As an effort to get private investment flowing into low-income communities, New York state is participating in the new Opportunity Zone development program. New York has more than 500 Opportunity Zones, and one is in Cayuga County.
Opportunity Zones are census tracts with an individual poverty rate of at least 20 percent and a median family income no greater than 80 percent of the area median. Auburn’s northwest quadrant qualifies as an Opportunity Zone.
Here’s how the program works: An Opportunity Zone can receive funds from Opportunity Funds. Those Opportunity Funds provide investors a chance to put that money to work by rebuilding poorer communities. To invest in Opportunity Funds, investors must hold 90 percent of their assets on a property within a designated zone.
Why would investors do this?
There are two main incentives. Investors can defer taxes on any prior gains invested in an Opportunity Fund until it’s eventually sold. If the investment is held for longer than five years, investors pay 10 percent less on those taxes. If the investment is held longer than seven years, that 10 percent becomes 15 percent.