Manhattan, NY. Shutterstock.
NEW YORK CITY- The Opportunity Zone program granting tax deferment credits to developers in designated census tracts has been a highly desired tax credit to plug in the capital stack. And as investors look to fully capitalize on the tax incentives afforded to projects in OZ zones, layering on top other subsidies offered through programs like the New Markets Tax Credit Program.
Opportunity Zone census tracts are areas considered 'in need of renewal' and because properties in those zones have to meet the necessary redevelopment guidelines, programs such as New Market Tax Credit Program, Low Income Housing Tax Credit and the Historic Tax Credit are attractive, Steve Polivy, chair of Akerman's Economic Development and Incentives Practice, tells GlobeSt.com.
"I consider those programs to be staples," he said. "Particularly in New York, there is a great deal of activity in affordable housing because of the mandatory inclusionary program. Developers who enhance the zoning capacity of a site will have a mandatory inclusionary housing component and low-income housing tax credits are natural to complete the capital stack there."
The New Markets Tax Credit Program attracts private capital into low-income communities, granting individual and corporate investors tax credits against their federal income tax for making equity investments in Community Development Entities, or specialized financial intermediaries. These have proved shiny to investors looking to maximize tax incentives on top of those granted by the Opportunity Zone program.
"We're still very active with New Markets because they tend to coexist with areas that have been designated with Opportunity Zones," Polivy said. "The OZ program has been very active, and has had a lot of activity through the end of last year and is still getting a lot of interest because it's a great way to marry development and investors to projects particularly in a low-income community."
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Mariah Brown
Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.
