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68 While headlines focused on the SALT provisions of the Tax Cut and Jobs Act of 2017, an over-looked provision expanded a pilot investment program championed by the Economic Innovation Group think tank, called Opportunity Zones. Interestingly, the pilot had only been in place a few months when the bill passed. e impact may end up sending larger long-term ripples through communities than the SALT provisions. For decades, politicians and local elected officials have struggled over how to address whole areas that are depressed, under-capitalized, and, for the most part, left behind. Programs might nibble at the edges, but local and even state-level funding and support was too little, and often too slow, to overcome the blight. Areas typically gentrified and there was a wholesale change with the loss of community character, and many times a loss of local residents. In contrast, opportunity zones are designed to allow the tax code (through re-invested capital gains profit) to incentivize the market to begin focusing on the structures within those under-funded areas. Additionally, as many cities have suffered from the gap-tooth effect caused by razing blighted properties—and having so many regulations that new development must be heavily subsidized, and was therefore limited by local budgets—new structures may now become financially viable across the whole zone. Under the tax provision, states nominated up to 25 percent of their low-income census tracts as opportunity zones. e IRS ultimately chose the tracts, predominantly based upon statistics. is is where it is important to note that these are not created zones, but the usage of existing zones— specifically, census tracts. In general, these tracts are usually not that large, geographically speaking. ey are also not homogenous. Recent articles have mentioned that beachfront tracts in New Jersey and New York, among other areas, don't have the same level of need by comparison. ose concerns may be valid, but setting a real estate standard across the U.S. will inevitably lead to disparity somewhere. PERFECT AS THE ENEMY OF GOOD While there will likely be sections of census tracts that do not need improvement that are designated as opportunity zones, those improvements will benefit neighboring properties, and this is not a bad thing. e goal of this effort should not be lost in the hypothetical consideration of how many tax dollars might have been collected, because they haven't been for years (decades in most cases). Rather, the goal is about focusing patient capital investment on revisiting urban cores across the country for the redevelopment of long-abandoned inner-city communities, as well as the return of businesses, and thereby job opportunities, for those areas. A single, striking point is that most of these opportunity zones lack the business capital necessary to sustain viable workforces, let alone the economic cascade that follows. e Amazon HQ2 facility landing in an opportunity zone will set a goal for which every other one of the 8,700 should strive. Reports are coming in that the Bronx has already seen prices increase 62 percent. Will some speculators who have squatted on properties make money? Very likely. If they want to retain those capital gains or leverage the earnings, they will likely reinvest as well … in an opportunity zone. e IRS determined the 8,700 qualified zones and has shared the information broadly with a list of the census tract numbers—12 percent of the total number of tracts. CREModels.com has an interactive map, and the data provided in GIS formats, for developer convenience to determine if a property is located in a Zone. Why? Because it is essential that the property purchased—after January 1, 2018—is located inside a qualified zone. Without getting into the hair-splitting aspects, if the site is outside the zone, so are the savings and benefits. at could result in a costly tax bill when the IRS catches up, as they always do. For decades, politicians and local elected officials have struggled over how to address whole areas that are depressed, under-capitalized, and, for the most part, left behind. Programs might nibble at the edges, but local and even state-level funding and support was too little, and often too slow, to overcome the blight.

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