Each Governor is authorized to designate 25% of the eligible census tracts1 as Opportunity Zones in their state. In Minnesota, this means the Governor can designate 1282 census tracts as Opportunity Zones out of an eligible 509 low-income census tracts. The Governor also has the option of including up to 5% of census tracts that are contiguous with an eligible census tract but are not themselves low-income tracts3. In Minnesota, the Governor could designate up to 74 tracts as contiguous out of the state's 128 designated Opportunity Zones.
1According to 26 U.C. Code § 1400Z–1, a population census tract is eligible for designation as an Opportunity Zone if it satisfies the definition of "low-income community" (LIC) in § 45D(e) of the Code.
2According to 26 CFR 601.601, Rev. Proc 2018-16.09: If the number of LICs in a State is not evenly divisible by 4, the 25 percent limitation is determined by rounding the fractional quotient up to the next whole number.
3Under 26 U.C. Code § 1400Z–1(e) of the Code, a tract that is not an LIC is eligible for designation if both of the following conditions are met: (1) The non-LIC tract is contiguous with an LIC that is designated as a QOZ (the contiguous LIC QOZ need not be in the same State.); and (2) The median family income of the non-LIC tract does not exceed 125 percent of the median family income of that contiguous LIC QOZ.
4According 26 CFR 601.601, Rev. Proc 2018-16.09(3): If the number of designated QOZs in a State is not evenly divisible by 20, the 5 percent limitation is determined by rounding the fractional quotient up to the next whole number.
What are Opportunity Funds?
Opportunity Funds are a new class of private sector investment vehicles authorized to aggregate and deploy private investment into Opportunity Zones.
Opportunity Funds allow U.S. investors holding unrealized gains in stocks and mutual funds to pool their resources in projects located in Opportunity Zones, which will be invested in rebuilding low-income communities.
Opportunity Funds pool investments in Opportunity Zones.
U.S. investors are eligible to receive:
A temporary tax deferral for capital gains invested in an Opportunity Fund.
A step-up in basis for capital gains reinvested in an Opportunity Fund.
A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund if the investment is held for at least 10 years.
Governor Dayton is charged with designating Opportunity Zones from among Minnesota’s 509 qualifying census tracts. In Minnesota, we feel strongly that local communities have the on-the-ground expertise to recommend which eligible census tracts in their county, city, tribal land or region should be designated Opportunity Zones. That’s why we are asking you to prioritize and rank census tracts in your city/county or tribal area that are eligible to be Opportunity Zones.
First-class cities are being asked to prioritize and rank Opportunity Zones within their city’s boundaries and will be strongly encouraged to collaborate with the County in which they are located in providing feedback. As of the 2010 federal decennial census, first-class cities are:
Each of Minnesota’s 87 counties are being asked to prioritize and rank Opportunity Zones within their County. Counties will be strongly encouraged to collaborate and may submit their responses as a region. DEED is aware that in Greater Minnesota the Initiative Foundations have agreed to act as conveners around this issue for their respective regions of the state. Counties will be encouraged to work together, or if they agree, a larger regional governance body such as a regional development commission can submit responses on behalf of counties in the region.
Each of Minnesota’s eleven tribal nations are being asked to prioritize and rank Opportunity Zones within their reservation or community. Tribal nations are encouraged to collaborate with the counties in which their lands are located, and tribal nations may collaborate with counties to submit responses or submit on their own.
Local decision-makers will have 30 days to provide their rankings to DEED and Minnesota Housing:
Initial information distributed to local-decision makers: February 14, 2018
Deadline to receive rankings from local decision-makers: March 29, 2018 (extension granted 3/8)
Local decision-maker organizations that have already submitted recommendations to DEED can submit modified recommendations as long as they are received before this new deadline
Recommendation due to Treasury: April 20, 2018.
Process to Prioritize and Rank Opportunity Zones
The map found here designates the lowest income 250 eligible census tracts in your county/city/tribal area or region; as well as the total eligible census tracts. We need you to work collaboratively to prioritize and rank your eligible census tracts for inclusion as an Opportunity Zone.
In accordance with H.R.1 Tax Cut and Jobs Act of 2017, Governor Dayton nominated 128 census tracts for designation as a qualified opportunity zone. On May 18, 2018, the U.S. Department of Treasury certified and formally designated these census tracts as qualified Opportunity Zones.
Stakeholders with additional questions about this process can contact Darielle Dannen, government relations director at DEED, or Ryan Baumtrog, Assistant Commissioner of Policy and Community Development at Minnesota Housing.