Pennsylvania Submits Nominations for Qualified Opportunity Zones to U.S. Department of Treasury
April 20, 2018
Harrisburg, PA – Today, Governor Tom Wolf announced that his administration has submitted the commonwealth’s allotted 300 census tracts across the state as Qualified Opportunity Zones, as created by the federal Tax Cuts and Jobs Act (TCJA) in December 2017. The U.S. Treasury Department is in the process of developing the Opportunity Zones program, and the IRS is expected to provide further information regarding opportunities for investment in zones in the coming months.
“After gathering input from individuals and organizations throughout the state and examining where the areas of need intersect with potential investment, I have submitted nominations for Pennsylvania’s Qualified Opportunity Zones,” Governor Wolf said. “We are hopeful this new incentive will bring much-needed investment to many distressed areas across the commonwealth.”
Pennsylvania had 1,197 census tracts eligible for Qualified Opportunity Zone status, and was given the opportunity to designate 25 percent, or a maximum 300 low-income community tracts as zones. The list of nominated tracts, additional data, evaluation criteria, and an interactive map can be found at DCED’s Qualified Opportunity Zones website. Final approval from the Department of Treasury is expected in May.
The TCJA created the Qualified Opportunity Zones as a tool for promoting long-term investment in low-income communities. Through this program, investors are provided tax benefits for investing capital gains in low-income community census tracts, as well as certain tracts adjacent to low-income tracts. The new tax incentive is for private investors making private equity investments in funds that will then invest in businesses, real estate, and other ventures in low-income communities. The incentive offers deferral, reduction, and potential elimination of certain federal capital gains taxes.
U.S. investors currently hold trillions of dollars in unrealized capital gains in stocks and mutual funds alone, making it a potentially significant untapped resource for economic development. Opportunity funds that invest in Qualified Opportunity Zones provide investors the chance to put that money to work rebuilding the nation’s distressed communities. The fund model will enable a broad array of private equity fund managers and investors to pool their resources, increasing the scale of investments going to under-served areas.