BY ED COGHLAN, CALIFORNIA ECONOMIC SUMMIT.
More than three million Californians live in some 879 federally designated Opportunity Zones in disadvantaged communities throughout the state. California has more Opportunity Zones than any other state.
The federal Opportunity Zone incentive allows investors to defer federal taxation on capital gains by investing the proceeds through a qualified opportunity fund into a designated Opportunity Zone. To be eligible for the full benefit, investments must be long-term (at least 10 years) and meet a set of rules designed to ensure these investments create additional economic activity in Opportunity Zone communities.
To maximize the potential impact for Opportunity Zone residents, the state needs to pass legislation that will help communities become “Opportunity Zone Ready.”
“No such action has been taken yet in California,” CA Fwd CEO Jim Mayer wrote recently. “This is a serious missed opportunity to tap an unprecedented source of private capital in communities that need it most, and the state is running out of time to act.”
Governor Newsom has shown support for Opportunity Zones and ensuring California is a competitive environment for impact investments that can support community-building projects and local businesses. As the governor said at the Opportunity Zone Investor Summit at Stanford University last month, for the program to succeed it must spark investment while benefiting existing residents, rather than just investors. “We don’t just believe in growth,” Gov. Newsom said at Stanford. “We believe in inclusion. You can’t have one without the other.”