Proposed Legislation to Extend and Improve Opportunity Zones

Reading time: 2 minutes

Bipartisan legislation was introduced to both the Senate and the U.S. House of Representatives last week that would improve Opportunity Zones and push back the tax incentive’s deferral date from 2026 to 2028.

The legislation, known as the Opportunity Zones Improvement, Transparency, and Extension Act,  would implement the following changes:

• Extending the lifespan of the program by two years.  The legislation would push the current deferral date of December 31, 2026 back by two years, to December 31, 2028.

• Expanding reporting requirements. A long-standing criticism of the program is a lack transparency into how well the Opportunity Zone incentive is working which these new requirements would provide.

• Sunsetting high income Opportunity Zones. There is a small percentage of Opportunity Zones that have median family income at or above 130 percent of the national median family income. These zones would be “sunsetted” and states would have the opportunity to designate new census tracts to replace them.

• Allowing for fund of funds. Currently, a Qualified Opportunity Fund is not permitted to invest into other Qualified Opportunity Funds. This legislation would unwind this restriction, allowing for “fund of funds,” which would potentially help smaller communities and projects raise equity more easily.

• Establishing a State and Community Dynamism Fund. Flexible grants would provide operating support and technical assistance to underserved communities.

Senators Cory Booker, a Democrat from New Jersey, and Tim Scott, a Republican from South Carolina, who introduced the original version of the OZ program in 2016, introduced the reform package in the Senate. Representatives Ron Kind, a Democrat from Wisconsin, and Mike Kelly, a Republican from Pennsylvania, introduced it in the House.