YouSaid · the spoken record

J. D. Vance

lines on the record: 33
first: 2019-05-22
most recent: 2019-05-22
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“So, I think we're having this really important national conversation today about income inequality and the haves and the have-nots, and there are their views on all sides. But I think one thing we can all agree on is that everyone should have the opportunity to grow and succeed. And to have that opportunity, we think it's really important to live in a neighborhood that has quality housing that your family can afford, great schools where you can learn, access to fresh food, great health services, and of course an array of jobs that's going to give you the opportunity to take care of your family. And right now, that's just not the case in many low-income neighborhoods. And despite that, within those neighborhoods, there are of course incredibly smart people with great business ideas who want to innovate, who want to grow, who want to solve so many of these challenges. And that's what we're looking for investors. We seek to back those people and their projects and their businesses and their ideas, and there's no way we're going to change the situation.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Really have to take it back to opportunity zones, not necessarily the specific incentive, but I think the dialogue we're in. Community and economic development can be a very niche and sort of isolated world within investment and investing. And even with all the talk, I would say over the last, I don't know, I call it four or five years when impact investing has gotten a lot of attention. You know, it's still sort of off on the side in a way. And so I think opportunity zones just have a lot of people talking about neighborhoods that they wouldn't be and not even just in the investment community, but you have mayors and economic development agencies almost just, I wouldn't say pride, but just a little bit more energy around solving some of the challenges in their neighborhoods and really being thoughtful about what public-private partnerships can do. And so we'll see what happens with opportunity zones and what these funds end up looking like and the investments that happen. But I think that the dialogue right now is healthy.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“I thought that at some point in my life I would be in this space more broadly right when I was 21 years old. I probably couldn't really articulate exactly what this space was. But, you know, I spent my very, very early years in Legos, Nigeria and was able to witness poverty on a level that I think was quite profound and stuck with me. And then I went to middle school and high school in Houston, Texas where I lived in a fairly low income neighborhood. So these challenges are not foreign to me. The idea that where you are and live and your neighborhood really matters is something that I understand personally. And so in getting to Goldman, I actually didn't start in the urban investment group. I started in our equities division being able to join the urban investment group and use my analytical skills and be a deal junkie for good in a way, you know, it's probably not something I envisioned when I walk through the door, but I've been in the urban investment group for almost 14 years now, and it's been a great experience.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Risk management. So at the end of the day, if you're going to invest in a business or real estate project, it should be one that the people in that community want and are going to utilize and is going to be productive. And I just think that it will take time for a new investment community who hasn't focused on these neighborhoods to understand that and get that. And I think that's the case when anyone goes into a new asset class. I think this is just particularly nuanced.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“I think it's a valid concern. I think it's a little too binary for one to suggest that people who are motivated by profit cannot make a positive impact. I just think that's fundamentally false. The grocery store in your neighborhood is probably financially and profit motivated, but they still supply fresh food that's good for you and your family. I don't think it has to be so either or. What I will say is that I do think that the challenges in these communities are complicated. They didn't happen overnight. There's significant overlap, unfortunately, with redlining dating back to the 1930s when banks with the explicit support of our federal government basically would not lend to the majority of black Jewish and immigrant neighborhoods in this country. That's complicated stuff. We're not going to solve it overnight. We're not going to fix it overnight. But I do think that every investment people should be thoughtful about is this really moving the needle in a positive direction or not? And even if you don't care about impact, you probably care about”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Another controversy around the opportunity zones is the argument that investors are just coming into these disadvantaged areas to make money. And they're not that concerned about the community and human aspect. How much of a concern is that, and how do you think about that problem?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“You're correct. Currently, the reporting requirements are close to non-existent. There's not too much you have to do other than choose a business or real estate project that's in the right place and self-certify that you've done so. However, just recently the program's initial co-sponsors, Senators Booker and Scott just released a draft of a bill that would require investors to report annually to Treasury some basic details about their opportunity zone investments. This hopefully will not only encourage an increased focus on impact for fund managers, but will also be an important data aggregation process for policymakers, taxpayers more broadly to really evaluate whether this program truly did have the intended impact”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“You alluded to this earlier, but there's been some pushback around the Opportunity Zone funds, and some people have been saying that the supervision, reporting requirements are a little bit lax, and that there's not a good way to make sure that the funds are actually meeting the criteria. Where are we on?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“It's allowed us to be just far more solutions oriented. So if you take a place like Newark, New Jersey, for example, housing is certainly a challenge there. You know, before we got involved, there hadn't been a quality new construction housing development in the downtown over 40 years, if you can imagine. But that wasn't the only issue. They also had issues around fresh food, issues around the school system when we started investing in New York, the graduation was barely above 50%. And so being able to really have capital and solutions for a range of challenges, it allows you just to accelerate that economic development when you can really focus on multiple angles.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“So, you talked a little bit about how our philosophy of investing has changed, and we might in the past have invested a single asset, but now we're looking at multi-asset strategies that sort of take into account all the challenges in one of these neighborhoods. So how's that played out in some places where we've invested?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Billion of that was in opportunity zones, so in effect, this is work that we're already doing. We think we're going to have some great new players in the space as folks are just showing and demonstrating so much interest. And we think it's something we're going to be using not in isolation, but as part of a comprehensive strategy.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“We've been investing, like you mentioned, in these communities for close to two decades. And so there's not really a change in strategy. I think the way that we're thinking about it, it's another tool in the tool belt. So our approach, which we've developed again over the last 20 years, has really showed us that to go into these neighborhoods and make a difference, it's very difficult to do it with just one product or one asset class. So we started primarily just doing private equity and just focused on housing. And over the years, we realized you really have to be able to think about fresh food and grocery stores, schools, assets that are going to create jobs, workforce development. And then we built out the financial products as well, so not just equity, but doing debt, tax credits, really being able to be solution-oriented as opposed to product-oriented. And so as we think about opportunities zones, this is just another benefit and incentive that is going to drive work in communities that we're already doing. So if we look back across the 8 billion that we've invested, we looked at this the other day.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“So, Margaret, you run Goldman's Urban Investment Group, and you've been investing in these kind of communities for a long time. How are you rethinking the strategy for your own team in light of these recent developments and the opportunity zone opportunity?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“I think these are definitely new entrants. I think if you sort of think about community development and economic development broadly, it's not like we just started talking about low-income neighborhoods at the end of 2017. So there are many community development financial institutions who are significant in this space. But what do they do? They tend to do lending. You have the CRA motivated banks who tend to do a lot of lending as well, tax credit investing. This is about private equity. We're talking about capital gains and benefits that you get only with true equity ownership. One of the big entrants into the space is the traditional real estate private equity community. And I do think it's important and positive and progress for a lot of these institutions and fund managers to be thinking about neighborhoods that they just, quite frankly, I don't think would be talking about if it weren't for opportunity zones.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“A specific strategy around a neighborhood, a specific asset class, and less all of the conversation about the structuring and tax incentives, et cetera, but more, what are these deals? What are we doing?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“So I think there's even been a change over the last couple weeks since the last round of regs that I think personally has been positive. So first, the range of investors that have reached out to us and have demonstrated interest is pretty broad. You have everything from high net worth investors, institutions, corporations, you have the foundation and philanthropic community trying to see what role they can play. And I feel like with a lot of the questions in the regs, so much of this was about what's the exact structure and let's quantify this benefit and what's the real incentive. Now I feel like there's more a movement to talk about what are the deals? What are we investing in? What are the risks of these underlying asset classes and projects? And where do I want to invest? You know, you hear about big national opportunity funds, but are people really going to, in a thoughtful, risk-managed way invest across all 50 states? I don't think so. So I think what you'll start to see is more regional funds develop where there's”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“So we've seen investors rush to raise money. Obviously, you see a new fund announced almost every day, right? But how are the investors actually proceeding? Are they rushing to deploy capital given the nature of the tax break and the need to get in early or are they taking it slower”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Chunks. And so I think what the industry and space needs to do is one, really get these regs down so every deal does not have millions of dollars of consultants and lawyers still trying to figure this out once we get into more of a routine and rhythm about how these deals are structured and those transaction costs can come down. I think I'll just allow for smaller deals, which will be helpful. The other thing that's going to really important for some of these smaller markets or more challenged markets is really going to be the responsibility of the public sector to market their city, market these neighborhoods say you won't just come here and make this one investment. We have a pool of investments. We have a strategy. We have neighborhoods that we're focused on. And so I think the more that the investing community can feel like they're going to make investments that are sound, they can do it efficiently, that will help some of the more challenged areas.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“So I think this is a difficult one. I mean, one of the things that I'll say about this federal tax base incentive relative to others that we've seen in the economic development space is that it's not allocated. So many previous bills, initiatives, et cetera, they would say, hey, California, you get this much based on population, New York you get this much, et cetera. So people aren't going to leave dollars on the table. So even if it was in a market that has smaller deals or more distress, incentives tend to get used. There's no allocation whatsoever. So every single dollar could get invested in downtown Portland as an example and you could have rural areas literally get zero. That's a little extreme, but that's one of the problems that fund managers and investors are going to focus on the places that are easier to invest. So what does that mean? Larger deal sizes. So if you are going to put in the work to structure a deal and you want to put out a billion dollars, are you going to do that in $5 million slugs or are you going to try to do that in a million dollars?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“I really do think those headlines are the exception and not the rule. If you look at actually Urban Institute did a really great study where they looked at basically signs of gentrification, so looking at capital that's flowing into a place, educational attainment, incomes, et cetera. And they actually found that only 4% of the opportunity zones that were selected were seeing that change anyway over the last couple decades. And so look, there's a lot that could be criticized about Long Island City, but you also have to really peel away the strategy of the public sector and every governor and every mayor had a different strategy. Here in New York, what we noticed is a lot of the census tracts that were chosen, including the ones in Long Island City, were also centered around the city's clusters of public housing. And so, yes, does Amazon need a subsidy? We can all debate that. But would people in one of the largest public housing developments in the country have benefited from that opportunity zone? I think so.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“You mentioned the criticism that some of the zones might have attracted capital anyway without these tax incentives downtown Portland, Oregon, Long Island City here in New York where Amazon was looking at a second headquarters. What's the argument to counter that?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Spread all across the country. Each governor had the opportunity to choose 25% of their eligible low-income neighborhoods, so they're in all fifty states, Washington, DC, Puerto Rico. 10% of the country's population lives in an opportunity zone. And so while a lot of the headlines were focused on the urban areas that were chosen, a full quarter of them were in rural areas. And there's been a lot of concern that maybe the opportunity zones that were selected weren't actually the most distressed or really in need of capital. If you look at them across the board and compare them to the zones that were eligible for choice, they are actually more distressed. They have lower incomes. They have higher unemployment. We've made actually eight opportunity zone investments on balance sheet to date. And again, there's a significant variety across these neighborhoods and what they look like and what the challenges are. One of the stats that I actually found most striking when we looked across all opportunity zones is that thirty-eight percent of adults”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Let's talk a little bit about where these opportunities zones are, where these communities that are struggling. I think in the past a lot of people focused on urban areas, but obviously we all know that a lot of rural areas have been left behind as well. So what are the opportunity zones look like on a map?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“I think we will. I don't think you'll see the same amount of capital and fund generation that you're seeing on the real estate side. I mean, I think you hit it on the head. At the end of the day, real estate is just definitionally a place-based asset. Whereas even now with the clarification about what businesses count, I think that folks are going to struggle a little bit to really create large pools of capital that are going to go into businesses that are deciding to be in a place just because it's in an opportunity zone. I think the other issue there is that corporate private equity funds, that tenure hold is going to be a little bit of a challenge, especially for fast-growing businesses like the venture model. You go to the next round, you're looking for that next capital raise, you're looking to take some liquidity off the table, in many cases far earlier than 10 years.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Initially, obviously, a lot of the interest was in real estate because that was clearly within the purview of the rule. Will we see new funds now that we've got a little clarification on the business side? Will we see funds that specifically focus on businesses in these underserved communities?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“So that was one really important clarification. Another one was about how depreciation will work. So a lot of folks were focused on, well, after I sell the investment at the end of the 10-year period, are my depreciation benefits going to recapture? And in most cases, they are not. So that was another really important clarification. And then lastly, there were, and this goes to the point about there still being lingering questions, there was a lot of clarification about what businesses would count. So Treasury came out with guidance about how you could qualify a business in an opportunity zone based on where it's located, where the goods and services are sold, where the employees are located. So now there are a few different ways to qualify for a business. That said, I think that raised additional questions as well.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“There were a few main clarifications, even though there's still questions lingering really did put this on a fast path. So first, one of the original issues with the regulations is that you only got that last third benefit, basically the elimination of capital gains tax on the investment, if you sold your interest in the opportunity zone fund. So what that does, it doesn't really make it possible to do multi-asset vehicle because everyone's focused on your sale of the fund as opposed to, well, what happens when I sell the underlying assets? So one of the things that this last round of regs clarified is that you get that benefit, that elimination of taxes for holding for 10 years when those assets are sold, not just when you're interested in the fund is sold. Seems like a pretty technical detail, but if you think about how funds are organized, everyone wants diversification. Fund managers are used to pooling investments, coming up with a theme, an investment thesis, and then really getting people to buy into that full fund or pool of assets.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“That explains why we're seeing so much money flow into this space. Correct. So there's been some confusion around how it would actually work in the details, but Treasury, the Department of Treasury, just released a second round of regulations to help clarify how it would actually operate. What did we learn from that latest batch of regulations and what questions are investors still asking?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Taking capital gains and investing them into Opportunity Zone funds, you get three benefits that are pretty attractive. One, you get to defer paying that initial tax until the earlier of when you sell that opportunity zone fund investment or to 2026. So just to pause on that for a second, it's by definition a perishing benefit. So if you invest today, you're going to get a longer deferral than if you invest, of course, a year or two years from now. And that's what's driving a lot of the energy and real rush in the space to really figure this out quickly. The second benefit is a reduction in the original capital gains tax. So if you hold that opportunity zone fund investment for five years, you only pay 90% of that original capital gains tax. And then if you hold the investment for seven years, you only pay 85% of that original capital gains tax. And then the third benefit, which we think is the most attractive, is in that actual opportunity zone fund investment, if you hold it for 10 years, you eliminate...”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“One of the primary issues in these neighborhoods is that they have not seen the level of investment that you see in other places. They are not new businesses being open. There are not new buildings going up. There's not new housing being developed. That's a generalization, but across the board. And so the goal of the opportunity zone act was to take capital, those trapped on the sidelines, and find a way to incent that capital to flow into these neighborhoods in a long-term way.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“About the financial argument for investing in these communities, the 2017 tax overhaul created incentives for investing in what are called opportunity zones, and we'll talk a lot about that phrase. What are opportunity zones and what were they trying to accomplish with this legislation?”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Cycle of underinvestment that continued. You didn't get new schools, new buildings, new jobs, etc. And so we simply have to reverse that. And the only way to reverse that is to start to bring that private capital back into these neighborhoods.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT
“Sure. It's no secret that ten years into a very strong financial recovery here in the US, there are still challenges facing many Americans. So just to put a few numbers around that, right now one in six people in this country live in a distressed community. That's fifty two million people in total. These are neighborhoods with low graduation rates, shrinking job markets. Many of them have high vacancy. So while there's a robust conversation at the national level about how we've hit record low unemployment, unemployment rates in some of these communities are still as high as 30%. So all that to say, place matters so much. If you are born in, educated in, living in, working in the low-income community in the U.S., your experience is vastly different from that of other Americans. So where are these neighborhoods? Unfortunately, they're not random. These are the same neighborhoods that have been suffering since red line started decades and decades ago, pretty much eliminating private investment, and that then, of course, created a vicious circle.”
2019-05-22 · Goldman Sachs Exchanges · What's the Business Case for Investing in America's Low-Income Communities? · IDENTIFIED FROM THE TRANSCRIPT