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OPPORTUNITY ZONE LOCATIONS
Zones are split with roughly 76% urban and 24% rural nationally
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NATIONWIDE UTAH UT OZ’s by County
71,001 census tracts nationwide, 31,680 LICs
9,453 contiguous tracts, 190 cross state tracts
7,920 designated opportunity zones
181 eligible tracts
46 designated
zones
Salt Lake (15)
Weber (5)
Utah (5)
Davis (3)
Box Elder (2)
Cache (2)
Iron (2)
Washington (2)
Beaver (1)
Carbon (1)
Duchesne (1)
Garfield (1)
Grand (1)
Millard (1)
Sevier (1)
Sanpete (1)
Tooele (1)
Navajo Nation (1)
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CURRENT STATUS
Governors prioritized higher-need places.
Average poverty rate is 31%, well above the 20
percent eligibility threshold
Average median family income is only 59% of
area median, compared to the 80% eligibility
threshold
Selected tracts have high need as well as
proven growth potential
The country’s Opportunity Zones already
contain 24 million jobs and 1.6 million places of
business
75% zones are located in zip codes that
experienced at least some level of post-
recession employment growth from 2011 to
2015.
Nearly $6.1 Trillion in eligible capital is
available
All 50 states and Puerto Rico have certified zones, which are set for the next 10
years
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BENEFIT TO INVESTORS?
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How The Opportunity Zones program offers investors three incentives for
putting their capital to work rebuilding economically distressed communities:
1.A temporary deferral: An investor can defer capital gains taxes until 2026
by keeping unrealized gains in an Opportunity Fund.
2.A reduction: The original amount of capital gains on which an investor has
to pay deferred taxes is reduced by 10% if the Opportunity Fund
investment is held for 5 years and another 5% if held for 7 years.
3.An exemption: Any capital gains on investments made through the
Opportunity Fund accrue tax-free as long as the investor holds them for at
least 10 years.
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POTENTIAL SCALE AND IMPACT
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• U.S. households sitting on an estimated $3.8 trillion in unrealized capital gains in
stocks and mutual funds alone at the end of 2017
• And U.S. corporations held another $2.3 trillion in unrealized capital gains
• Pot of potential capital eligible for reinvestment in Opportunity Zones totals $6.1
trillion, meaning only a fraction has to be invested to create tremendous impact
• O-Zones have an average poverty rate of 31% and an average median family
income of only 59% of area median
• < 4% of O-Zones are currently at risk for gentrification / displacement
• Average O-Zone housing stock median age is 50 years (10+ years over US
median)
• 56% of O-Zone residents are minorities
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WHO ARE OZ INVESTORS?
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Range of institutional and individual private investors focused on these communities:
• Financial institutions (banks / insurance companies)
• Corporations
• CRA Banks
• CDFIs
• HNWIs
• Family Offices
• Foundations
Range of impact motivations, risk-tolerances, return profiles:
• Tax incentives, regulatory requirements, philanthropic / impact returns, financial trade-offs
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ELIGIBLE INVESTMENTS
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Wide range of Opportunity Zone investment opportunities, including:
• High-growth start-ups
• Main street businesses
• Real estate (ground-up / rehabbing)
• Manufacturing facilities
• Brownfield redevelopment
• Entrepreneurship incubators / accelerators
• Co-working spaces
• Rental housing
• Affordable housing
• Etc.
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LOCAL STRATEGIES
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1) Incentives to attract investment
• State cap gains, TIF / RDA, tax credits, blighted land
2) In-kind support
• Zoning / planning, environmental regs, infrastructure
3) Coordinate with other public, private, philanthropic funding
4) Steering investment, e.g., to lower-income/rural communities
• Create opportunity zone prospectus for your region/community
5) Affordable housing / displacement mitigation
• Inclusionary zoning, affordable housing programs, minimum sq. ft. requirements
6) Capacity-building
• Incubators / accelerators / TA to small businesses & entrepreneurs
7) Investing in human capital to get better social outcomes
• “Wrap-around” programs to address social problems in O-Zone communities
• E.g, job training, financial literacy, navigation, preventative health, education
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LOCAL TACTICS
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1) Education / Awareness Raising / Knowledge Hub
• Getting the word out through convenings, info sessions
• Knowledge hub website
• Identify “shovel-ready” projects, state / local incentive opportunities
2) Community investment prospectus
• Marketing document for investors touting competitive advantages of local Zones
• Statewide vs. local communities
3) Designate state / local points of contact on O-Zones
4) Market Zones to business relocations
• Valuations, Human Capital
5) State/Local RFP processes
• 1-step – offer suite of incentives / supports
• 2-step – RFI to understand investor constraints in particular Zones then RFP with offer of specific incentives
6) Partner with local philanthropy on human services
• Workforce training through special high schools, community colleges, other providers
• Other services aimed at addressing poverty in these communities and helping residents be able to participate in
economic activity
7) Partner with local philanthropy / impact investors on credit enhancement packages
8) Partner with local financial institutions (CRA banks and others) on project debt
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GOED AND UAC’s ROLE
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● Purpose: To perform comprehensive opportunity zone planning for rural economic development
directors and other community stakeholders to ensure capital from Opportunity Funds is targeted
these underserved communities throughout the State.
● Key Partners: GOED, Sorenson Impact and The Gardner Policy Institute at the University of Utah
● Key Areas of Focus
a. Community Engagement
■ Engage with all OZ-eligible rural Utah counties to provide education on the Opportunity Zone
legislation, determine eligible projects, local economic factors, and key stakeholder opinions
b. Market Research and Investment Materials
■ Prepare in-depth market research and create investment prospectuses for all eligible areas
prioritizing projects by readiness and investability
c. Marketing and Investor Communication
■ Create an online portal that shows all OZ deals across the State to connect with Opportunity
Funds
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QOZ GUIDELINES- WHAT WE KNOW SO FAR
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The investment must be acquired
after December 31, 2017 in
exchange for cash;
Must be a qualified opportunity
zone business, or is being organized
for the purpose of being a qualified
opportunity zone business;
Must remain a qualified
opportunity zone business for
substantially all of the qualified
opportunity fund’s holding period
A trade or business in which substantially all of the tangible
property owned or leased by the taxpayer is QOZBP and:
• At least 50% of income derived from Active Conduct
• Substantial portion of intangible property used in active
conduct of business
• < 5% unadjusted basis of property is nonqualified
financial property
Qualified Opportunity Stock & Partnership Interests
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Tangible property used in a trade or
business
Acquired by purchase from an unrelated
party (20% standard) after December 31,
2017
During substantially all of holding period,
substantially all the use is in a QOZ
Original use in the QOZ commences with
the taxpayer OR
Taxpayer substantially improves the
property
during any 30-month period after
acquisition, additions to basis exceed
an amount equal to the adjusted
basis of such property at the
beginning of such period
Qualified Opportunity Zone Business Property (QOZBP)
QOZ GUIDELINES CONT.
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WHAT DOES A SAMPLE DEAL LOOK LIKE?
Partial forgiveness and forgiveness of additional gains
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CURRENT OPPORTUNITY
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SWOT
Private Equity
Expertise
Public-Private
Finance
Expertise
Transaction
Expertise
& Best Practices
Tax
Knowledge
The OZ program brings together many
disciplines
OZ deals require a unique blend of expertise
across private finance, public finance, and tax
incentives
Many capital gain investors are seeking
organizations that provide one of these, but
few can provide all
Investors are seeking transaction expertise
and looking for first movers
New guidelines are still being analyzed
Opportunity to create best practices and
attract capital seeking tax advantages across
the country
