In 2018, the Utah Governor’s Office of Economic Development (GOED), along with the Utah Department of Workforce Services (DWS), announced designated Opportunity Zones from the U.S. Treasury Department. GOED and DWS worked to obtain the nomination of low-income census tracts to be considered for opportunity zone designations. Layton City’s census tract #49011126001 is a qualified Opportunity Zone, ripe for potential investment.
The list of Opportunity Zones was compiled to provide a balance for the benefit of both rural and urban communities. By identifying Layton’s area ideal for potential investment, its designated Opportunity Zone can help boost the local economy in the right direction. Layton’s Opportunity Zone is mainly located in the Historic Downtown sector, with the south-north boundaries running from Layton Parkway to the Layton Hills Mall.
The Federal Opportunity Zones Program is an innovative reinvestment system established through the Tax Cuts and Jobs Act of 2017. Through an incentive that could potentially eliminate capital gains taxes over a 10 year period, and investment into designated Opportunity Funds, researchers estimate that the program may infuse rural and underserved markets with an estimated 6.1 trillion dollars of new development.
Opportunity Zones were created from low-income census tracts with poverty rates of at least 20 percent and median family incomes of no greater than 80 percent of the area median income. Opportunity Funds invest at least 90 percent of their capital in qualifying assets in Opportunity Zones.
Investors who reinvest their realized capital gains into qualified Opportunity Funds receive a tax incentive on capital gains. For capital gains placed in Opportunity Funds for at least 5 years, investors’ basis on the original investment increases by 10 percent. If invested for at least 7 years, investors’ basis on the original investment increases by 15 percent. For investments held for at least 10 years, investors pay no taxes on any capital gains produced through their investment in Opportunity Funds..
The type of investments that qualify include real estate projects, provided they build new construction or significantly improve existing structures. Funds can also invest in businesses that perform the majority of their operating activities in Opportunity Zones.
The intent of the Opportunity Zone incentive is to deliver much-needed investment in people and communities where the need and potential for growth is greatest. Local employers now have a new source of equity capital to access when looking to fund projects or expansions.
The goal of Opportunity Zones is economic prosperity for all and this program can go a long way in helping to support growth in economically-distressed areas. Opportunity Zones have the promise of attracting more businesses and new investment. Layton City’s own Opportunity Zone can provide investors with endless potential to generate lasting community impact while earning significant returns.