At an Oval Office gathering earlier this year, President Donald Trump began touting his administration's new real estate investment program, which offers massive 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.
Government watchdogs say the case underscores the ethical minefield they created two years ago when they became two of the closest advisers to the president without divesting from their extensive real estate investments.
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 major projects under the program from Miami to Los Angeles. Separately, the couple has 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 coming back.
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 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 a gold rush of 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 Jared Kushner's financial disclosures show their personal financial empire is 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.
"All America regardless of zip codes should have access to the American dream," the president said.
An administration spokesman earlier told the AP that individual state governors nominate communities for Opportunity Zone designation based on need and the White House "has nothing to do with those decisions."
The Investing in Opportunity Act, which became law last 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.
A significant moment came when the law's key GOP sponsor, South Carolina U.S. Sen. Tim Scott, met President Trump after the violence-plagued white supremacist rally in Charlottesville, Virginia, in August of 2017.
Trump promised Scott his support for Opportunity Zones as a way to show his administration's outreach to minority communities. But Scott had already found a supporter weeks earlier in Trump's daughter, in conversations that grew out of previous meetings about passing a child care tax credit.
Political sponsors and lobbyists told the AP that Ivanka Trump played an important role in promoting the legislation, while Kushner was also quietly supportive behind the scenes.
"Ivanka was on board with it," said Sean Smith, Scott's communications director. After their first conversation, Smith said Scott and Ivanka Trump talked by phone and in person nearly a dozen times. He added that Scott also spoke to Kushner about the program, but noted, "It was much more Ivanka than Jared."
A team from Economic Innovation Group, or EIG, a Washington think tank that pioneered the Opportunity Zones concept, met with top Kushner aides Reed Cordish and Chris Liddell two weeks before the tax reform bill was passed.
Funded by Napster founder and early Facebook investor Sean Parker, EIG spent more than $1.4 million on lobbying over the past two years, both before and after the Investing in Opportunity Act passed. The group met with White House officials every quarter since the start of the Trump administration, and also met with frequently with officials from Treasury and other White House agencies, records show.
"Creating the incentive to bring capital into communities that are currently being overlooked is just a tremendous opportunity," Ivanka Trump said as her father and a crowd of supporters nodded during the White House session February 14.
Last month, at a dinner in Washington put on by the conservative Kemp Foundation, Scott singled out Ivanka Trump as his point person on the initiative. "When we were looking for help to get the tax bill across the finish line," he said, "I kept looking to the same person for help in the White House."
There is no indication 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.
But backers of the program acknowledge that Ivanka Trump's out-front role drummed up interest from public officials and financial stakeholders.
Along with the Kushner-tied Cadre Opportunity Zone funds, more than 50 real estate and private equity interests have made plans in recent weeks to create investment funds under the program, including several with ties to the couple and the Trump administration.
Last month, former White House Communications Director Anthony Scaramucci launched an opportunity zone fund tied to his Skybridge Capital investment firm, aiming to build projects worth more than $3 billion. Opportunity Zone funds have also been set up recently by New York-based Normandy Real Estate Partners and Heritage Equity Partners, two firms that have worked with Kushner Cos. on real estate ventures.
They 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.
Government officials have estimated the program would cost $1.5 billion in lost tax revenue over 10 years, but Treasury Secretary Steve Mnuchin has estimated the zones would attract up to $100 billion in renewal efforts.
While the Opportunity Zone program mostly targets census tracts of high poverty and unemployment, it also allows "contiguous" tracts that might not be low-income, but are close enough to deprived communities to be eligible.
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 following reports it was in an Opportunity Zone.
A study by the Urban Institute in Washington found that nearly a third of the more than 8,700 Opportunity Zones nationwide — and all 13 of the ones containing Kushner properties — were showing signs of heavy investment and gentrification, based on such factors as rent increases and the percentage of college-educated residents.
The most immediate advantage could come from the investment in Cadre. CEO Ryan Williams announced late last month that Cadre was starting up an Opportunity Zone fund that would aim to build major development projects in designated areas of Los Angeles, San Francisco, Seattle, Portland, Phoenix, Houston, Atlanta, Philadelphia and Miami.
The company said the program "fits with Cadre's commitment to identifying opportunities in less-advantaged areas that are primed for growth."