In a former warehouse on a dimly lit street in the South Bronx, Denver homes developers sipping Puerto Rican moonshine listened as a local official urged them to capture a new U.S. tax break by rebuilding the decaying neighborhood.
In Alabama, a young lawyer quit his job after seeing the same tax break’s potential to help one of the nation’s poorest states. He now spends his days driving his Hyundai from town to town, slideshow at the ready, hoping to connect investors with communities.
And on a conference call with potential clients, a prominent hedge fund executive pitched investments in a boutique hotel in Oakland, which he described as San Francisco’s Brooklyn. The project is eligible for the same tax break, designed to help the poor.
Fervor about opportunity zones is heating up across the U.S. For a limited time, investors who develop real estate sales Denver or fund businesses in these areas are able to defer capital gains on profits earned elsewhere and completely eliminate them on new investments in 8,700 low-income census tracts. The goal is to reinvigorate these areas. But the question is whether the 2017 tax law will, as U.S. Treasury Secretary Steven Mnuchin predicts, pump $100 billion into places that need it most, or if investors will play it safe by funding projects in a few zones already on the upswing.
There’s no lack of optimism among officials in shrinking Rust Belt towns, wind-swept Western landscapes and hurricane-ravaged Puerto Rico, who hope to jump-start local economies. The incentives are so flexible they could be used for everything from affordable housing to solar farms. Read more