Opportunity Zones were one of the big, and underreported, legislative achievements of this Congressional session. Part of the late 2017 Tax Cuts and Jobs Act, the proposal provides generous capital gains tax credits to investors who back projects and businesses operating in designated Opportunity Zones. These zones are intended to be located in low income census tracts or areas of particular economic distress. States designate these zones, and, to date, the U.S. Treasury Department has designated more than 8,700 such zones around the country.
There’s still a lot of uncertainty about how this program will work. Opportunity zone boosters estimate that the program could incentivize an additional $30 billion of new investments into designated zones. That number seems high to me, but, for now, I remain hopeful and optimistic about the program’s potential.
I expect that we’ll be seeing a lot more discussion on the state of opportunity zones as the program’s rules and procedures are clarified and actual implementation begins. Watch this space for further updates. In the meantime, I encourage interested folks to check out a new Opportunity Zone update report from the Council of Development Finance Agencies which discusses how state officials are managing the programs. In addition, the Urban Institute continues to be an excellent source of information on opportunity zone implementation as well. A sampling of their recent studies can be accessed here.