The goal of the Opportunity Zone initiative is to encourage long-term private capital investment in low-income urban and rural communities. The program offers long-term federal tax deferral on capital gains for investments in designated zones, with additional tax exclusion from new capital gains achieved from those investments. In April, Governor Holcomb nominated 156 census tracts with the help of a group of advisors from around the State. Additional information is available in a April 19 press release from Governor Holcomb's Office.
Now that proposed regulations have been released, Indiana cities and towns with designated Opportunity Zones can move forward with positioning their Opportunity Zone for investment.
To help with next step, the Opportunity Investment Consortium of Indiana was created. The goal of this consortium is to encourage the transformation of Opportunity Zone neighborhoods into vibrant places for residents and businesses. The consortium is comprised of a public/private collection of investors and co-investors poised to support and invest in Opportunity Zones through the facilitation of this online pairing tool. This tool will help match projects in need of funding to potential investors. View this presentation to learn more.
An advisory leadership, together with backbone agencies, training, and consultancy partners, will collectively provide coordinated assistance to deals as they clear milestones and prepare for Opportunity Zone investment infusions. Commitments to help staff the backbone of the pilot include: State of Indiana, Local Initiatives Support Corporation (LISC), Cinnaire, Indy Chamber, Indiana Bond Bank, Indiana Economic Development Corporation, Indiana Office of Community and Rural Affairs and Indiana Housing & Community Development Authority. Local Initiatives Support Corporation will house the online portal with support from the Fifth Third Foundation.
Indiana's Opportunity Zones
What is an Opportunity Zone?
The Tax Cuts and Jobs Act of 2017 allowed governors to nominate certain census tracts as Opportunity Zones, subject to approval from the U.S. Department of Treasury. Up to 25% of a state’s low-income census tracts were eligible for designation, which permitted Indiana to nominate up to 156 census tracts as Opportunity Zones. States were required to submit their lists of Opportunity Zones to the U.S. Department of Treasury no later than April, 2018.
Opportunity Zones provide federal capital gains tax advantages for investments made in these areas. This designation is intended to attract capital investment into areas that are economically distressed.
To be eligible as an Opportunity Zone, census tracts had to qualify as “low-income.” To do so, the census tract must have met one of the following requirements:
- The tract has a poverty rate of at least 20%; OR
- (A) For a census tract in a metropolitan area, the tract’s median family income does not exceed 80% of the greater of: the metropolitan area median family income or the statewide median family income; or (B) For a census tract in a non-metropolitan area, the tract does not exceed 80% of the statewide median family income.
However, if the census tract is located within a high migration rural county, the tract qualified as low-income if it did not exceed 85% (as opposed to 80%) of statewide median family income. A “high migration rural county” is any rural county that, during the 20-year period ending with the year in which the most recent census was conducted, has a net outmigration of inhabitants from the county of at least 10% of the county population at the beginning of such period.
If you have any questions regarding the Opportunity Zone program or nomination process, please email email@example.com