DEPARTMENT: Economic Development
DEPARTMENT HEAD: Rene Dominguez
COUNCIL DISTRICT(S) IMPACTED: Council Districts 1, 2, 3, 4, 5, 6, and 10
SUBJECT: Federal Opportunity Zones update
SUMMARY:
The Opportunity Zones (OZ) tax incentive, established by The Tax Cuts and Jobs Act of 2017, is an economic development tool designed to encourage long-term private investments in low-income areas. This briefing will provide an overview of the program and the City's strategy around this federal incentive including stakeholder engagement, creation of educational resources, and opportunity zones marketing efforts. Additionally, staff will provide an update on the release of the second round of U.S. Internal Revenue Service (IRS) regulations, current legislative activity, and public Requests for Information seeking public input on data collection, tracking investment, and maximizing benefits in opportunity zones.
BACKGROUND:
The Opportunity Zones federal tax incentive was established by the Tax Cuts & Jobs Act of 2017 to foster economic growth by encouraging the long-term investment of unrealized capital gains in designated OZ's in exchange for deferment and reduction of capital gains taxes. The OZ designation expires on December 31, 2028. The federal government estimates that there are more than $6 trillion in unrealized capital gains available nationwide.
All investments seeking to benefit from the OZ tax advantages must be made through an IRS-certified Qualified Opportunity Fund. The tax benefits include deferment of capital gains taxes until December 2026; reduction of deferred capital gains taxes of up to 15%; and invested capital gains grow tax free if the investment is held for at least 10 years. An Opportunity Fund is required to hold at least 90% of its assets in qualified OZ business and/or property. Eligible investments include property, stocks, or a joint partnership within a designated OZ.
Opportunity Zones in San Antonio
In early 2018, Governors were tasked ...
Click here for full text