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Bill aims to create 950 new Opportunity Zones nationwide

Source Credit: Original article written by Opportunity Zone Expo Staff / published June 30, 2021

A Minnesota congressman has introduced legislation that would expand the federal Opportunity Zone (OZ) program by creating new zones and extending the tax deferral date by three years. If passed, U.S. Rep. Jim Hagedorn’s Expanding Opportunity Zones Act of 2021 would create an estimated 950 new OZs across the country, including 25 in Minnesota. The legislation would allow the U.S. Department of Treasury to reopen the low-income OZ designation process for 90 days to allow states to boost their OZ districts by an extra 5%, from 25% to 30%.

The tax deferral date — the signature incentive of the original OZ legislation, which was enacted during President Trump’s administration in 2017 — would be extended from Dec. 31, 2026, to Dec. 31, 2029.

Hagedorn, who represents a predominantly rural district south of Minneapolis-St. Paul, said he based his proposal off one floated in the city of North Mankato and Greater Mankato Growth, a regional chamber of commerce.

“Opportunity Zones have been a key to spurring workforce development, job creation and economic growth in communities,” Hagedorn said in a news release on June 25, the day he introduced his bill. “However, many areas across the country, including parts of Nicollet County, are not designated as Opportunity Zones despite being low-income areas that are adjacent to an existing Opportunity Zone. My legislation is aimed at promoting investment and development in places like North Mankato. Expanding Opportunity Zones will give countless Americans the chance to succeed and move our nation’s economy forward when we need it the most.” Bill could help previously overlooked areas become Opportunity Zones

Chris Knoppe, a Columbus, Ohio-based developer, is president of CBUS OZ Funds, a qualified opportunity fund (QOF).

He said expanding the number of OZs across the country would be beneficial to economic growth. Knoppe pointed to areas of the Columbus region “that seem like they should absolutely be designated as OZ, but they simply did not make the cut the first time around. Adding a few more zones now would provide a chance to include some previously overlooked census tracts and widen the intended impact to the communities that need it.”

Knoppe added that the tax deferral extension also “makes a lot of sense, because many would-be OZ investors were sidelined during the pandemic, reducing the overall adoption of the OZ program.”

Bill seems not ‘fully developed’, some OZ professionals say

Matthew Rappaport, a tax lawyer with New York-based Falcon Rappaport & Berkman PLLC, was less optimistic.

He said the Expanding Opportunity Zones Act of 2021 appears to be not “fully developed” — the legislation is only two pages — and because Hagedorn is a Republican, his position in the minority Congressional party won’t be an advantage toward getting it passed.

Rappaport added that the bill also “has to account for the idea that a Dec. 31, 2029, end to the deferral period would mean that taxpayers who invested prior to Dec. 31, 2019, get a tax-free sale prior to even recognizing deferred gain — that dog will not hunt. It’s tough to speculate on impact until we see something more fully formed.”

Source Credit: Original article written by Opportunity Zone Expo Staff / published June 30, 2021

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