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The Trump Associates Benefiting From a Tax Break for Poor Communities

President Trump has called it “the hottest thing going,” a multibillion-dollar tax break designed to channel investments into poor neighborhoods, leading to new housing, businesses and jobs.

The tax benefit allows people to delay paying taxes on profits from stocks or other investments for years. To qualify, they have to direct their untaxed gains into federally certified regions known as opportunity zones. Profits on those investments are then tax-free.

While some money is flowing to poor communities, the most visible impact so far has been to set off a feeding frenzy among the wealthiest Americans. They are poised to reap billions in untaxed profits on high-end apartment buildings and hotels in trendy neighborhoods, storage facilities that employ only a handful of workers or student housing in bustling college towns.

Read our investigation of the opportunity zone tax incentives here:How a Trump Tax Break to Help Poor Communities Became a Windfall for the RichOpportunity zones were created as part of the Trump tax law to lure investment to distressed areas. But much of the money is fueling real-estate developments targeting the affluent.Aug. 31, 2019

Among those investing in opportunity zones: Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team; Leon Cooperman, a hedge fund manager; Sidney Kohl, one of the developers of the department store chain; and Richard Forman, the former owner of the Forman Mills chain of clothing stores. Big banks like JPMorgan Chase and Goldman Sachs are getting into the mix, too.

Here are four high-profile beneficiaries of the tax break who have personal or professional connections to Mr. Trump.

A hotel in New Orleans

Anthony Scaramucci

The former White House communications director runs an investment company, SkyBridge Capital, that is using the opportunity-zone program to help build a new hotel, outfitted with an opulent restaurant and a rooftop pool, in the trendy Warehouse District of New Orleans.

Skybridge has raised more than $50 million from outside investors, and most of it is being used to help finance the hotel, which will likely be the first of numerous opportunity-zone projects financed by SkyBridge, according to Brett S. Messing, the company’s president.

Most of the money for this opportunity zone fund, Mr. Messing said, has come from about 50 different investors, who have sold houses or have cashed out on profits from private equity investments or hedge funds.

A luxury community in Miami

Richard LeFrak

Mr. LeFrak, a longtime confidante of Mr. Trump’s and a major campaign donor, is building a sprawling luxury residential community in the middle of an opportunity zone in Miami, though it’s unclear how much of the development’s funding will end up being tax-advantaged.

In an opportunity zone in Miami, Mr. LeFrak, who donated nearly $500,000 to Mr. Trump’s campaign and inauguration and is personally close to the president, is working with a Florida partner on a 183-acre project that is to include 12 residential towers and about 500,000 square feet of retail and commercial space.

“We are still evaluating it at this point,” said Daniel Salas, general counsel for the project, in an interview this summer.

Stu Loeser, a spokesman for Mr. LeFrak, said the company’s “analysis so far finds that the program wouldn’t work for more than 90 percent of the project.”

A Miami High rise

The Kushners

Jared Kushner’s family company owns or is in the process of buying at least a dozen properties in New York, New Jersey and Florida that are in opportunity zones. That includes a pair in Miami, where Kushner Companies plans to build a 393-apartment luxury high rise with sweeping views of Biscayne Bay, according to a company presentation for potential investors.

“Kushner Companies is considering the option of accessing opportunity zone funds,” the company said in a statement, but it added that the Miami project likely will not use them.

In addition, Cadre, an investment company co-founded by Mr. Kushner and his brother, Joshua, is raising hundreds of millions of dollars that it hopes to use on opportunity-zone projects.

An Apartment Building in New Jersey

Chris Christie

Mr. Christie, the former governor of New Jersey and a one-time adviser to Mr. Trump, has raised money for opportunity-zone investments, including an apartment building in Hackensack, N.J., and a self-storage center in Connecticut.

More on the tax cuts:How a Trump Tax Break to Help Poor Communities Became a Windfall for the RichAug. 31, 2019Face It: You (Probably) Got a Tax CutApril 14, 2019House Gives Final Approval to Sweeping Tax OverhaulDec. 20, 2017


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