Heads Up! - Oct. 5, 2018
Oct. 4, 2018
Dear City Council Members,
Here’s some important information for the week.
Opportunity Zone Update and Clarification
Recently, community members have inquired as to the federal government’s Opportunity Zone Program and the selection of a census tract in Boulder under that program. This item provides greater detail regarding the program and supplements staff’s March 30, 2018 Heads Up item on the same topic.
The Opportunity Zone Program is a federal initiative arising out of the Tax Cut and Jobs Act of 2017. That federal law created the program to encourage investment in low-income urban and rural communities through a federal tax incentive providing federal tax benefits to private investors who invest in Opportunity Funds (new investment vehicles that utilize investors’ gains from prior investments to make qualifying new investments in real estate, infrastructure or businesses located in census tracts designated as opportunity zones).
The program has no impact on the scope or applicability of local taxes. Further, federally designated opportunity zones do not change applicable local zoning, land use policies or review procedures required for planning and development within Boulder.
The program may attract private investment in low income environments potentially suitable for a myriad of enhancements. Having a designated opportunity zone within the city may also be appealing if such enhancements support local residential, business and commercial projects aligning with community goals such as affordable housing, multimodal transportation and other infrastructure, affordable commercial space, and funding for startups and small businesses.
Under the program, states could nominate a number of census tracts for consideration. In a transparent public process, the Colorado Office of Economic Development and International Trade (OEDIT) identified eligible census tracts based on low per capita incomes and potential for private investment in public-serving uses. Twelve of the eligible census tracts are in Boulder’s city limits. OEDIT published information and sent mailings to local elected officials and stakeholders across the state requesting feedback on which census tracts to nominate for federal opportunity zone designation.
Based on an analysis of the feedback received, OEDIT nominated census tracts throughout the state where the program could help address economic need by encouraging private investment while avoiding displacement and gentrification. The city manager approved submitting census tract 122.03 (highlighted in yellow on the map below) for consideration for opportunity zone designation based on staff’s analysis of community factors potentially aided by designation, if selected, including housing, affordable commercial, public-private partnerships enhancing infrastructure investments and support for local businesses across a myriad of industries. Boulder’s 2.5-mile census tract 122.03 was identified as having potential under the program and is among the 126 census tracts in the state nominated by Governor Hickenlooper and approved by the federal Treasury Department and the Internal Revenue Service (IRS) for opportunity zone designation on April 18, 2018.
Over the next few months, the Treasury Department and the IRS will be providing further details and additional legal guidance on opportunity zones and opportunity funds. City staff has been gathering further information, awaiting final federal regulations and will continue to update City Council and the public as more information becomes available.
For more information, contact Yvette Bowden, director of Community Vitality and Parks and Recreation, [email protected] or 303-413-7215.