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Opportunity Zone Industry Gearing Up For Expansion Under Trump

The opportunity zone program — the tax break for businesses investing in economically distressed communities — was a key pillar of the Trump administration’s economic policy the first time around.

Passed with the Trump tax law in late 2017, the program has fueled tens of billions of dollars of investment. The pace of funding has slowed as the program sunsets at the end of 2026, meaning investors are nearing a deadline to deploy funds into one of the nation's 8,764 qualified opportunity zones. 

But now, following Donald Trump’s election for a second term, the real estate community that has made a business out of taking advantage of the program is ramping up for a likely renewal.

“​​There’s more conversation, more excitement around opportunity zones,” said Javelin 19 principal Jill Homan, who advises opportunity zone investors. “And I think that has to do with the change in administration.”

HCVT partner Blake Christian, a tax consultant who helps clients set up OZ funds, said he has received a noticeable uptick in requests since the election. 

“I was flooded with phone calls in December,” he said. 

“I would say a minimum of 25 calls in December with people wanting to defer their gains. And that's primarily, I think, clearly from the discussions, they're more optimistic with the Trump administration and likely getting an extension of the program,” he added.

The day after the election, the room at Novogradac's Fall Opportunity Zones Summit was buzzing with excitement after a Republican victory in the White House and Congress the night before, OZPros founder Ashley Tison said in a podcast recorded live from the summit.

“The level of kind of excitement here at the conference is also one that’s very ebullient and is very excited about kind of the future of opportunity zones,” he said.

Novogradac partner Jason Watkins, who chaired the summit, said even though he expected that the program would likely be extended in some form under either nominee, the election provided more certainty.

“With the Trump administration coming forward, and with the opportunity zones having been a major talking point for the president-elect, that I think it's more of an expectation now that we really do think something will happen for sure,” he said. “I think it might have been a little bit more up in the air under a Harris administration.”

Novogradac's stakeholder group is now calling for the program to be made a permanent part of the tax code with some adjustments. Its Opportunity Zones Working Group, a coalition of community development stakeholders, sent a letter to the Trump transition team earlier this month, which Watkins shared with Bisnow.

“The OZ incentive has proven, well documented, positive economic and social impacts in low-income communities across America,” the letter read. “The OZ incentive has earned the right to be extended and made a permanent part of the Internal Revenue Code.”

Any changes to the opportunity zone legislation would need to be passed by Congress. Under the new Trump administration, that would likely come in the form of a broader tax package. 

The Opportunity Zones Transparency Extension and Improvement Act was introduced in September 2023 as a bipartisan piece of legislation that would extend the deferral period for qualifying capital gains through 2028. But it has yet to be brought to the floor.

That legislation is now very likely to advance, experts told Bisnow, as a longer-term renewal via a new tax package is also coming into the conversation.

“What I've heard behind the scenes, and what folks who pay close attention to all this stuff seem to be saying, is opportunity zones are fairly low-hanging fruit for a new package,” said Steve Glickman, co-founder and former CEO of the Economic Innovation Group, which helped craft the OZ legislation.

Whether the program is extended for the short term, renewed for 10 more years or permanently written into the tax code remains an open question. But the fact that Republicans are in control of the White House and Congress has led advocates to think some action is likely — multiple used the term “optimistic” or “cautiously optimistic” to describe the anticipation around an extension. 

Trump hasn’t explicitly said he will push Congress to pass an extension or revamp of the opportunity zone program. But he did tout the program on the 2024 campaign trail, and many of his choices for relevant administration roles have backgrounds in helping craft and execute the OZ program.

The president-elect selected Kevin Hassett, who co-authored the EIG paper that spurred the 2017 legislation, to head the National Economic Council, which advises the president on economic policy. Hassett, who served in the role for Trump’s first two terms, was a leading advocate of the program.

Scott Turner, the president-elect’s choice to run the Department of Housing and Urban Development, drove implementation of the program during Trump’s first term. In his statement on Turner’s nomination, Trump highlighted the billions of dollars invested into opportunity zones under Turner’s leadership.

Alfonso Costa Jr., who worked on the program while serving as deputy chief of staff at HUD during Trump's first term, said in an email to Bisnow that under Turner “there will be a renewed emphasis” on OZs.

“There is no greater advocate of Opportunity Zones, and I am confident in Scott's ability to galvanize support both in the Executive Branch and throughout Congress to ensure that the initiative is a core government focus moving forward,” he said.

In December, Trump's pick for Treasury Secretary, Scott Bessent, a former executive with Soros Fund Management, met with Sen. Tim Scott, a Republican from South Carolina who was an original champion of the legislation.

“I’m looking forward to working with Scott [Bessent] to extend and expand my Opportunity Zones initiative and usher in a tax code that enhances growth, investment, and economic opportunity for all Americans,” the senator said in a statement after the meeting.

“You have some key players in place in key roles who have been real champions for the program over the past decade,” Glickman said.

Fundraising Losing Steam 

The pace of fundraising for opportunity zones has slowed since the booming period of 2020 to 2022. 

The cumulative fundraising total since the start of the program reached $39.5B last quarter, according to a survey from Novogradac, which says the full number is likely much higher. That came more than two years after it reached $30B, but it made the previous $10B jump in just nine months from September 2021 to June 2022.

Investment in the second quarter of 2024 was down 70% from the prior year — $446M compared to $1.3B, Bisnow reported in September. Q3 saw a jump to $1.24B in investment after strong stock market growth in the beginning of the year created capital gains for investors to deploy. 

Investors have 180 days from when a capital gain is recognized to then invest it into a fund.

With the looming 2026 deadline, investors also have a shorter window to defer their capital gains with the program. There’s a fixed deferral date regardless of when investors put money into the program. So those who invest into the program on the last day possible have to recognize the gains immediately. That is a very different position from those who invested at the beginning of the program in 2019 and were allowed to delay their gains for seven years.

The reduced deferral time has caused investors to pull back, realizing the benefit isn’t as enticing now as it was at the beginning.

But Novogradac’s Watkins said even with that caveat, the major benefit for the program is the longer-term advantage it comes with: If an investor holds onto an opportunity zone project for at least 10 years, they can write off the gains that they get from its sale.

“The bulk of the value of the incentive is in the long-term hold, rather than in the short-term deferral,” he said.

Redbrick LMD Managing Partner Tom Skinner, who raised opportunity zone funds for his firm's Bridge District and St. Elizabeths East mixed-use projects in D.C., said the program was a “huge boost to capital formation” for the projects. He said many people "kind of forgot about opportunity zones” over the last two years, but he expects that to change.

“There’s a very strong expectation that in 2025 as the expiring elements of the Tax Cuts and Jobs Act end up getting extended, there will be an extension and most likely a slight reform and expansion of the opportunity zone legislation,” he said at Bisnow's DMV 2025 Economic and Political Forecast event last month

“We’re very excited at the prospect of that providing a shot in the arm for our existing project and more broadly across the region,” he added.

The optimism that came with the election doesn’t mean investors are launching into new investment headfirst. Nothing with Congress is guaranteed, and for more funds to start unfolding, there needs to be more certainty.

And with the next iteration still up in the air, there is pressure to get more clarity about the future of the program soon.

“My hope is that something can happen sooner rather than later,” Homan said. “Because we have really great momentum with projects, with investments, and these types of institutional-size funds and institutional projects don't turn on a dime.”

The OZ Impact 

Multiple proponents of the program said it should be easier to sell to lawmakers this time around now that they can see it has succeeded in spurring billions of dollars into historically disadvantaged areas. 

“There is just no economic development program that exists now in the U.S. toolbox that can match that scale … You've seen it have a big impact on the ground in communities that have really been starved for capital,” Glickman said.

But not everyone who has studied the program agrees about its success.

While advocates like Homan, Glickman and Christian believe it has put billions of dollars toward communities that wouldn’t have received investment otherwise, there has been skepticism around how the program functions and whether it is truly making a difference.

Brett Theodos, a senior fellow at the Urban Institute who has researched and testified before Congress regarding OZs on multiple occasions, told Bisnow he believes the majority of projects receiving the benefits would have happened anyway and investors are now just getting a tax cut for them.

“The program was initially intended to revitalize disinvested places and grow local economies. It largely has failed to do that,” Theodos said.

Theodos said the funds are mostly going to locations and sectors that the private market would have invested in regardless of any subsidy. On the real estate side, he said it has been widely used to develop market-rate apartments and industrial assets in appreciating markets.

He argued that investors aren’t taking OZ gains into account when underwriting projects, meaning deals must be able to pencil without the incentive.

“So the program is both quite expensive and ineffective at driving new investment into communities,” Theodos said.

From Theodos’ point of view, the program would need a complete overhaul to achieve its original goal. 

“The challenge this program faces is fundamental to its structure,” he said. “It's not a bug. It is the design of the program that poses the challenge.” 

But he doesn’t foresee that type of reform happening soon given the makeup of Congress and the White House.

Proponents of the program have more targeted things they would like to see changed. 

Novogradac’s stakeholder group, in its letter to the Trump transition team, made suggestions for the program’s next iteration to be more limited to underserved communities. 

States designate their own opportunity zones, but there are federal regulations about what qualifies for a zone based on census data. Novogradac’s group is advocating for requirements that funding be limited to communities in deeper distress.

Multiple OZ advocates also said they would like to see more of an emphasis on rural communities as well as more transparency about the economic impact of the program. There are estimates about funding, like the data that comes from Novogradac’s survey, but there is no formal government reporting mechanism.

Other discussions surround whether the program should be expanded to allow investment funds other than just capital gains, which would allow more players to use the benefit.

“There's improvements that are going to be made,” Glickman said. “This was a new experiment in an economic development program. It did things totally differently than the way economic development programs had been done before.”

CORRECTION, Jan. 14 10:30 ET: A previous version of this article misstated Blake Christian’s title. It has been corrected.

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