All 72 nominated “opportunity zones” across the state – including 17 in Fairfield County – have been approved by the U.S. Department of the Treasury. The zones are part of the federal government’s recently established Opportunity Zone Program, which aims to induce long-term investments in low-income communities.
The program provides a federal tax incentive for investors to re-invest unrealized capital gains into opportunity zones through opportunity funds. Under the terms of the program, the governor of each state must submit a plan to the federal government designating up to 25 percent of the qualified census tracts in his/her state as opportunity zones, which is then subject to Treasury Department approval.
Among the zones approved are seven in Bridgeport, five in Stamford, three in Norwalk, and one each in Danbury and Stratford.
“Our urban centers are now ripe with potential, and the investments made possible through this program will further strengthen our resolve to foster growth in Connecticut cities,” Gov. Dannel Malloy said.
“Well-executed public-private partnerships can create jobs, help new and growing businesses, and spur private investment throughout our state,” the members of Connecticut’s Congressional delegation said in a joint statement. “These opportunity zones are a win for Connecticut and we can’t wait to see neighborhoods across the state benefit from this program.”
“These new opportunity zones will allow Connecticut to attract more investments in strategically targeted neighborhoods,” added Department of Housing Commissioner Evonne M. Klein. “Promoting economic growth means we’re investing across the board – in housing, in business, in transportation, and more. With partnerships at every level of government and in the private sector, we’re promoting a state where residents will want to live, work, and raise a family.”
Qualified census tracts are those that have a poverty rate of at least 20 percent of a median income that does not exceed 80 percent of the area median income. The opportunity fund model encourages investors to pool their resources in opportunity zones, increasing the scale of investments going to underserved areas. The funds may seed new businesses, expand existing firms, or undertake real estate development.
Qualifying investments may include a broad range of commercial and residential investments, such as transit-oriented development, affordable housing and mixed-use development, and energy efficiency and renewable energy projects on public and private assets. In exchange for their investments, opportunity fund investors are able to decrease their federal tax burden through the preferential treatment of capital gains.
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A complete list of designated opportunity zones from across the country can be found on the U.S. Department of the Treasury, Community Development Financial Institution Fund’s Opportunity Zones Resources website.