The US Treasury Department on April 17 issued its final clarifications on how the community development program known as “opportunity zones” will function, what kinds of projects qualify and how the generous tax breaks on offer will operate. The program, signed into law in 2017, allows individuals and businesses to shelter capital gains by investing in economically distressed communities that were chosen by state governors in 2018.

The latest guidance expands the types of development eligible for the tax credits from residential and commercial to include energy, infrastructure and various environmental projects. It also clarifies the deadlines for investing, in effect giving some investors an extra 180 days or until June 1 to take advantage of the tax benefits.

Opportunity zones were the brainchild of Steve Glickman, a senior White House economic and trade advisor during Barack Obama’s first term. After leaving government in 2013, Glickman teamed up with Napster founder Sean Parker to form the Economic Innovation Group (EIG), a research organization that ultimately shepherded the Opportunity Zone concept through Congress and into law in 2017.

Now running his own consultancy, Develop LLC, Glickman is advising some of the largest real estate investment funds in the world as they vie for the unprecedented capital gains benefits afforded by the law that Steve and his team drafted. The program is also unprecedented in its scope: Some 8,700 opportunity zones chosen by the 50 U.S. state governors — as well as nearly the entire island of Puerto Rico – cover almost 12% of the U.S. and are home to more than 35 million people. Glickman spoke with Karma Network Contributing Editor and PCRP Group Managing Partner Michael Moran.

Michael Moran: Where do you see the potential of opportunity zones?

Steve Glickman: Opportunity zones are really an unprecedented attempt to build a new industry in private capital markets based around long-term growth investments into distressed areas of the country. Tapping into private equity capital markets make Opportunity Zones different from any other community development program we’ve seen in recent U.S. history in that the program doesn’t rely on a set of heavy-handed government incentives on the front end. The result of that is you can leverage far more investment and move far more capital.

(Read the full interview on the Karma Network)

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