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California Submits Nominated Opportunity Zones

What's Next and How to Stay Involved
 

The Tax Cuts and Jobs Act of 2017 created Opportunity Zones, a new community investment tool designed to drive long-term capital to rural and low-income urban communities throughout the nation. Enterprise Community Partners is engaged with Opportunity Zones at a federal level and across numerous states. In California, Enterprise has worked with state and local partners on the nomination of California’s Opportunity Zones, and previously submitted a comment letter to the Governor’s Office and the Department of Finance.

Opportunity Zones have the potential to provide meaningful community benefits to low-income communities, and equitable development and economic growth must be a cornerstone of this initiative. To protect against the unintended consequences that could result from uncapped, incented investment in distressed communities, there should be intentional policies and strategies to proactively guard against displacement and ensure equitable benefits of economic development.

It is Enterprise’s strong position that Opportunity Zones should not supplant other community development tools, like New Markets Tax Credits or Community Development Block Grants, which communities use for many activities that Opportunity Funds will not invest in, such as public services and non-revenue generating infrastructure projects.

 
View the nominated Opportunity Zones

  • Last week, Gov. Jerry Brown met the original deadline to submit tract nominations to the Treasury. The final tract nominations are posted on the Department of Finance (DOF) website
  • There is a very useful interactive map. We recommend partners review the final tract nominations to understand which communities will potentially be impacted.
  • Thank you to partners who submitted comment letters! Adjustments were made to some of the tract nominations in response to public comments, which are described on the DOF website as well.


What’s next in the federal process?

  • Treasury reviews tract nominations. Treasury is required to approve or reject Opportunity Zones nominations between April 19 – June 18, 2018. Once approved, designations remain in place for 10 years.
  • Treasury is developing additional guidance on the process by which Opportunity Funds must be certified. The Treasury will proceed by releasing either a proposed or interim rule, the nuance being the length of the rulemaking process and degree of public input.
  • Opportunity Funds will not begin receiving investment until the rulemaking process is finalized. Depending on the timing and process by which that happens, we may see funds deploying capital in Opportunity Zones in late 2018 or early 2019, but there are many factors that could ultimately influence this timeline.


ACTION: Now that tract nominations are submitted, how else can equity and affordable housing advocates engage?

  • Immediate: Submit comments to the IRS on the rule. We recommend that partners submit rule recommendations for the record now, as the rulemaking process may be interim. Enterprise has submitted national comments to the IRS.
    • Note: The first three recommendations on the designation of Qualified Opportunity Zones are now outdated for California.
    • It is Enterprise’s position that equitable development and economic growth must be a cornerstone of this initiative. To protect against the unintended consequences that could result from uncapped, incented investment in distressed communities, there should be intentional policies and strategies to proactively guard against displacement and ensure equitable benefits of economic development. We encourage partners to review and consider echoing recommendations that aim to advance equitable outcomes. Read Enterprise’s comment letter.


Stay involved

  • Longer-term: Share technical knowledge on developing and administering Opportunity Funds. Enterprise is currently exploring how to engage investors and proceed in the development and certification of Opportunity Funds. We hope to convene interested partners to share technical knowledge as we learn more about this process.

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