All Opportunity Zones Now Final
Last week the U.S. Department of the Treasury and the IRS announced the approval of Opportunity Zone designations in Florida, Nevada, Pennsylvania and Utah. With this final round of approval, Opportunity Zones have now been designated in all 50 states, the District of Columbia and five territories.
Here’s what we know:
- On average, the nearly 35 million people living in Opportunity Zones have a median family income 37 percent below the area or state median.
- Many states included explicit set-asides for tribal areas, resulting in 294 Opportunity Zones that contain Native American lands—proportional to their share of all eligible LICs.
- According to the Economic Innovation Group, more than three-quarters of Opportunity Zones lie within metropolitan areas. However, Opportunity Zones are nearly evenly split between high density (urban) zip codes and low density (rural) ones, with the remaining 22 percent in medium density (suburban) communities.
These Opportunity Zones are eligible to receive investments from Opportunity Funds over the next ten years. The IRS has stated that Opportunity Funds can self-certify, meaning they do not need to register or receive approval prior to receiving and making investments. We are beginning to hear that some groups are proceeding in fund formation, however, as Enterprise noted in our testimony to the Joint Economic Committee, many potential fund managers are looking to Treasury and the IRS for additional clarity and guidance prior to establishing Opportunity Funds.
We are also beginning to see activity from foundations and public-sector leaders looking to encourage Opportunity Fund investments geared toward inclusive economic growth. For example, The Kresge Foundation and The Rockefeller Foundation announced a request for letters of inquiry (LOIs) on Tuesday for fund managers establishing new Opportunity Funds designed to benefit low-income people and communities.
Over the coming months, we anticipate the administration will release additional FAQs, revenue procedures, and perhaps an interim or proposed rule. Further guidance and clarity is being encouraged by Enterprise and many others, and we will continue to provide updates as information becomes available.