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New Bill Could Kill Opportunity Zones Tax Break In New York

A rendering of Youngwoo's 2420 Amsterdam Ave. in Washington Heights, a development which is in an opportunity zone.

New York state Sen. Michael Gianaris, one of the Democrats credited with killing Amazon’s headquarters plan for Queens, has a new bill aimed at stopping New Yorkers from using the federal opportunity zone program.

The proposed legislation, known as the Opportunity Zone Tax Break Elimination Act, would separate New York’s capital gains tax code from the federal government, The Real Deal reports. It would also amend the city’s tax law and administration code in relation to investment income.

“Though a laudable goal, the vague standards for states to designate Opportunity Zones has allowed Empire State Development to designate many areas with booming, over-developed real estate markets as opportunity zones,” the bill text states, per TRD.

The opportunity zones program, established in 2017, was billed as a way to drive hundreds of billions of dollars of investment into underserved communities. Critics have described it as a tax dodge that would only help projects that were already in the works, not improve poor communities.

Most of the buzz surrounding the program has taken place at events and with consultants, as Bisnow reported last year, though several qualified opportunity zone fund managers and experts have said they have noticed a jump in the amount of deal activity occurring during the crisis.

In New York state, there are 514 zones, 60% of which fall in New York City. Several New York development firms have made moves to establish dedicated opportunity zone funds since the program was established, including RXR Realty, Heritage Equity Partners and Somerset Partners. Goldman Sachs invested $83M into a vast affordable housing complex within Long Island City's opportunity zone in 2018. The city is also home to some of the wealthiest opportunity zones in the country.