economic development – Page 3 – Project Development/Infrastructure/P3

January 18, 2019 by Brad A. Molotsky

OZs and Affordable Housing – Good Bedfellows in Nebraska

A bill in the Nebraska Legislature would give priority to federal opportunity zones (OZs) in the allocation of state Affordable Housing Trust Fund and other state programs.

As crafted, LB 87 would add OZs to already existing statewide enterprise zones in receiving priority for allocation of precious housing trust fund assistance. T

The bill would similarly prioritize OZs to receive Job Training Cash Fund, Site and Building Development Fund and Business Innovation Act assistance.

The legislation was referred to the Urban Affairs Committee and is likely to see movement in the coming weeks. This type of OZ together with other incentives at the state level is also seeing similar movement in Ohio and California for different types of incentives for job creation and housing.

If interested, give us a call at Duane Morris where we continue to track and execute on Opportunity Zone related matters for our clients and friends.

October 25, 2018October 25, 2018 by Duane Morris

Treasury Dept. Issues Much-Anticipated Opportunity Zone Regulations

On October 19, the U.S. Treasury Department issued the much-anticipated proposed regulations for the federal Opportunity Zone (OZ) tax incentive program created under the 2017 Tax Cuts and Job Act, as well as related Revenue Ruling 2018-29.

The guidance indicates that a second set of proposed regulations will be issued later in the year that will address issues such as defining “original use,” the treatment of assets sold by a Qualified Opportunity Fund (QOF) and logistical issues with respect to the movement of tangible assets of a QOF business in and out of an Opportunity Zone.

Read the full text of this Alert on the Duane Morris LLP website.

April 26, 2018May 18, 2018 by Duane Morris

Pennsylvania files for Opportunity Zones for 10-year tax deferred investments in community development

On April 20, 2018, Governor Tom Wolf submitted to U.S. Treasury his list of designated Opportunity Zone sites for Pennsylvania. To date, 18 states and territories—including Arizona, California, Colorado, Georgia, Idaho, Kentucky, Michigan, Mississippi, Nebraska, New Jersey, Oklahoma, South Carolina, South Dakota, Vermont and Wisconsin, as well as American Samoa, Puerto Rico and the U.S. Virgin Islands—have filed for and received approval of their sites. Pennsylvania has now followed suit and submitted its list for approval. Previously, we discussed Opportunity Zones in our Alerts dated March 1 and April 10, 2018.

Designations are approved for 10 years and permit investors to defer tax on any prior gains until no later than December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund. A Qualified Opportunity Fund is an investment vehicle that is organized to make investments in the zones designated above as Qualified Opportunity Zones. Note that while we are awaiting draft regulations, which are anticipated within the next 60 days (i.e., by June 30, 2018), it appears that if investors hold their investments in the Opportunity Fund for at least 10 years, they would be able to increase its basis to that of the fair market value of the investment on the date it is sold. In other words, their appreciation in the value of the asset thereafter would be tax-free.

Read the full Alert on the Duane Morris LLP website.

April 10, 2018May 18, 2018 by Duane Morris

18 states and U.S. territories obtain Qualified Opportunity Zones for development investment

As a follow-up to our Alert from March 1, 2018, on April 9, the IRS and U.S. Treasury approved designated Opportunity Zones in 18 states and territories—including Arizona, California, Colorado, Georgia, Idaho, Kentucky, Michigan, Mississippi, Nebraska, New Jersey, Oklahoma, South Carolina, South Dakota, Vermont and Wisconsin, as well as American Samoa, Puerto Rico and the U.S. Virgin Islands.

Designations are approved for 10 years and permit investors to defer tax on any prior gains until no later than December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund. A Qualified Opportunity Fund as an investment vehicle that is organized to make investments in the zones designated above as Qualified Opportunity Zones. Note, that while we still await draft regulations, it appears that if investors hold their investments in the Opportunity Fund for at least 10 years, the investor would be able to increase its basis to that of the fair market value of the investment on the date it is sold—in other words, their appreciation in the value of the asset would be tax free.

While sounding almost too good to be true, the rationale of allowing for this type of appreciation treatment is to attempt to incentivize additional or initial investment in the designated low-income areas in an effort to boost economic growth and job creation.

Read the full Alert on the Duane Morris LLP website.

March 1, 2018May 18, 2018 by Duane Morris

Qualified Opportunity Zones: Congress’ plan for community development

On December 22, 2017, as part of Congress’ House Resolution 1, the concept of a Qualified Opportunity Zone (QOZ) was added to the toolbox of potential community development tools. In this Alert, we explain what a QOZ is and offer strategies to help real estate developers take advantage of the benefits of QOZs. In short, an investment in a Qualified Opportunity Fund that is in turn invested within a QOZ is entitled to certain tax deferral of capital gains, certain basis step-up (which will lower tax on sale/disposition) and, if held long enough (10 years or more), the ability to not have to pay tax on the appreciation of investment within the fund beyond the initial deferred gain. As explained below, QOZs are in low-income areas; thereby, investment in these areas is incented by the creation of the ability to defer gain within them.

Read the full text of this article.