The EPA requests clarification to IRS Opportunity Zone guidance to spur brownfield remediation

Last month, the EPA’s Office of Brownfields and Land Revitalization (OBLR) requested clarification from the IRS on the extent to which brownfield site remediation could be facilitated through investments in Opportunity Zones.


As noted in a previous article, investors can enjoy deferred taxes and other incentives when investing in designated Opportunity Zones. The IRS released its initial Opportunity Zone guidance and proposed regulation back in October. The commentary notes that—in order to reap the tax benefits central to the Opportunity Zone program—the investment must lead to a doubling of the tax basis of the building (not including the value of the land) or the original use of the property must spurred from such an investment.


OBLR’s letter asked several key questions, and the IRS’ decisions may have a significant effect on the extent to which brownfield properties receive Opportunity Zone-related investments. Specifically, the OBLR recommended that the IRS revise its proposed rule to incorporate the following:


  • Allow environmental remediation costs to count as “substantial improvements” to a property;
  • Allow for funds to be deployed over a longer period of time so that properties can be cleaned up and developed along a more reasonable timeframe;
  • Allow the gains resulting from the remediation of one property to be invested in another Opportunity Zone-designated property; and,
  • Include brownfield cleanup and reuse of vacant, underutilized, or bank land bank property as an “original use” of a property, since enabling the original or initial use of a property from an investment spurs eligibility for the tax benefits.


How the IRS will ultimately weigh in on these issues remains to be seen. As of this writing, the Department of Treasury, including the IRS, is still impacted by the partial government shutdown and has yet to respond.

White House Opportunity and Revitalization Council Created to Support Opportunity Zone Program

On December 12th, President Trump signed an Executive Order to create the White House Opportunity and Revitalization Council to provide coordinated support for Opportunity Zones across the federal government. The Council will be led by Housing and Urban Development Secretary Ben Carson and include representatives from 13 federal agencies.

Over 8,700 Opportunity Zones have been designated throughout the United States to spur investment in distressed communities. These zones—home to about 35 million Americans—could attract over $100 billion in private funding spurred by a federal tax incentive included in the Tax Cuts and Jobs Act.

The Council is tasked with ensuring that relevant federal programs sufficiently support the Opportunity Zone program and maximize its effectiveness. Specifically, over the next year, the Council will propose:

  • changes to federal policies to encourage public and private investment in Opportunity Zones and other distressed areas;
  • changes to federal policies that would help state, local and tribal governments more effectively harness federal resources in Opportunity Zones and other distressed areas; and,
  • best practices for making public and private investments in Opportunity Zones and other distressed communities.

In addition, the Council will determine how to best evaluate the Opportunity Zone program and the efficacy of the actions of the federal government to support Opportunity Zone-related investments.


Creation of Opportunity Zones in the New Tax Law Will Spur Community Development

From Vita Nuova Member Kathy Castagna – 4/23/18

On December 22, 2017, President Trump signed the Tax Cut and Job Act, a $1.5 trillion tax cut bill, into law. The Investing in Opportunity Act is a $7.7 billion bipartisan provision that is part of the Tax Cut and Job Act. This provision seeks to bolster economically depressed areas across the United States by offering deferred taxes and significant tax breaks to those parties willing to sustain investment in low-income areas.

Read on here.