Under a regulation called the Community Reinvestment Act, U.S. banks have been required by law to return a portion of their money to low-income communities. But regulators are proposing a change that would redefine that requirement, and it could help boost the construction of sports stadiums.
According to Bloomberg, the proposal outlines a list of hypothetical ways for banks to meet their obligations as required by law, including one that says by “investment in a qualified opportunity fund, established to finance improvements to an athletic stadium in an opportunity zone that is also an LMI (low- or moderate-income) census tract.”
The Community Reinvestment Act, which was enacted in 1977, seeks to ensure that banks support lower-income areas where loans are often more difficult to procure. Data collected on bank support for these areas is taken into account when authorities decide whether to allow certain bank activity, such as adding new branches or taking over other banks.
The proposal is not without its critics, who worry that the move to allow investments in sports stadiums to count as support for lower-income areas would reward banks and investors for building projects that do little to actually help their neighborhoods. Oregon Senator Ron Wyden actually introduced legislation in November that would give the public more information on which projects claim tax breaks and other benefits for investments in opportunity zones. Wyden’s bill would seek to prevent certain projects, such as stadiums and luxury apartments, from receiving such breaks.
“There are no safeguards to ensure taxpayers are not simply subsidizing handouts for billionaires with no benefit to the low-income communities this program was supposed to help,” said Wyden when the bill was introduced.
The regulatory proposal is open for public comment, and nothing has been approved yet. Spokespeople for the regulatory agencies involved in drafting the proposal told Bloomberg that they are eager to hear public feedback.
“The proposed list of activities related to opportunity zones are intended to encourage economic growth and jobs in low- and moderate-income areas,” a spokesperson for the Office of the Comptroller of the Currency told Bloomberg.
