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Opportunity Zones Resource Center

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Overview


Created as part of the Tax Cuts and Jobs Act, Opportunity Zones are a federal economic development tool aiming to improve the outcomes of distressed communities around the country. Opportunity Zones are low-income census tracts that offer tax incentives to groups who invest and hold their capital gains in Zone assets or property. By investing in Opportunity Zones, investors stand to gain a temporary deferral on their capital gains taxes if they hold their investments for at least 5 years, and a permanent exclusion from a tax on capital gains from the Opportunity Zones investments if the investments are held for 10 years.


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-Understanding Opportunity Zones

Interested in learning more about Opportunity Zones? This section will help you understand the basics.

Learn more about Opportunity Zones

Opportunity Zones, created as a result of the passage of the Tax Cuts and Jobs Act, are low-income census tracts eligible to use tax incentives to encourage long-term investments in Zone assets and property. Opportunity Zones are designated as such by the governor or chief executive of a given state, district, or territory. All 50 states, the District of Columbia, and U.S. territories are eligible to designate Opportunity Zones.

Opportunity Zones must be created within "low-income communities," as defined by Section 45D(e) of the Internal Revenue Code (the New Markets Tax Credits Program uses the same definition). In Section 45D(e), "low income communities" are any census tract that have a poverty rate of at least 20 percent, or the median family income does not exceed 80 percent of statewide median family income. If in a metropolitan area, the median family area for such tract must not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income.

As of December 22, 2017, state governors or territory chief executives had 90 days to designate their state or territories' Opportunity Zones. A maximum of 25 percent of a state or territories' low-income census tracts may be designated as Opportunity Zones. If a given state or territory has less than 100 low-income census tracts, it may still designate 25 state Opportunity Zones.

Tax Benefits to Investing in Opportunity Zones

For an investor to realize the tax benefits of investing in Opportunity Zones, an investor's capital gains must be invested in a Qualified Opportunity Fund with 180 days of the sale or exchange that generated the gains. Investors are then eligible to defer the tax on their capital gains until the earlier of: the date the Opportunity Fund investment is sold or December 31, 2026.

The capital gains invested in a Qualified Opportunity Fund are eligible for partial tax forgiveness if the investment is held in a Qualified Opportunity Fund for at least 5 years. After 5 years, only 90 percent of the original gain is taxed. If the investment is held for 7 years, only 85 percent of the original gain is taxed.

If an investment in a Qualified Opportunity Fund is held for 10 years, any tax on the appreciation of that investment is forgiven.

What are Opportunity Funds?

Opportunity Funds are Treasury-certified investment vehicles, that deploy capital into Opportunity Zones. Opportunity Funds are required to hold at least 90 percent of their assets in an Opportunity Zone, or face penalty for each month it fails to meet the investment requirement. The penalty equals the amount of the investment shortfall, multiplied by the underpayment rate as defined in Section 6621(a)(2) of the Internal Revenue Code.

-Resources

View all Opportunity Zones Resources

-Official Treasury Designations

-Rules and Regulations

The U.S. Department of the Treasury continues to work through the process of codifying the regulatory framework for the Opportunity Zones incentive. CDFA will continue to update this page as additional tranches of guidance and proposed regulations are released.

Second Tranche of Proposed Regulations

The second tranche of proposed regulations, released on April 17, 2019, offer answers and clarity to a number of questions that arose following the release of the first tranche of Opportunity Zones guidance. The second tranche of IRS guidance primarily addresses the tax treatment and issues related to:
  • Operating businesses in Opportunity Zones;
  • Land and land leases;
  • The definition of original use and building vacancy;
  • Opportunity Fund assets and investments.
View the Second Tranche of Proposed Regulations
View Second Tranche Highlights from EIG
View Second Tranche Highlights from Opportunity Alabama
View Second Tranche Highlights from KPMG
View Second Tranche Highlights from Novogradac (Part 1)
View Second Tranche Highlights from Novogradac (Part 2)
View Second Tranche Highlights from Ballard Spahr

First Tranche of Proposed Regulations

The U.S. Department of the Treasury has released regulatory guidance on Opportunity Zones and Opportunity Funds. These regulatory proposals help to clarify how investors will engage in Opportunity Zones and provide more framework for communities to understand the types of businesses and real estate projects that are eligible for investment.

The regulatory proposals address several key areas, including:
  • The requirements that must be met by a taxpayer to defer gains by investing in an Opportunity Fund;
  • The rules permitting a corporation or partnership to self certify;
  • The rules regarding the requirements that must be met by a corporation or partnership to qualify as an Opportunity Fund.
Additionally, the IRS has released a revenue ruling addressing:
  • The application to real property of the "original use" requirement in section 1400Z-2(d)(2)(D)(i)(II), and;
  • The "substantial improvement" requirement in section 1400Z-2(d)(2)(D)(i)(II) and 1400Z-2(d)(2)(D)(ii).
View the First Tranche Proposed Regulations
View the Revenue Ruling

-Opportunity Funds Resources

Opportunity Zone Reporting & Reform Act of 2019 - Detailed SummaryMembers only Login
The proposal requires information reporting from both Opportunity Funds and their investors. QOFs are required to report identifying information, amount and composition of assets, names and taxpayer identification numbers of investors, the amounts and dates of their investments, which zones the funds have invested in, and a variety of identifying information about the type of investments made.
CDFA Food Finance White Paper Series: Food Systems & Investment Tools
This paper continues a white paper series demonstrating the ways in which traditional development financing is already supporting food systems, with a focus on finance tools that help to stimulate investment. An overview of investment tools, such as tax credits and opportunity zones, is provided with examples of current programs as well as an extensive collection of case studies to illustrate how these tools can make an impact.
Opportunity Zones Fundamentals & The Latest Updates in Ohio - Dave Jackson Members only Login
Dave Jackson from Bricker & Eckler presents on Opportunity Zones Fundamentals & The Latest Updates in Ohio during the Ohio Roundtable.
Incentivizing Investment Transparency - Alexander FlachsbartMembers only Login
Alexander Flachsbart with Opportunity Alabama presents on Incentivizing Investment Transparency.
Incentivizing Investment Transparency - Chelsea CruzMembers only Login
Chelsea Cruz with Federal Reserve Bank of New York presents on Incentivizing Investment Transparency.
View more Oppportunity Funds Resources

-Opportunity Zones Resources

Energy Financing in Opportunity Zones
Michael Baer from Rhode Island Infrastructure Bank presents on the Session: Energy Financing in Opportunity Zones in Boston during the New England Roundtable.
Energy Financing in Opportunity Zones
Wendy O'Malley from MassDevelopment presents on the Session: Energy Financing in Opportunity Zones in Boston during the New England Roundtable.
Opportunity Funds to Support Rural Development
Carlos Mello from Finance Authority of Maine and Jonathan Tower from Arctaris Capital Partners presents on the Session: Opportunity Funds to Support Rural Development in Boston during the New England Roundtable.
Opportunity Zones Fundamentals & The Latest Updates in New England
Skye Morse from M&S Development presents on the Session: Opportunity Zones Fundamentals & The Latest Updates in New England during the New England Roundtable.
Where are Opportunity Zones? Perspectives from State & Local Agencies
Ted Brady from Vermont Agency of Commerce and Community Development presents on the Session: Where are Opportunity Zones? Perspectives from State & Local Agencies in Boston during the New England Roundtable.
View more Oppportunity Zones Resources

-Mapping Tools

Interactive Mapping Tools for Opportunity Zones

Interactive online maps can be used to find Opportunity Zone census tracts across the U.S. Below are links to several mapping tools:

CIMS - Department of the Treasury CDFI Fund
Opportunity Zones and NMTC Interactive Map - CohnReznick
Opportunity Zones Explorer by Opportunity360 - Enterprise Community Partners

-Case Studies

Developing a Local Opportunity Zones Strategy - Mandy MallottMembers only Login
Mandy Mallott from City of Columbus presents on Developing a Local Opportunity Zones Strategy in Ohio during the Ohio Roundtable
Highlighting PACE Projects in Opportunity Zones - Rachel Davis--Chris Jones--Colin-KalvasMembers only Login
Rachel Davis, Chris Jones, and Colin Kalvas from Bricker & Eckler presents on Highlighting PACE Projects in Opportunity Zones in Ohio during the Ohio Roundtable.
Case Studies - Alfred PuchalaMembers only Login
Alfred Puchala with CapZone Impact Investments presents on Case Studies during the Intro Opportunity Zones Finance WebCourse.
Navigating the Opportunity Zones: A Playbook for Community Development
CDFA and LISC collaborated on this report, which is designed to offer community organizations an overview of the possible trajectories and best practices to consider when designing community-based Opportunity Zones strategies.
Case Studies and New Opportunities in Sustainable Infrastructure FinanceMembers only Login
David Rogers from Frost Brown Todd offers case studies and creative financing structures to support sustainable infrastructure projects at the 2019 CDFA Federal Policy Conference.
View more Case Studies

-Headlines

-Publications

Navigating the Opportunity Zones: A Playbook for Community Development
CDFA and LISC collaborated on this report, which is designed to offer community organizations an overview of the possible trajectories and best practices to consider when designing community-based Opportunity Zones strategies.
View more Publications

-Training Courses

The CDFA Intro Opportunity Zones Finance WebCourse will bring together program designers, fund managers, communities, investors, and policy experts to educate and review the most up-to-date thinking and strategies on how to maximize Opportunity Zone designations and how best to attract zone investments. This interactive webcourse will help communities bring all economic development stakeholders to the table, and have a firm understanding of how the development finance toolbox can both encourage and supplement Opportunity Fund investments.

View All Courses

-Upcoming Events

Fundamentals of Economic Development Finance WebCourse
January 29-30, 2020
Daily: 12:00 - 5:00 PM Eastern
The Fundamentals WebCourse is the foundation for all of CDFA’s educational offerings. This course helps attendees understand the variety of development finance tools available, from bonds, tax credits and TIF, to federal financing programs, RLFs, and access to capital lending resources.
Register
CDFA Federal Policy Conference
April 14-15, 2020
Washington, DC
The federal government plays a critical role in driving private and public investment in innovation, job creation, infrastructure, and community development. With the 2020 presidential election quickly approaching, development finance will be a key policy issue across the nation. The 116th Congress will also play a major role in shaping our country’s economic development policy going forward. It's up to the development finance community to focus the national discussion on smart federal policy, and CDFA is the voice of the economic development finance community on Capitol Hill. For these reasons, CDFA will host its CDFA Federal Policy Conference on April 14-15 in Washington DC.
Register
View more Upcoming Events

-Webcasts

CDFA Federal Financing Webinar Series: Opportunity Zones

The CDFA Federal Financing Webinar Series: Opportunity Zones is an exclusive, four-part online offering that will convene finance experts, federal agencies, and local development finance practitioners to discuss how federal financing tools can be used to leverage the Opportunity Zones incentive. The series will highlight the variety of ways federal grants, loans, guarantees and credit enhancements can be used to attract greater investment in Opportunity Zones, with a particular emphasis on rural development, infrastructure projects, affordable housing, environmental remediation and small business development.


Federal agencies are actively considering ways they can support projects in Opportunity Zones and encourage Opportunity Fund investments into the most highly distressed areas around the country. CDFA is working hand-in-hand with many of these agencies as they consider the shape and scale of their involvement with Opportunity Zones, and CDFA encourages all stakeholders to participate in the webinars and bring project questions and ideas to our expert panelists.

§ Opportunity Zones and Rural Development featuring USDA and EPA
§ Opportunity Zones and Affordable Housing featuring HUD and USDA
§ Opportunity Zones and Transportation featuring DOT and EDA
§ Opportunity Zones and Small Business Development featuring SBA and EDA

The CDFA Federal Financing Webinar Series: Opportunity Zones is a four-part offering available throughout the year. Those interested in attending the series can register for individual webinars or the full webinar series as a package deal. CDFA recommends registering for the full webinar series initially to take advantage of the best available pricing. Webinars will be recorded and made available to all registered participants.

Friday, March 8, 2019

Fri 2:00 PM - 3:30 PM
Opportunity Zones and Rural Development featuring USDA and EPA [RECORDING]
In this webinar, financing experts from the U.S. Department of Agriculture and Environmental Protection Agency provide an overview of how financing and grant programs can leverage investments into Opportunity Zones. CDFA centers the discussion around USDA Rural Development programs and EPA water and brownfield financing programs.
Moderator(s)
  • Tim Fisher, Director, Government & External Affairs, Council of Development Finance Agencies
Speaker(s)
  • Geoffrey Armes, Community Programs Specialist, U.S. Department of Agriculture
  • David Foster, Acting Chief of Staff, Rural Business Service, U.S. Department of Agriculture
  • Arielle Gerstein, Program Manager, U.S. Environmental Protection Agency
  • Jon Grosshans, Community Planner, U.S. Environmental Protection Agency
  • Jacqueline Ponti-Lazaruk, Chief Innovation Officer, U.S. Department of Agriculture
  • Susan Woolard, Acting Branch Chief, U.S. Department of Agriculture

Thursday, June 27, 2019

Thu 2:00 PM - 3:30 PM
Opportunity Zones and Affordable Housing featuring HUD and USDA [RECORDING]
In this webinar, financing experts from the Departments of Housing and Urban Development and Agriculture provide an outline of how their respective financing and grant programs can drive investments into Opportunity Zones. CDFA centers the discussion around USDA Rural Development programs and HUD programs within the office of Community Planning and Development.
Moderator(s)
  • Malcolm Guy, Coordinator, Government & External Affairs, Council of Development Finance Agencies
Speaker(s)
  • James Carras, Principal, Carras Community Investment, Inc.
  • Spencer Chretien, Special Policy Assistant, U.S. Department of Housing and Urban Development
  • Martha E. Hanson, Finance and Loan Analyst, U.S. Department of Agriculture

Thursday, August 22, 2019

Thu 2:00 PM - 3:30 PM
Opportunity Zones and Transportation featuring DOT and EDA
In this webinar, CDFA will convene financing experts from the Department of Transportation and Economic Development Administration to discuss how their respective financing and grant programs can incentivize Opportunity Fund investments into Opportunity Zones. CDFA will center the discussion around programs offered through DOT's Build America Bureau and Federal Highway Administration, as well as funding programs offered by the EDA
Speaker(s)
  • Roger Bohnert, Director, Outreach and Project Development, U.S. Department of Transportation
  • Doug Lynott, Director, Economic Development Integration, Economic Development Administration
  • Peter Mancauskas, Financial Program Manager, Federal Highway Administration Office of Innovative Program Delivery

Thursday, October 24, 2019

Thu 2:00 PM - 3:30 PM
Opportunity Zones and Small Business featuring SBA and EDA
In this webinar, CDFA will convene financing experts from the Small Business Administration and Economic Development Administration to discuss how their respective financing and grant programs can leverage Opportunity Fund investments in Opportunity Zones. CDFA will center the discussion around SBA 504 and 7(a) Loan programs, as well as the funding programs offered by the EDA

CDFA National Sponsors

  • Alaska Industrial Development and Export Authority
  • Baker Tilly Virchow Krause
  • BNY Mellon
  • Bricker & Eckler LLP
  • Bryan Cave Leighton Paisner LLP
  • Business Oregon
  • CohnReznick
  • FBT Project Finance Advisors LLC
  • Fifth Third Bank
  • Frost Brown Todd, LLC
  • Hawkins Delafield & Wood LLP
  • Ice Miller LLP
  • KeyBanc Capital Markets
  • Kutak Rock LLP
  • McCarter & English, LLP
  • McGuireWoods
  • MuniCap, Inc.
  • NW Financial Group, LLC
  • Petros PACE Finance
  • SB Friedman Development Advisors
  • Stern Brothers
  • Stifel Nicolaus
  • U.S. Bank
  • Wells Fargo Securities
  • Wilmington Trust
  • Z. The Bond Buyer
Become a Sponsor