LISC National

Opportunity Zones


Opportunity Zones represent a new tax incentive intended to connect private investment capital to low-income communities nationwide. NMSC is one of many organizations working towards the successful implementation of this economic development tool, providing guidance through its inaugural stages and access to resources and tools.
 

Too many American communities have been left behind by widening geographic disparities and increasingly uneven economic growth. We come from different parties and regions, but share the common conviction that all Americans should have access to economic opportunity regardless of their zip code.

- Senators Scott and Booker & Congressmen Tiberi and Kind in a joint statement, 2/2/2017


Overview

The Opportunity Zones incentive was established by the bipartisan Investing in Opportunity Act as an innovative approach to spur long-term private sector investments in low-income urban and rural communities. 

The act establishes Opportunity Zones as a mechanism through which investors with capital gains tax liabilities across the country may receive preferential tax treatment for investing in Opportunity Funds certified by the U.S. Treasury Department. Opportunity Funds use the capital invested to make equity investments in businesses and real estate in Opportunity Zones designated by each state.

Opportunity Zone: An Opportunity Zone is an economically-distressed community in which certain types of investments, made through Opportunity Funds (see below), may be eligible for preferential tax treatment. Any low-income census tract, as defined within the New Markets Tax Credits program, is eligible for designation as an Opportunity Zone. 

The final deadline for governors to submit their Opportunity Zone nominations to the U.S. Treasury was April 20, 2018. Opportunity Zone designations certified by Treasury will remain in effect until December 31, 2028. 

Opportunity Fund: A Qualified Opportunity Zone Fund is an investment vehicle organized as a corporation or partnership for the purpose of investing in Opportunity Zone property.

  • Opportunity Funds are private sector entities required to invest 90 percent or more of their resources in Opportunity Zones.
  • Opportunity Zone property includes stock, partnership interest, or business property in a Opportunity Zone business. 


Why now?

According to The Economic Innovation Group:

  • More than half of America’s most economically distressed communities contained both fewer jobs and businesses in 2015 than they did in 2000.
  • New business formation is near a record low. The average distressed community saw a 6% decline in local businesses during the prime years of the national economic recovery. 
  • The U.S. economy is increasingly dependent on a handful of places for growth. Five metro areas produced as many new businesses as the rest of the country combined from 2010 – 2014. Now is the time to diversify.
     

Opportunity Zones Updates