Established by the Tax Cuts and Jobs Act of 2017, Congress has created a new community development program that encourages long-term investments in low-income urban and rural communities. The Opportunity Zone Program provides tax incentives for investors to re-invest unrealized capital gains into Opportunity Funds by providing a temporary tax deferral for capital gains. Opportunity Funds are private sector investment vehicles that invest at least 90 percent of their capital in Opportunity Zones. This new program has the potential to become an important, viable program for housing and community development agencies across the country.
Governors for all U.S. states and territories, along with the mayor of the District of Columbia, are allowed to identify 25 percent of the total number of low-income census tracts in their state, territory, or federal district as an Opportunity Zone. States must conform to the Low-Income Community federal standard as a baseline for zone designations but are free to establish additional criteria to reflect local needs and priorities.
Governors have until March 22, 2018 to identify their Opportunity Zones to the Treasury Department.