By Aaron Clapper, GOPC Project Manager
Opportunity Zones have enticed investors and communities interested in reaping the benefits of the program since their establishment in December 2017 out of the Tax Cuts and Jobs Act. With this interest, many clarifying questions have been asked and addressed by the Treasury Department through follow-up regulations. Designed to spur investment in low-income census tract communities, Opportunity Zones provide tax incentives to private investment in Opportunity Zones through Qualified Opportunity Funds. Please visit GOPC’s previous blog for a detailed FAQ of Opportunity Zones.
Last month, the Treasury Department issued its second round of proposed Opportunity Zones guidelines. These guidelines follow an initial round issued by the Treasury Department in October 2018. Both sets of guidelines aim to answer questions raised regarding investments in Qualified Opportunity Zones through Qualified Opportunity Funds. The proposed guidelines issued last month provide clarity on issues such as:
how Qualified Opportunity Funds may meet the 90-percent asset test (as 90% of assets must be in Opportunity Zones property)
how a Qualified Opportunity Zone Business may meet the 50% gross income requirement (50% of the gross income for the Qualified Opportunity Zone Business must be derived from within the qualified opportunity zone)
the ability to reinvest proceeds recognized from an investment in Qualified Opportunity Zone Business Property if a sale were to occur
For a briefing of all the proposed guidelines, please visit this recap posted by the Economic Innovation Group. A 60 day comment period was opened with the release of the regulations, and Treasury and IRS will hold a public hearing on July 9, 2019. Treasury has also issued a Request for Information (RFI) on data collection and tracking for Qualified Opportunity Zones. In the coming months, a third and final round of regulations should be published by the Treasury Department.
Last week, the state of Ohio released an online portal for Ohio’s 320 Opportunity Zones. This website is designed to serve as a hub of information and content for communities, economic development organizations, and investors as they work together to spur invest in Ohio’s Opportunity Zones. The website allows communities to input information about their Opportunity Zones and submit project ideas, and serves as a one-stop shop for investors interested in finding projects in Ohio’s Opportunity Zones.
GOPC will continue to provide updates on Opportunity Zones as new resources become available.