By James Fink, originally published in Buffalo Business First on Apr 25, 2019, 2:53 PM EDT.
Opportunity Zone clarifications — all 169 pages — should aid developers
A set of week-old federal clarifications related to developments within designated Opportunity Zones could trigger a series of projects advancing beyond the planning stage.
And, chief among them is the redevelopment of the Boulevard Mall, the Amherst shopping center acquired in early April by investor/developer Nick Sinatra.
After months of reviews, the Department of Treasury on April 18 issued a 169-page clarification related to the fledgling program. It was introduced last fall as a means to encourage development in demographically and economically challenged U.S. Census Bureau tracts. In Buffalo, there are 18 designated Opportunity Zones and another five in Niagara Falls along with one in Amherst, where the Boulevard Mall sits.
Patrick Fitzgerald, a land use attorney with Phillips Lytle LLP, said the revisions will answer questions that the development community has raised.
A number of tax deferred credits will be available, ranging from paying 85 percent of their capital gains by Dec. 31, 2026, or, if they hold on to the project for 10 years, they get a full 100 percent exemption on any new gains earned related to the project.
Fitzgerald predicted that the clarified federal rules will prod many Opportunity Zone area projects to advance.
“I definitely see more money being put into (investment) funds,” Fitzgerald said. “I am getting calls.”
Real estate investment funds may target midsized cities like Buffalo because of the large number of Opportunity Zones. Investment funds that zero in on Opportunity Zone areas may play a key role in the redevelopment of such local landmarks as the DLW Terminal in downtown Buffalo or the Hotel Niagara in Niagara Falls.
“They can benefit Buffalo in a lot of ways,” Fitzgerald said. “The OZ credits can be icing on the cake.”
Nick Sinatra has said he will seek Opportunity Zone tax credits to redevelop the Boulevard Mall, which his Sinatra & Co. acquired during an April 3 online auction.