The Spring Street Brief

The Government Accountability Office has released a comprehensive report on the Opportunity Zone tax incentive, responding to a congressional request for review in the aftermath of the One Big Beautiful Bill Act (OBBBA), enacted in 2025. The report examines how OBBBA provisions reshape future zone characteristics, what states and stakeholders experienced under the original program, how much is actually known about community impact, and whether the new law's reforms address the original program's documented shortcomings — a question with direct implications for LIHTC investors, developers,...

Show Notes

The Government Accountability Office has released a comprehensive report on the Opportunity Zone tax incentive, responding to a congressional request for review in the aftermath of the One Big Beautiful Bill Act (OBBBA), enacted in 2025. The report examines how OBBBA provisions reshape future zone characteristics, what states and stakeholders experienced under the original program, how much is actually known about community impact, and whether the new law's reforms address the original program's documented shortcomings — a question with direct implications for LIHTC investors, developers, and policymakers who have used OZ equity to layer into affordable housing deals.

Key Takeaways:

  • The GAO report was commissioned by Congress specifically to evaluate the OBBBA's changes to the Opportunity Zone program, signaling active legislative scrutiny of the reformed incentive.
  • The report's four-part scope includes zone characteristics under the new law, stakeholder experience with the original incentive, community impact awareness, and whether OBBBA reforms resolved prior program challenges.
  • The original OZ program, created under the 2017 Tax Cuts and Jobs Act, drew persistent criticism for concentrating investment in already-transitioning neighborhoods rather than deeply distressed communities.
  • A key GAO focus is the measurability of community benefit — a gap that has complicated both program defense and policy refinement since the program's inception.
  • Deals layering OZ equity with LIHTC credits have been a notable market feature; shifts in investor behavior driven by the revised incentive structure will directly affect deal economics in those transactions.
  • The report documents state-level administrative experience with zone designations, surfacing friction points that will inform how states approach designations under the new rules.
  • Congressional appetite for further reform will be shaped by whether the OBBBA version of the program produces outcomes the GAO report framework can measure and validate.

For practitioners structuring deals that layer Opportunity Zone equity with LIHTC credits, or state HFAs and agencies advising on zone designations under the revised program, this report is the most authoritative current assessment of what has actually changed and what remains unresolved. Monitor follow-on congressional activity closely — this GAO report is likely to serve as the evidentiary foundation for the next round of OZ legislation.

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