Opportunity Zones are census tracts that have been nominated and approved for participation in the Opportunity Zones Program established by the federal government in 2017.
This program aims to encourage investments in low-income rural and urban areas that are economically distressed and in need of economic development.
To qualify as an opportunity zone a census tract must have a poverty rate of at least 20%, median family income of less than 80% of the statewide or area median income and be nominated by that state's governor.
Investments into an Opportunity Zone must be made through a Qualified Opportunity Fund which is a legal entity that makes equity investments into real estate projects and active businesses within Opportunity Zones.
Captial gains invested into an Opportunity Zone grant the following tax benefits to the investor:
1. Tax deferral on gains rolled into an Opportunity Fund.
2. Tax reduction (of up to 15%) on gains rolled into an Opportunity Fund.
3. No tax on appreciation of investments if the investor "cashes out" of the Opportunity Fund after 10+ years.
Tax Increment Finance Districts (TIFs) are special districts designated by the City of Huntsville where the City makes improvements in infrastructure with the intent of stimulating economic development.
As development occurs the value of property within the district increases and so do revenues generated from property taxes paid by the owners.
The City is allowed to use these increased revenues to pay for the improvements it made to stimulate the development of the district and to pay for other public infrastructure improvements.
Property taxes are not increased within TIF Districts; Revenues are increased because of the increased value of the properties within the district.