California needs to conform with federal Opportunity Zone provisions

California needs to conform with federal Opportunity Zone provisions

When California's state legislators return to session on Monday, one of the issues they will be considering is legislation that will allow the state to take full advantage of Opportunity Zones investment in some of the poorer areas of the state. Opportunity Zones (OZs) provide a new tax incentive to spur private investments in communities of need.

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Study: Opportunity Zone-ready California could generate hundreds of millions in economic activity

South Los Angeles, California (Photo: Alfred Twu/Wikimedia)

South Los Angeles, California (Photo: Alfred Twu/Wikimedia)

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.”

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CalOZ Attends White House OZ Conference

CalOZ Attends White House OZ Conference

On April 17, CalOZ attended the White House Opportunity Zone Conference & Breakout Sessions with State, Local, Tribal, & Community Leaders. The event coincided with the release of the second round of IRS regulatory guidance regarding OZ fund investments. CalOZ President Kunal Merchant pressed Treasury Security Stephen Mnuchin for details regarding OZ fund metrics and reporting - a critical component to ensuring investments fulfill their intended community purposes.

Watch here:

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Former Kings executive launches opportunity zone group

Former Kings executive launches opportunity zone group

The prospect of opportunity zones has generated excitement over the last year, but some developers, funds and communities aren’t sure how to leverage the new tax incentive program. hat’s why Kunal Merchant, a former Sacramento Kings executive and aide to former Mayor Kevin Johnson, says he’s launching CalOZ, a new group dedicated to navigating the complicated framework around opportunity zones.

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Gov. Newsom says Trump-backed investment program could boost California

Gov. Newsom says Trump-backed investment program could boost California

Gov. Gavin Newsom said Monday that a Trump administration program that provides tax breaks meant to spur investment in low-income areas could boost California’s economy. Newsom said the Opportunity Zones program could help address two of the state’s major challenges: promoting energy investment to meet its climate change goals and providing funding for housing amid a shortage that has exacerbated income inequality.

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California is running out of time to capitalize on the potential of Opportunity Zones

California is running out of time to capitalize on the potential of Opportunity Zones

Tens of billions of dollars are reportedly being raised nationwide by hedge funds, investment banks, and money managers looking to capitalize on new “Opportunity Zone” tax incentives created by the 2017 federal tax package. Some 34 other states have taken action to conform their state tax systems with new federal rules that provide tax breaks to investors who invest in more than 8,000 federally-approved low-income neighborhoods across the country.

No such action has been taken yet in California—where more than three million people live in 880 designated Opportunity Zones. 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.

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OED kicks off City of San Jose Opportunity Zones dialogue

OED kicks off City of San Jose Opportunity Zones dialogue

There’s a lot of buzz right now around Opportunity Zones – a new federal tax incentive for investment in lower-income communities. With 11 designated Census tracts, San Jose has the most Zones in Silicon Valley, and investors have responded by looking for deals throughout the new Zones, especially in Downtown.

But what does the Opportunity Zone designation really mean? How does it align with the city’s goals and priorities for housing development, equitable growth, and economic activity?

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Wall Street, Seeking Big Tax Breaks, Sets Sights on Distressed Main Streets

Wall Street, Seeking Big Tax Breaks, Sets Sights on Distressed Main Streets

Distressed America is Wall Street’s hottest new investment vehicle.

Hedge funds, investment banks and money managers are trying to raise tens of billions of dollars this year for so-called opportunity funds, a creation of President Trump’s 2017 tax package meant to steer money to poor areas by offering potentially large tax breaks.

Little noticed at first, the provision has unleashed a flurry of investment activity by wealthy families, some of Wall Street’s biggest investors and other investors who want to put money into projects ostensibly meant to help struggling Americans.

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Will Opportunity Zones in California Be Golden?

Will Opportunity Zones in California Be Golden?

To those outside California, it might be perplexing that the state treasurer, Fiona Ma, got the loudest applause during her keynote address at the NES Financial-sponsored Opportunity Zone Expo for simply proclaiming that when it came to opportunity zones, the state would abide by the federal government tax statute. But California has always gone its own way when it comes to taxing capital gains income.

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State Treasurer: California Is Open For Business, Will Comply With Opportunity Zone Program

State Treasurer: California Is Open For Business, Will Comply With Opportunity Zone Program

Newly elected California State Treasurer Fiona Ma is on a mission to support the governor's effort to build more housing in California through the new opportunity zone program.

Since taking office earlier this year, Ma and her staff have been busy on the road across the state, meeting with business leaders at community and professional business forums.

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Opportunity Zone Designation Could Help These Santa Ana Projects Get Off The Ground

(BisNow)

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Santa Ana-based developer Caribou Industries has tabbed Lee & Associates to find a joint venture equity investor in the company’s ongoing efforts to build Orange County’s tallest skyscraper and redevelop the former home of the Orange County Register newspaper in Santa Ana.

Caribou CEO Mike Harrah is pitching potential investors that the proposed 37-story One Broadway Plaza in downtown Santa Ana and the 20-acre mixed-use 625IVE project at the former Orange County Register site, just off the Interstate 5 freeway, are each in designated opportunity zones.

Scott Leads Bipartisan Letter to Treasury Encouraging Opportunity Zone Rules Clarification

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WASHINGTON—Today, United States Senator Tim Scott (R-SC) led a bipartisan, bicameral letter to Treasury Secretary Steven Mnuchin encouraging clarity about the Department of Treasury’s proposed Opportunity Zone regulations released on October 19, 2018.

“As original cosponsors of the underlying Investing in Opportunity Act, we write to express both praise of and concerns with Treasury’s proposed regulations under Code section 1400Z-2, released on October 19, 2018, and urge you to address key issues that are critical to this provision working according to congressional intent.

Opportunity Zones: Can a tax break for rich people really help poor people?

(Washington Post, 1.24.19)

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Progressive economists, myself included, have been highly critical of the 2017 tax law, as it will surely deepen income inequality and starve the Treasury of needed revenue. But there is a measure in the law that has the potential, if well implemented — a big “if” — to actually help low-income people. I’m talking about Opportunity Zones.

There’s no evidence that simply giving rich people more after-tax income helps those with fewer means. If this new idea works, it’s because it incentivizes those with capital gains to reinvest their returns in places starved for capital investment.