What are Opportunity Zones?
The Opportunity Zone program was created as part of the Tax Cuts and Jobs Act on December 22, 2017. An Opportunity Zone is an area or community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.
Opportunity Zones are designed to spur economic development by providing tax benefits to investors. First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026. If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain. If held for more than 7 years, the 10% becomes 15%. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.
The City of Cleveland Heights' Opportunity Zone
Cleveland Heights is a diverse, progressive, and vibrant suburb of Cleveland just up the hill from University Circle, with its museums, colleges and world-renowned medical facilities - Cleveland Clinic and University Hospitals - and is a convenient commute to downtown.
The Caledonia Park Opportunity Zone is unique in that it is almost exclusively residential. The neighborhood is well situated for investment targeted at Millennials and young professionals looking for a first home or older residents looking to downsize. Situated just up the hill from University Circle, it is an ideal location to benefit from the proximity to the variety of cultural assets and medical institutions nearby.
The City will be seeking development partners for City/Land Bank owned parcels within the Opportunity Zone. Redevelopment projects could involve, workforce, affordable, and market rate housing.
In addition to the Opportunity Zone benefits available to investors, the Caledonia Park Opportunity Zone is located in a target reinvestment area that allows for the highest levels of property tax abatement permitted in the state through the City’s Community Reinvestment Area (CRA). New construction of single-family, two-family or townhomes units qualify for a 15 year, 100% property tax abatement. Remodeling/renovation projects would qualify for a 12 year, 100% abatement.
If you are interested in investing in the Caledonia Park Opportunity Zone or anywhere in the City of Cleveland Heights, please contact Economic Development Director Tim Boland at 216-291-4857 or email@example.com.
Additional Links and Resources: