WASHINGTON -- At an Oval Office gathering earlier this year, President Donald Trump began touting his administration's new real estate investment program, which offers large tax breaks to developers who invest in downtrodden American communities. He then turned to one of the plan's strongest supporters.
"Ivanka, would you like to say something?" Trump asked his daughter. "You've been pushing this very hard."
The "opportunity zone" program promoted by Ivanka Trump and her husband, Jared Kushner, -- both senior White House advisers -- could also benefit them financially, an Associated Press investigation found.
Kushner holds a big stake in a real estate investment firm, Cadre, that recently announced it is launching a series of opportunity zone funds that seek to build large projects under the program from Miami to Los Angeles. Separately, the couple have interests in at least 13 properties held by Kushner's family firm that could qualify for the tax breaks because they are in opportunity zones in New Jersey, New York and Maryland -- all of which, a study found, were already making comebacks.
Six of the Kushner Cos. buildings are in New York City's Brooklyn Heights area, with views of the Brooklyn Bridge and Manhattan skyline, where a five-bedroom apartment recently listed for $8 million. Two more are in the beach town of Long Branch, N.J., where some oceanfront condos within steps of a white-tablecloth Italian restaurant and a Lululemon yoga shop list for as much as $2.7 million.
There's no evidence the couple had a hand in selecting any of the nation's 8,700 opportunity zones, and the company has not indicated that it plans to seek tax breaks under the new program. But the Kushners could profit even if they don't do anything -- by potentially benefiting from a recent surge in opportunity zone property values amid strong interest from developers and investors.
Ivanka Trump's advocacy for the opportunity zone program "creates a direct conflict of interest with her spouse's investment in Cadre," said Virginia Canter, chief ethics counsel for the nonprofit Citizens for Responsibility and Ethics in Washington. "Jared Kushner's interests are Ivanka Trump's interests and vice versa."
Ivanka Trump and Kushner's financial disclosures show that their personal financial holdings are worth between $200 million and $800 million, with much of it in real estate, including Kushner's stake of between $25 million and $50 million in a holding company with an ownership stake in Cadre. Kushner previously had Cadre-related management positions, but he terminated those roles when he joined the Trump administration, holding onto his passive stake.
The disclosures require recusal from dealing with policy matters that touch on real estate and "would have a direct and predictable effect on Cadre." Ivanka Trump also has interests in Trump Organization properties which are not located inside opportunity zones.
"Ms. Trump has divested assets, set up trusts, removed herself from businesses and decisions about her investments," Abbe Lowell, ethics counsel for the couple, said in a statement. "In addition, she adheres to the ethics advice she has received from counsel about what issues she can work on and those to which she is recused."
The Kushner Cos. did not respond to requests for comment.
Ivanka Trump continued her promotion of opportunity zones in a series of tweets Wednesday. "Opportunity Zones will catalyze private sector investment that will create jobs + economic growth in overlooked communities nationwide," she wrote.
But neither she nor her father commented on the AP investigation later Wednesday during a White House event where the president ordered the establishment of a council headed by Housing Secretary Ben Carson to aid the opportunity zone program.
The Investing in Opportunity Act, which became law in December as part of the Republican-sponsored tax overhaul, never gained traction when it was first proposed during the Obama administration, but it quickly found favor in a White House headed and dominated by real estate developers and investors.
Political sponsors and lobbyists told the AP that Ivanka Trump played an important role in promoting the legislation, while Kushner was quietly supportive behind the scenes.
There is no indication that the couple directly intervened in the shaping of the opportunity zone program specifically to advance their financial interests. And public officials say there is no evidence that any actions were taken to influence the selection of opportunity zone boundaries.
Investors are flocking to what financial analysts say are some of the most generous tax benefits they have ever seen. Investors who plow capital gains from previous investments into opportunity zone projects can defer taxes on those gains up to 2026. If they decide not to cash out their investment for seven years, they get to exclude up to 15 percent of those gains from taxes. And they can permanently avoid paying taxes on any new gains from investment in the zones if they hold onto the investment for a decade. With capital gains taxes as high as 23.8 percent, the savings can easily add up.
Critics say that could allow developers to cash in by targeting zones already teeming with investment and gentrified neighborhoods. Amazon's recent decision to locate a new headquarters in the bustling New York City neighborhood of Long Island City, for example, drew rebukes after reports that it was in an opportunity zone.
Business on 12/13/2018