This summary was written by Jeffrey Stoller. Mr. Stoller is president of BJS Communications in Moorestown, N.J.
Since enactment of the 2017 Tax Cuts and Jobs Act, a broad range of developers, public officials, and community leaders have viewed the law’s Opportunity Zone (OZ) designations as a powerful tool for bringing new housing and business activity to low income areas nationwide.
The OZ program seeks to channel significant amounts of investor capital gains income into local development projects, in exchange for reduced or eliminated capital gains taxes. At first glance, there’s something in it for everyone: new amenities and jobs for distressed neighborhoods; more tax revenues for municipalities; a significant infusion of cash for developers; and reduced or waived capital gain taxes for long-term investors.
The ground rules seem relatively simple as well:
So, what’s not to love?
According to an expert panel of New Jersey attorneys, developers and local officials at the 2019 Redevelopment Forum, there is no guarantee that every Opportunity Fund’s projects will succeed and appreciate in value enough to ensure long-term rewards. Their message: “Don’t try this at home … these Opportunity investments are hard!”
For all the success stories emerging from various OZs nationwide, there are still many obstacles to overcome:
Ultimately, the best strategy for New Jersey investors, local officials and developers may be to focus their attention on Opportunity Zones in municipalities that:
Partnering with experienced OZ developers with successful track records in construction and property management is also recommended. Avoid “first-time” firms with no prior involvement with redevelopment work
Above all, the panel stressed the need to obtain proper legal advice to help navigate the critical, unresolved issues surrounding the draft Opportunity Zone regulations.
More information about Opportunity Zones may be found on the session page on the Redevelopment Forum 2019 website.
Participating on the panel were Anne S. Babineau, Esq., a partner at the law firm of Wilentz, Goldman & Spitzer PA, who moderated the discussion; Brent T. Carney, Esq., a partner with the law firm of Maraziti Falcon LLP; Jeff Monge, the managing partner at Monge Capital; Lillian A. Plata, Esq., a founding member of Nee Plata Law LLC; and Eduardo J. Rodriguez, the director of planning and community development for the City of Elizabeth.
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