There’s no question that the new Opportunity Zone program is generating enthusiasm in most economic development quarters, along with a measure of trepidation in others. But no one knows how to prove success or failure from Opportunity Zones, which were created by the 2017 tax overhaul, H.R. 1 (115), to boost economic development in struggling areas.
The New Proposed Regulations provide more flexibility in the way taxpayers can qualify for the benefits of the Opportunity Zone tax incentive program. With limited exceptions, taxpayers are permitted to rely on the New Proposed Regulations before they are finalized. These largely favorable regulations enhance scalability and are likely to lead to increased investment in Qualified Opportunity Zones.
The zones, designated low-income communities based on census data, are part of a program created in the 2017 federal Tax Cuts and Jobs Act that will allow big institutional investors, such as banks, to defer capital gains and earn tax-free interest by putting their money into housing and business development efforts within the areas.
Opportunity zones present a great tax advantage to real estate investors in the US housing market. So it’s no surprise that once more guidelines were put in place and clarified earlier this year, demand from investors would shoot up in these regions across the nation. The result? Property prices have increased significantly.
Without a coordinated effort that includes policymakers, investors, fund managers and philanthropists, Council members are concerned the residents of the Opportunity Zones won’t have a voice, could be displaced if their neighborhoods become gentrified and “are at risk of losing out and falling further behind, while Zones in already-gentrifying parts of urban areas like New York City or Washington, D.C., continue to draw the lion's share of development capital,”...
Opportunity zones have been a hot topic in the impact finance industry since their announcement, but do CDFIs and other impact lenders have a role to play? Michael Swack and Charles Tansey think so. They join us on this episode to discuss their recent white paper, “The Potential Role for CDFIs in Opportunity Zones,” which was published by the University of New Hampshire Carsey School of Public Policy with the support of Enterprise Community Investment.
The end of 2019 marks a major deadline for investors seeking to use the 2017 tax law provision to shelter 15% of their profits from stocks and other investments, particularly from real estate, from taxes. In return for the tax break, they must hold their investments in mostly low-income opportunity zone census tracts for seven years, under tax code Section 1400Z-2.
More than 8,700 newly created Opportunity Zones are now racing to attract a portion of the $6 trillion in capital that may flow under a provision of the new tax law enacted in 2017. The law uses a package of tax incentives to jumpstart economic development in distressed communities by financing local startups, building small businesses, or developing properties--but there are also opportunities for education institutions and workforce-development programs.
We are excited to share our fiscal 2019 annual report. The Economic Growth Institute is expanding its research, company engagement, and education initiatives, which are shared in this year's report. The Institute has provided innovative economic development programming and applied research for over 35 years. - Economic Growth Institute
After 18 months, some communities are starting to see Opportunity Zones (OZ) investments. LISC, a community development entity with a long track record of project finance, has published a new guide to help communities plan to capitalize on the investment. These activities remain heavily focused on real estate projects but may still be informative for groups looking to bolster their regional innovation economy.