Fund Directory - compiled by the National Council of State Housing Agencies
What are Opportunity Zones?
Opportunity Zones are low-income census tracts selected by each state's governor and confirmed by the U.S. Department of Treasury. The goal of Opportunity Zones is to improve economic outcomes of these areas by incentivizing investors through the temporary deferral of capital gains taxes. Investors are able to re-invest their unrealized capital gains, tax deferred, into Opportunity Zones. Opportunity Funds are an investment vehicles that is set up as either a partnership or corporation for investing in eligible property that is located in an Opportunity Zone.
Who created Opportunity Zones?
The Opportunity Zone program was created as part of the Federal 2017 Tax Cuts and Jobs Act and is a new tax incentive.
Who monitors the Opportunity Zone Program?
Opportunity zones are a Federal Program, run by the U.S. Department of Treasury and Internal Revenue Service.
Is there an Opportunity Zone in Bloomington?
Governor Dayton initiated and the U.S. Department of Treasury approved 128 qualified Opportunity Zones in Minnesota. The one Opportunity Zone in Bloomington is Census Tract 251, which is the entire South Loop District (includes Mall of America, Health Partners) and a few parcels west of Hwy 77 and east of Old Cedar Avenue.
How did Bloomington Census Tract 251 qualify?
Census tracts were eligible for opportunity zone consideration if they met the definition of low-income community, as defined by the Federal Government (poverty rate of at least 20% or median family income less than 80% of the metropolitan area median family income). Bloomington's Census Tract 251 (2011-2015 ACS data) had a 10.6% poverty rate and the median family income was 67.3% of the metropolitan's area median family income.
How did Bloomington apply to be included in the Opportunity Zone Program?
The U.S. Department of Treasury created a database of all of the census tracts eligible for Opportunity Zone designation. Staff with Hennepin County contacted the City of Bloomington to notify us of the economic opportunity and interest in receiving designation. City staff prepared supporting material for potential development within Bloomington's Tract 251. Hennepin County coordinated the selection of eligible census tracts within the County and sent supporting information to DEED. DEED reviewed all of the state applications and made the recommendation to the Governor, who then worked with the U.S. Department of Treasury for approval of the state's 128 opportunity zones.
How will the Opportunity Zone Program spur development?
Census Tract 251 has over 140 acres of shovel-ready infill sites zoned for multi-family residential, including affordable housing, office, retail, entertainment, and medical uses. Existing redevelopment contracts are in place; however, development for the intensity has been slow. With the designation as an Opportunity Zone, the additional Federal tax incentive may assist in closing the financial gap and bring development to fruition.
The Fenley - Recent Example of Opportunity Zone Success
McGough recently began construction on its 402-unit rental residential development project (40 units affordable at 80% area median income) at Bloomington Central Station, within Census Tract 251. During Spring of 2018, the developer was seeking equity financing for the project which proved challenging given its large scale. One leading equity partner initially passed on the investment opportunity in the spring, but later returned to close on the deal soon after the site was designated as an Opportunity Zone. The additional returns provided by the Opportunity Zone incentive made the difference for this project, for which McGough is both the developer and the general contractor.
How will the City review development within the Opportunity Zone?
The City will continue to review developments through the permitting and entitlement process to ensure development complies with the City Code.
How will the City ensure affordable housing within the Opportunity Zone?
The City is currently working on an ordinance to encourage creation of new affordable housing units and preservation of existing affordable housing in Bloomington. The potential incentives of this ordinance, along with the financial benefit of Opportunity Zones, make this area attractive.