The Opportunity Zone (OZ) program was enacted as part of the 2017 Tax Cuts and Jobs Act in order to incentivize investment and development in designated low-income communities across the country. Over the next ten years, investors can reinvest in these distressed and underdeveloped properties and land parcels for significant tax breaks on capital gains.
Throughout Colorado, there are 126 federally designated Opportunity Zones, 37 which are located within the Denver area. Recently, Colorado Governor Jared Polis announced the formation of a dedicated office within the Office of Economic Development and International Trade (OEDIT) to stimulate active investment in Colorado’s Opportunity Zones. The purpose of the new office will be to engage stakeholders to facilitate active investment within these zones and to provide communities with procedural guidance and technical knowledge to secure investments.
The office is partnering with the Colorado Department of Local Affairs (DOLA) to support communities in developing Opportunity Zone strategies, with the goal of attracting capital to projects that will have a positive community impact.
In Colorado, the OZ program may help address a number of challenges, including:
Promoting economic vitality in parts of the state that have not shared in the general prosperity over the past few years;
Funding the development of workforce and affordable housing in areas with escalating prices and inventory shortages;
Funding new infrastructure to support population and economic growth;
Investing in startup businesses that have potential for rapid increases in scale and the ability to “export” outside the state of Colorado; and
Upgrading the capability of existing underutilized assets through capital improvement investments.
Additionally, the OZ program has a number of applications for business developments in Colorado, including:Real estate development, infrastructure projects, new business developments, and expansion of existing businesses.
The OZ program provides a unique opportunity for investors to capitalize on tax incentives while restoring economic activity in geographic areas that need it most. There is bipartisanship support for the program and state leaders believe the program could be a turning point for the state’s disadvantaged communities, both urban and rural.