OPPORT UNI T Y ZONE S A Ne w E c o no mic De ve lo pme nt T o - PowerPoint PPT Presentation

OPPORT UNI T Y ZONE S A Ne w E c o no mic De ve lo pme nt T o o l Ma rk J. Ritc hie Bra nc h Chie f, Busine ss Suppo rt Bra nc h Busine ss De ve lo pme nt a nd Suppo rt Divisio n De pt. o f Busine ss, E c o no mic De ve lo pme nt & T o urism

PROGRAM PURPOSE T he Oppo rtunity Zo ne Pro g ra m is a n e c o no mic de ve lo pme nt to o l tha t use s fe de ra l ta x inc e ntive s to dire c t inve stme nt c a pita l to unde rse rve d lo w inc o me a re a s, tha t is, ta rg e te d c o mmunitie s c a lle d o ppo rtunity zo ne s. T his pro g ra m wa s e sta b lishe d a s pa rt o f the T a x Cuts a nd Jo b s Ac t o f 2017.

HOW I T WORK S – I NVE ST OR I NCE NT I VE S I nve sto rs (hig h ne t wo rth individua ls, c o rpo ra tio ns) who ha ve trig g e re d a c a pita l g a in b y se lling a n a sse t like sto c ks o r re a l e sta te c a n re c e ive spe c ia l ta x b e ne fits if the y ro ll tha t g a in into a n Oppo rtunity F und within 180 da ys. T he re a re thre e prima ry a dva nta g e s to ro lling o ve r a c a pita l g a in into a n o ppo rtunity fund: 1. De fe r the pa yme nt o f the c a pita l g a ins until De c 31, 2026. 2. Re duc e the ta x o we d b y up to 15% a fte r 7 ye a rs. 3. Pa y ze ro ta x o n g a ins e a rne d fro m the o ppo rtunity fund.

HOW I T WORK S – OPPORT UNI T Y F UNDS I NVE ST I N UNDE RSE RVE D COMMUNI T I E S At le a st 90% o f o ppo rtunity fund must b e inve ste d in a n o ppo rtunity • zo ne . T he inve stme nts must b e e q uity inve stme nts. Spe c ific a lly, e lig ib le • purpo se s inc lude sto c k, pa rtne rship inte re st, a nd b usine ss pro pe rty. Cre a tio n o f o ppo rtunity funds will b e priva te se c to r drive n. • Re a l e sta te b a se d inve stme nts will b e hig hly de sira b le b e c a use o f the • stro ng po te ntia l fo r a ppre c ia tio n. Ve nture c a pita l funds fo r inve stme nt into inno va tive c o mpa nie s ma y • a lso b e stimula te d. Wa iting o n g uida nc e (rule s) fro m the T re a sury De pa rtme nt, o n • a dditio na l re q uire me nts fo r o ppo rtunity funds.

HOW I T WORK S – COMMUNI T Y BE NE F I T S I t is ho pe d tha t this pro g ra m will le a d to ne ig hb o rho o d a nd b usine ss distric t re - vita liza tio n a s we ll a s e nc o ura g e e ntre pre ne urship in the o ppo rtunity zo ne s. E xa mple s: --Ge ntrific a tio n o f distre sse d a re a s. --Ne w ho using de ve lo pme nts. --E xpa nsio n funding fo r b usine sse s. --Ne w de ve lo pme nts in unde rde ve lo pe d a re a s, e .g ., sho pping c e nte rs, ma nufa c turing pla nts, b usine ss o ffic e s. Guida nc e fro m va rio us g o ve rnme nt a nd priva te se c to r o rg a niza tio ns sug g e sts the o ppo rtunity funds will b e va rie d, fro m pro pe rty de ve lo pe rs to se c to r o r de mo g ra phic spe c ific b usine ss inve sto rs.

OPPORT UNI T Y ZONE S Ha wa ii wa s a utho rize d to de sig na te 25 c e nsus tra c ts a s o ppo rtunity zo ne s. Ha wa ii ha s 99 c e nsus tra c ks tha t me e t the lo w-inc o me e lig ib ility re q uire me nt fro m whic h the sta te c a n de sig na te no t mo re tha n 25 pe rc e nt a s q ua lifie d o ppo rtunity zo ne s a c c o rding to the pro g ra m. Ce nsus tra c ts tha t a re c o ntig uo us with lo w-inc o me c o mmunitie s ma y a lso b e de sig na te d a s q ua lifie d o ppo rtunity zo ne s if the y a re b e lo w 125% o f the me dium fa mily inc o me o f the q ua lifying c e nsus tra c t. Only 5% o f the c e nsus tra c ts no mina te d c a n b e fro m c o ntig uo us tra c ts. T wo (2) o f the 25 zo ne s no mina te d a re q ua lifie d c o ntig uo us c e nsus tra c ts.

CONCL USI ONS • Ne w e c o no mic de ve lo pme nt to o l using the ta x c o de to ste e r inve stme nt c a pita l to distre sse d a re a s in the U.S. • So fa r, the first o ppo rtunity funds e sta b lishe d ha ve b e e n pro pe rty de ve lo pe rs. • Mo re g uida nc e o n the funds is e xpe c te d fro m the T re a sury De pa rtme nt this ye a r. • K e y suc c e ss fa c to r fo r Ha wa ii will b e the o ppo rtunity funds the mse lve s…

CONT ACT : MARK J. RI T CHI E BRANCH CHI E F , BUSI NE SS SUPPORT BRANCH BUSI NE SS DE VE L OPME NT AND SUPPORT DI VI SI ON ST AT E OF HAWAI I , DE PT . OF BUSI NE SS, E CONOMI C DE VE L OPME NT & T OURI SM P.O. BOX 2359 HONOL UL U, HI 96804 PHONE : 808-587-2785 F AX: 808-586-2589 ma rk.j.ritc hie @ ha wa ii.g o v http:/ / inve st.ha wa ii.g o v