2010 census data was the driver behind Opportunity Zone designations. There is not an option for states to designate additional Opportunity Zones under the current legislation, so any new designations would require an act of Congress.
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What data was used to identify eligible tracts for the OZ program?
Can states add additional zones in years to come?
Answers
The zones are closed to those already approved, as there was an application process whereby state governors had until March 21, 2018, to send nominations to the U.S. Treasury.
They used census data from 2010 that were identified as areas qualifying as low-income areas. No additional zones at this time are expected unless legislative change happens.
The states started with all of the low-income census tracts described for purposes of the new markets tax credit pursuant to Section 45D(e) of the code. Added to this were certain adjacent census tracts. Each state then nominated essentially one fourth of these tracts (with a special 5% cap on the adjacent tracts), and with a minimum of 25 tracts in each state. The IRS then verified that the selected tracts met the criteria and certified them. That’s it. Unless and until the Internal Revenue Code is modified to change the designation provision (and there’s no pending or proposed legislation that would make any changes prior to 10 years after the original provision was adopted), there is no way to change or add to these designated census tracts. In other words, short of a bill being proposed in Congress, and then signed by the president and becoming law, there’s no way to get any other tracts added to the list of eligible census tracts.
The zones were finally designated in 2018. Each governor could nominate up to 25% of his/her state low-income census tracts (as shown in the 2011-2015 survey). It seems that no additional designations will be allowed.
Census data and area median income statistics were used to identify the Opportunity Zone census tracts. The identified Opportunity Zones are permanent for the duration of the program. Current legislation does not provide for a way to add more zones in the future.
The selection of eligible tracts was based on 2010 Census data. The deadline has passed for states to designate zones, so absent error (which for example recently allowed Puerto Rico to add two zones) or a change in law, states cannot designate additional zones in years to come.
The data came from the 2010 U.S. Census. Only the federal government can add zones. The states cannot add any other zones.
The zones were selected from low-income census tracts. No more census tracts can be designated.
Family income of residents was the main driver. Governors picked the final census tracts from a larger group of eligible census tracts. Unfortunately, states cannot add census tracts absent a technical corrections bill through Congress.
The zone selection for the current Opportunity Zone program ended in spring 2018. Governors nominated zones that were qualifying low-income census tracts, with the ability to choose a smaller percentage of zones that did not qualify on their own, but border low-income tracts. If the program proves successful and is extended beyond its original provisions, this would reopen the ability to select zones again.
The data is from the U.S. census tracts. Additional tracts can be added after the 2020 Census.
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