Chicago’s Opportunity Zones by the Numbers
Over 600 real estate professionals including several members of 33 Realty’s investment brokerage team attended Bisnow’s Chicago Opportunity Zones and 2019 Forecast event held last week.
While the opportunity zone program was signed into legislation almost two years ago, there is still some ambiguity as to whether or not the government-sponsored program will work as designed.
Steve Glickman, the architect behind the program, says it will. Unlike other incentive packages like tax credits, the opportunity zone program is designed to encourage investment across entire census tracts – not just individual project parcels.
Here’s a look at opportunity zones by the numbers:
- Participation in the opportunity zone program allows the investors three ways to defer capital gains on invested capital – temporary deferral, step-up in basis, or permanent exclusion.
- To setup a qualified opportunity fund, a total of 90% of the tangible property is required to be located in the opportunity zone.
- There are 8,700 opportunity zones nationwide, 327 in Illinois, and 133 in Chicago.
- For the opportunity zones located in Chicago, the median family income is less than $38,000 and the poverty rate is 30% or more.
One of the big unknowns of the program is how newly created businesses (located within an opportunity zone) will be able to participate. Whether these businesses can take advantage of the IRS’s proposed incentives is one of the many known unknowns of the opportunity zone program.
Managing Director of 33 Realty, Sean Connelly, cited other known unknowns that will shape commercial real estate in 2019 as the shift in Chicago political leadership, legalization of marijuana, a new tax assessor, and the potential for rent control.
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Read Bisnow’s recap of the conference here.