Opportunity Zones

PROGRAM OVERVIEW

Established by Congress through the Tax Cuts and Jobs Act of 2017, Opportunity Zones are a new community development program providing a federal tax incentive for private investment in qualified low-income communities. The program encourages investors to reinvest their unrealized capital gains into local businesses, real estate, or development projects in exchange for a reduction in their tax obligations. Opportunity Zones will be effective for 10 years; however, investors can hold onto their investments for a longer period and still receive tax benefits.

 

INVESTMENT BENEFITS

The Opportunity Zones program offers three potential tax incentives for investing in designated low-income communities through a Qualified Opportunity Fund:

  1. Temporary deferral in taxable income for capital gains
  2. Step-up in basis for capital gains
  3. Permanent exclusion from taxable income of capital gains

For more detailed information on these investment benefits, please see this fact sheet from the Economic Innovation Group.

 

INVESTMENT PROCESS

For information on creating a Qualified Opportunity Fund and the types of investment that qualify for the Opportunity Zones program, please see this list of frequently asked questions published by the IRS.

Additionally, the U.S. Department of the Treasury issued proposed regulations for the program in October 2018. While this guidance is a significant step, many key questions remain unanswered and additional rounds of regulations are yet to come.

For some key takeaways from the early guidance, please see this summary from the Economic Innovation Group.

 

ARLINGTON'S DESIGNATED OPPORTUNITY ZONES

 

Columbia Pike

Census Tract: 51-0131-02701

Designated by the County as a Special Revitalization District, the Columbia Pike corridor has seen a significant level of development in the past decade. Incentivized by the County's adoption of a Form Based Code in 2004, developers have delivered 1,592 housing units and 208,000 square feet of retail since 2009 while another 1,247 housing units and 98,000 square feet of retail are under construction. Despite the development boom along the corridor, none of these developments occurred in the zone.

Located on the western half of Columbia Pike, the zone is comprised of over 1,300 low-rise, affordable housing units, a limited number of single-family homes, and less than 20,000 square feet of neighborhood-serving retail. While no substantial private investment has been made within the zone, construction is underway on an adjacent block that will add 443 housing units and 90,000 square feet of retail, including a Harris Teeter grocery store.

Beyond the private sector attention, the County is heavily investing in Columbia Pike's success through streetscape improvements, including utility undergrounding, and a forthcoming premium bus network. Additionally, an important focus of the County’s efforts along Columbia Pike is the preservation and creation of affordable housing. In order to achieve this goal, the County adopted financial and land use tools such as a Transit Oriented Affordable Housing Fund (TOAH), Columbia Pike Tax Increment Financing (TIF), and Transfer of Development Rights to further support the vision.

 

Adopted Land Use Plans

Columbia Pike Initiative - A Revitalization Plan (2005)

Columbia Pike Neighborhoods Area Plan (2012)

 

Existing Uses and Recent Development Activity

Presentation from Arlington's Department of Community Planning, Housing & Development (2018)

 

Green Valley

Census Tract: 51-0131-03100

Located within the Shirlington Road Corridor, a County-designated Special Revitalization District, the Green Valley (formerly known as Nauck) zone is undergoing a long-term transformation guided by the Nauck Village Center Action Plan (2004). At the epicenter of the revitalization will be the 1.1-acre Nauck Town Square, a County-funded plaza that will serve as the social and cultural center of the neighborhood, both for formal events and informal gatherings. Beyond the soon-to-begin plaza, the community's vision is a series of mixed-use developments that complement the Town Square with a variety of housing types and neighborhood-serving retail. 

The private sector has responded to the the planning efforts, as several projects have been completed since 2009: two affordable housing development totaling 130 units; an $8 million, 12-townhome development with 6,000 square feet of retail; and a 100,000 square-foot self storage facility. Existing plans call for an additional 400 housing units and a modest amount of retail space to deliver in the coming decades.

The County is continuing to invest in the Green Valley zone through curb and intersection improvements, as well as the Nauck Design Initiative that offers technical assistance for owners of several key properties related to potential redevelopment options.

 

Adopted Land Use Plans

Nauck Village Center Action Plan (2004)

Four Mile Run Valley Area Plan (2018): Part 1 / Part 2

 

Existing Uses and Recent Development Activity

Presentation from Arlington's Department of Community Planning, Housing & Development (2018)

 

Arlington Opportunity Zone Comparison

Population Columbia Pike Green Valley
Residents 3,316 6,185
Employees 231 1,227
Educational Attainment    
Bachelor's or Higher 36.6% 49.9%
Household Income    
Median $52,986 $100,880
Inventory    
Renter-Occupied Housing 95.5% 54.4%
Commercial Space 18,800 SF 324,000 SF

 

Source: CoStar, ESRI 2018.

 

ADDITIONAL RESOURCES

 

CONTACT INFORMATION

Michael Stiefvater

(703) 228-0827

[email protected]

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