EDA’s interactive map highlights Opportunity Zones as well as projects near them that have received public support.
New York State boasts 514 Opportunity Zones, defined by high poverty rates and median family incomes lower than state average. Investors who make capital gains investments within these zones can defer federal taxes on any capital gains realized from investing here.
Investing in Opportunity Zones
The Opportunity Zones program created by the 2017 Tax Cuts and Jobs Act offers investors tax advantages when investing in low-income communities within designated census tracts. Investors may defer or reduce capital gains taxes when they reinvest their gains through qualified Opportunity Funds that invest directly in Opportunity Zone properties or businesses.
Initial impact studies of opportunity zones designations and investments reveal mixed, limited, or no effects on neighborhood-level economic outcomes. Many observers agree that opportunity zones will only make an impactful difference in economically distressed communities if local partners participate actively in their creation and implementation.
Local economic and community developers can capitalize on this incentive by including opportunity zone information in their 5-year comprehensive development strategies. To better target investments to areas that require them most, we recommend supporting mission-driven funds, restructuring incentive rewards and requiring reporting separate from taxes forms. Use our interactive map or search tool to locate Opportunity Zone census tracts within any congressional district, state, county, EDA region or city.
Investing in Communities
Under the federal Tax Cuts and Jobs Act of 2017, over 8,700 low-income census tracts have been designated Opportunity Zones, qualifying them for preferential tax treatment when new private investments enter through qualified Opportunity Funds.
Investment in Opportunity Zones has varied considerably across the nation, reflecting local economic development challenges and needs. A recent paper analyzing state-level data indicates that zones receiving investments tend to have lower poverty rates, higher homeownership rates and rental rates as well as more residents holding bachelor degrees than comparable nondesignated census tracts.
Opportunity Zones have attracted investment from various types of investors, such as private equity funds and real estate developers, but it remains too early to assess if it has had any long-term positive results for communities targeted by this program. NCSHA advises its member HFAs to put Opportunity Zones high on their list of priorities until then.
Investing in Community Development
The Tax Cuts and Jobs Act of 2017 introduced the Opportunity Zone program, providing investors with incentives to reinvest capital gains into low-income communities. Through this federal initiative, investors may defer tax on capital gains invested into Qualified Opportunity Funds that invest in businesses located within Opportunity Zones in the United States.
More than 8,700 census tracts across the country have been designated Opportunity Zones by governors from each state and territory, according to research findings. Communities receiving Opportunity Zone investments tend to boast higher rates of bachelor degree holders, lower unemployment and poverty rates and are more likely to experience gentrification.
Local governments must promote Opportunity Zone investments from a regional standpoint to attract private-sector investment, since many assets touted within individual communities are regional in nature and can become more appealing when seen within an overall framework.
Investing in Regional Development
The Opportunity Zone program offers federal incentives to encourage private investment in low-income communities. As of 2019, 8,764 Opportunity Zones exist across rural and urban locations nationwide, nominated by governors for investment purposes and approved by the Secretary of Treasury to meet federal investment criteria.
Opportunity Zones offer significant potential for economic development, but may come at the cost of taxpayers. According to research from the Joint Committee on Taxation, Opportunity Zone programs costing taxpayers $2 billion in lost revenues annually — which is expected to increase as we approach 2029.
Local leaders can increase the effectiveness of this incentive by aligning it with existing economic development activities in their region and locality. They should include data and goals/objectives within Comprehensive Economic Development Strategies that directly relate to Opportunity Zones as well as identify priority projects aligned with opportunities in those locations.
