Running List of Key OZ Links
See the links below for more detailed information and summaries:
- Opportunity zones and urban revitalization: a place-based approach to the emerging market (Katz & Higgins 2019)
- DRAFT Monterey County OZ Story Map
- 2nd Proposed Opportunity Zone Regulations, April 17, 2019
- CALOZ.org Opportunity Zone Portal, March 25, 2019
- Accelerator for America: Opportunity Zone Guide
- Proposed Opportunity Zone Regulations, October 19, 2018
- Novogradic, Treasury Guidance Summary, October 19, 2018
- Investing In Opportunity Zones, CDFA, ADC, October 10, 2018
- NDC Webinar, July 27, 2018: Opportunity Zones Implementation
- Forbes Magazine Article, July 18, 2018: Opportunity Zones Backstory
- Novogradic, ADC, June 19, 2018: Investing in Opportunity Zones
- CA Department of Finance
- US Department of Treasury Community Development Financial Institutions (CDFI) Fund
- California Opportunity Zone Portal
- OZ Frequently Asked Questions – IRS
- Understanding OZs – Federal Reserve Bank of San Francisco
Background & Updates
9 Census Blocks in Monterey County are qualified Opportunity Zones (OZ) (8 in North County/Peninsula and 1 in South County). Track #14102 on the south/southeast edge of the City of Marina (northern edge of the former Fort Ord) is among them. Downtown Seaside has 2 large tracts, and the City of Salinas has 5.
Opportunity Zones (OZ) are an innovative, flexible, and bipartisan solution for catalyzing private sector-led economic growth. OZ were established by congress in the Tax Cuts and Jobs Act of 2017.
OZ offer investors three incentives for putting their capital to work in economically distressed communities:
- A temporary deferral: An investor can defer capital gains taxes until 2026 by rolling their gains directly over into an Opportunity Fund (OF).
- A reduction: The deferred capital gains liability is effectively reduced by 10% if the investment in the OF is held for 5 years and another 5% is held for 7 years.
- An exemption: Any capital gains on subsequent investments made through an OF accrue tax-free as long as the investor stays invested in the fund for a least 10 years.
There are three major components to Opportunity Zones:
- Investments: Opportunity Funds make equity investments in businesses and business property in Opportunity Zones.
- Funds: Opportunity Funds are investment vehicles organized as corporations or partnerships for the specific purpose of investing in qualified Opportunity Zones.
- Zones: States and territories designated 25 percent of their eligible low-income census tracts as Opportunity Zones.
There are 3 types of property eligible for Opportunity Fund investment:
- Stock of a qualified opportunity zone corporation;
- Partnership interest in a qualified opportunity zone partnership; and
- Business property used in qualified opportunity zones.
- A qualified opportunity zone business must use “substantially all” of its tangible property within a zone and meet a few additional basic test.
- Investments that do not quality include funds of funds, sin businesses, and financial institutions.
- A substantial improvement test applies unless the business property is original use.
Updated 10/19/18: The Treasury Department today issued proposed guidance related to the new Opportunity Zone tax incentive. The tax benefit, created by the 2017 Tax Cuts and Jobs Act, is designed to spur economic development and job creation by encouraging long-term investments in economically distressed communities nationwide.
The proposed regulations released today clarify what gains qualify for deferral, which taxpayers and investments are eligible, the parameters for Opportunity Funds, and other guidance. The proposed regulations should provide investors and fund sponsors the information they need to confidently enter into new business arrangements in designated Opportunity Zones. The Treasury Department plans on issuing additional guidance before the end of the year.
April 17, 2019:
Washington – The U.S. Department of the Treasury today issued its second set of proposed regulations related to the new Opportunity Zones tax incentive. The tax benefit, created by the 2017 Tax Cuts and Jobs Act, is designed to drive economic development and create jobs by encouraging long-term investments in economically distressed communities nationwide.
“We are pleased to issue guidance that provides greater flexibility for communities and investors as we continue to encourage investment and development in Opportunity Zones,” said Secretary Steven T. Mnuchin. “This incentive will foster economic revitalization, create jobs and spur economic growth that will move these communities forward and create a brighter future.”
The guidance makes it easier for funds to ensure compliance with the requirement that a fund has 90 percent of its assets invested in Opportunity Zones and expands the working capital safe harbors. The proposed regulations also provide clarity on treatment of gains on long-term investments, ownership and operation of the business, and what constitutes Qualified Opportunity Zone Business Property.
For the full guidance click here.