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Opportunity Zones

9 Census Blocks in Monterey County are qualified Opportunity Zones (OZ) (8 in North County/Peninsula and 1 in South County). Track #14102 on the south/southeast edge of the City of Marina (northern edge of the former Fort Ord) is among them. Downtown Seaside has 2 large tracts, and the City of Salinas has 5.

Opportunity Zones (OZ) are an innovative, flexible, and bipartisan solution for catalyzing private sector-led economic growth. OZ were established by congress in the Tax Cuts and Jobs Act of 2017.

OZ offer investors three incentives for putting their capital to work in economically distressed communities:

  1. A temporary deferral: An investor can defer capital gains taxes until 2026 by rolling their gains directly over into an Opportunity Fund (OF).
  2. A reduction: The deferred capital gains liability is effectively reduced by 10% if the investment in the OF is held for 5 years and another 5% is held for 7 years.
  3. An exemption: Any capital gains on subsequent investments made through an OF accrue tax-free as long as the investor stays invested in the fund for a least 10 years.

There are three major components to Opportunity Zones:

  1. Investments: Opportunity Funds make equity investments in businesses and business property in Opportunity Zones.
  2. Funds: Opportunity Funds are investment vehicles organized as corporations or partnerships for the specific purpose of investing in qualified Opportunity Zones.
  3. Zones: States and territories designated 25 percent of their eligible low-income census tracts as Opportunity Zones.

There are 3 types of property eligible for Opportunity Fund investment:

  1. Stock of a qualified opportunity zone corporation;
  2. Partnership interest in a qualified opportunity zone partnership; and
  3. Business property used in qualified opportunity zones.
  • A qualified opportunity zone business must use “substantially all” of its tangible property within a zone and meet a few additional basic test.
  • Investments that do not quality include funds of funds, sin businesses, and financial institutions.
  • A substantial improvement test applies unless the business property is original use.

Updated 10/19/18: The Treasury Department today issued proposed guidance related to the new Opportunity Zone tax incentive. The tax benefit, created by the 2017 Tax Cuts and Jobs Act, is designed to spur economic development and job creation by encouraging long-term investments in economically distressed communities nationwide.

The proposed regulations released today clarify what gains qualify for deferral, which taxpayers and investments are eligible, the parameters for Opportunity Funds, and other guidance. The proposed regulations should provide investors and fund sponsors the information they need to confidently enter into new business arrangements in designated Opportunity Zones. The Treasury Department plans on issuing additional guidance before the end of the year.

See the links below for more detailed information and summaries:

Events

Monterey Bay Opportunity Zone Investment Forum

Join the Central Coast Marketing Team member municipalities (City of Marina, City of Salinas, City of Santa Cruz, City of Seaside, Gilroy Economic Development Corporation,  Monterey County)  for informative morning focused on Opportunity Zone investment opportunities within the Monterey Bay region. This event, scheduled for 8:00am – 12:30pm Friday November 15 at CSUMB Salinas City Center, will feature keynotes from leading OZ thinkers, policy minds and economic developers, and will include presentations from each municipality about the opportunities in their respective zones. The event should appeal to investor, developers, brokers, and others interested in potential of this exciting economic development tool for realizing change in select underserved parts of our community.

Agenda

7:30 AM                         Registration Opens

7:30 to 8:30 AM         Networking Breakfast

8:30 to 8:45 AM         MBOZ Kick-Off – Opening Remarks

  • Honorable Joe Gunter, Mayor, City of Salinas – Welcome to the City and the MBOZ Investment Forum
  • Josh Metz, Assistant Executive Officer, Fort Ord Reuse Authority/Vice President, Central Coast Marketing Team – Master of Ceremonies for MBOZ conference

8:45 to 9:30 AM         OZ Roundtable – Part 1 – California Perspective

Join us for an engaging roundtable discussion with our panel of experts who will share their unique perspectives concerning OZs.  We’ll hear the latest information from the Treasurer’s Office with the State of California and get an update from the founder of CALOZ, an organization dedicated to maximizing the transformative potential of California OZs. We will also learn what are the important OZ legal and process-oriented issues.  And rounding out our panel, we will hear from the investment community and how they are looking at OZ opportunities.

Part 1 Speakers

  • Tim Schaefer, Deputy Treasurer of Finance, Office of California State Treasurer’s Office
  • Dave Smith, Co-Founder, CALOZ

9:30 to 10:45 AM       OZ Roundtable – Part 2 – Nuts, Bolts and Money

Part 2 of our OZ Roundtable will focus on the mechanics, legal aspects and investment perspective associated with establishing, managing and reporting requirements for a Qualified OZ. We will discuss what it takes to be successful, and what the investment community is looking for before they join fund your zone.

Part 2 Speakers

  • Tim Ulen, Partner, Petrinovich Pugh & Company
  • David Bitner, VP, Cushman & Wakefield
  • Jonathan D. Tower, Founder and Managing Partner of the Arctaris Impact Fund, LP (invited)

10:45 to 11:00 am      Networking Break

11:00 to 12:15 pm      Tri-County OZ Opportunity Briefing

This part of the conference will focus on the local OZ sites that offer potential investors with exciting, long term project sites, many which allow for a campus like buildout and are in excess of 50 acres. Each OZ jurisdiction will have 10 minutes to present their OZ and highlight the unique aspects and why investors should want to land at their site.

Moderator:

  • Kate Roberts, President, Monterey Bay Economic Partnership

Presentors:

  • City of Marina – Matt Mogensen
  • City of Seaside – Kurt, Overmeyer
  • City of Salinas – Andy Myrick
  • City of Santa Cruz – Rebecca Unitt
  • San Benito County
  • King City

12:15 to 1:30 PM        In the Zone – Networking Lunch

Join the zone representatives, active investor, developer and community leaders during a casual informative walkaround networking lunch.

1:30 PM                      MBOZ Conference Concludes

Sponsors