Opportunity Zone and Local Incentives, Part 2: Q&A with Walker & Dunlop’s Robert Quarton

By Amy Sorter

In a previous article, Connect Media pointed out that the federally-driven Opportunity Zone program is being paired with municipal, county and state incentives. To shed additional light on this topic, Connect Media chatted with Robert Quarton, Walker & Dunlop Inc.’s Vice President, Capital Markets, to delve further into the pairing of O-Zone and other incentives.

Q. How do multiple designations help an area that is already designated as an Opportunity Zone?
A. From a federal tax perspective, the local city designations do not enhance the federal Opportunity Zone tax benefits. However, you can stack other federal tax benefits (historic tax credits, new market tax credits, affordable tax credits, etc.) with the Opportunity Zone tax benefits. There is also the potential to take advantage of any state-level tax incentives on top of the federal tax benefits. Each state has to designate whether they will comply with the Opportunity Zone tax benefits on state tax law. So far, some have conformed with the federal law, while others have made changes, and the remainder have not finalized the tax treatment. With all of this variance, a developer or investor should consult a reputable tax attorney or CPA to discuss the specific tax structure for each development.

Q. Is there a potential for confusion from developers/investors when it comes to designations?
A. Yes, there could be tax confusion around these designations. Opportunity Zones are federal law and should be evaluated from a separate perspective. Again, a developer or investor should consult a reputable tax attorney or CPA to discuss the individual tax structure for each development.

Q. Will we be seeing more of these types of designations, especially in OZs, moving forward?
A. It’s possible. Opportunity Zones were enacted to improve communities by creating financial benefits for investors willing to put money into these zones. Developers, equity funds and government entities are using this legislation to benefit financially from projects, and to generate buzz and attention around investing in these communities Due to these motivations, you could see a number of local and state municipalities create these designations to drive interest and investment in their local areas to attract investors looking to make a positive social impact.

For comments, questions or concerns, please contact Amy Sorter