Nebraska's Opportunity Zones

[ita]

I came across this morningsky article yesterday and decided to do a quick read over. Even though it wasn't news about some new development, it does answer, at least in my personal opinion, the question as to why there is all of a sudden several large projects downtown that are being planned and being pushed towards development. We all know the projects, and several are mentioned in the article. Well it looks like this Opportunity Zones thing under the 2017 Federal tax plan creates this uber-special designation that allows big money investors to build without realizing their investment if they keep the property for at least 10 years. I don't know if there is a cap, but it makes sense that big money in town has been buying property and/or pushing there development plans in zones that happen to have the special designation. I don't think it is odd that this tax incentive was included during a time when the sitting president is a known real estate-mogul (being sarcastic), but it will be a boon for urban development in downtown Omaha.

https://morningsky.com/omaha/posts/oppo ... latest-tax

Looking into it more, the State has a page dedicated to this new development. They have an interactive map where you can see all 44 zones designated around Nebraska. Interesting, but not surprising, the 20-22 story tower in Lincoln should be in a Zone. Surprising and somewhat suspiciously insidious, most of Downtown, including areas where much of the big plans have been announced as of late, and a portion of North O, including the 74 North project area, is included, but not 24th to 16th streets North of Burt and South of Spencer streets. Hmm. Also, since we like talking about the Metro, Fremont gets two huge zones, Ralston gets one, Aksarben falls into a zone, and Bellevue gets...squat. In any case, the page provides additional information about how the state is taking advantage of this 'opportunity'.

https://opportunity.nebraska.gov/progra ... ity-zones/

Iowa similarly has a page, with south Council Bluffs getting a fairly large zone.

https://www.iowaeconomicdevelopment.com ... unityzones

Lastly, give it up for the IRS for summarizing for us, who will likely not be able to take advantage of this opportunity, to understand how this all works.

https://www.irs.gov/newsroom/opportunit ... -questions

Mods, I don't think we have anything about this topic yet, but if there is already a thread about this, please merge or delete this one. Thanks.

[ita]

Here is an update on transactions within Omaha's Opportunity Zones in 2018:

https://morningsky.com/omaha/posts/numb ... nvestments

I am really hoping that some deals are made/announced this year related to the undeveloped/underutilized parcels in Downtown.

[iamjacobm]

https://www.nytimes.com/2019/02/20/busi ... funds.html

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. The ranks of those starting such funds include Anthony Scaramucci, the New York hedge fund executive who served briefly as Mr. Trump’s communications director.

More than 80 of the funds have sprung up since January 2018, even though the Trump administration has not finalized regulations governing them. Managers of the funds are seeking to raise huge sums of money by pitching investors on a combination of outsize returns and a feel-good role in fighting poverty.

The law permits an investor to roll over capital gains — proceeds from the sale of stocks or a home, for instance — into an opportunity-zone fund. The fund can then put the money in a zone by investing in, say, a condo project or affordable-housing units.

An investor who keeps money in a such a fund for 10 years is able to exclude 15 percent of the original capital gain from taxation. And — potentially much more lucratively — the investor would not owe taxes on any gains that accrued if the investment increased in value in that time.

[Taco]

Not sure how aksarben, blackstone, downtown, and the unmc area are a part of this, but most of north and south omaha aren't. Not sure this program is reaching its stated purpose.

[ita]

Not sure how aksarben, blackstone, downtown, and the unmc area are a part of this, but most of north and south omaha aren't. Not sure this program is reaching its stated purpose.

The IRS FAQ page states that the zones are designated to spur economic growth and job creation in low-income ares. I am not sure how the areas you mentioned qualify, but the State made those designations. It's obvious the underlying purpose, ie. create another investment vehicle for wealthy people to make more wealth while lowering their tax burden, is why these zones were created. I think it is terrible that most of North and all of South O and South downtown were not offered as opportunity zones, even though I think this could lead to bigger projects for the areas you mentioned.

[iamjacobm]

The only data point used was either 20% poverty rate or being 80% of the metro median income. Basically any census tract under probably 50K average median income was eligible in Omaha, not a terribly low barrier to hit in areas with older homes and more rentals.

Then add in that there was a limited amount of zones per state, each census tract had to be nominated and approved at the state level. Pretty easy to pick and choose where you want these.

[ita]

Although this article is how the program is working nationally, this addresses the issues we have noticed concerning how certain areas of the Metro are designated as opportunity zones. Here's a clear indication about how these opportunity zones are currently being used.

Black Businesses Miss Out on Opportunity Zone Tax Breaks

Almost 97% of the more than $10 billion raised by opportunity funds so far has been raised by funds focused on commercial or residential real estate, according to Novogradac, a national professional services organization.

Much of that money likely will be spent on projects that have been in the works for years and have a high expected return, such as high-end apartment buildings.

Local efforts to drum up investor interest in projects with more of a community benefit, including by adding incentives, don’t appear to be significantly changing how money flows, the Urban Institute’s Theodos said.