Final regulations governing Qualified Opportunity Funds were published in the Federal Register on January 13, 2020. They will become effective on March 13, 2020 and they address two rounds of public notice and comment.
Among the new provisions is the inclusion of a brownfield as “original use” that commences with the qualified opportunity fund to facilitate brownfield redevelopment. Specifically, the final regulations provide that all real property of a brownfield site, as defined by section 101 of CERCLA, including land and structures, located in a qualified opportunity zone and purchased by the qualified opportunity fund after December 31, 2017 will constitute “original use” of the property that commences with the fund, if within a reasonable period, the qualified opportunity fund makes investments in the brownfield site to ensure that all property comprising the brownfield site meets basic safety standards for both human health and the environment.
This may assist in encouraging qualified opportunity fund managers to consider brownfield properties situated in qualified opportunity zones because the clarification addresses a concern raised by the EPA and others that a 30-month clock for substantial improvement of brownfields is not always feasible.