

We need to make sure that rural and tribal communities are getting a fair share of the funds. The designation of zones so far splits about 75/25 urban to rural.  

That’s a good start. But the key questions will be: are investments getting made in rural zones and on tribal lands, and what more can we do to assist these communities in building a pipeline of projects that get funded.

Ideally, I would like to see data collected on job creation, poverty reduction, and new business formation across zones.  These numbers would tell us a great deal about the impacts of the newly created zones.

Ultimately, transparency wins the day.  Knowing more allows us to do more. 

Closely monitoring implementation and establishing appropriate guardrails either through rules or additional action by Congress can go a long way toward ensuring that Opportunity Zones bring new economic activity to communities who desperately need it.

This is big opportunity, let’s seize it. Thank you to the witnesses for being here today.  I look forward to your testimony.”

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For more information, please contact Latoya Veal at Latoya_Veal@jec.senate.gov or 202-224-0379.