The Town of Chapel Hill announced Thursday that it received an "opportunity zone" designation for the census tract near Martin Luther King Jr. Boulevard and South Estes Drive. The Town applied and was approved for the designation last spring.
“The primary goal was to create a tool that encourages people to invest and reinvest in this census tract for the betterment of the census tract, for the betterment of Chapel Hill,” said Dwight Bassett, the Town's economic development officer.
An opportunity zone is a low-income area that aims to attract investors by incentivizing them to reinvest their capital gains, or a profit from the sale of property or an investment. By doing this, the investor can defer their capital gains taxes until 2026, and if they hold the property for at least 10 years, they will not have to pay any of these taxes when they sell it. The investor still has to pay the tax on the initial investment.
The U.S. Department of the Treasury designates certain tracts as opportunity zones, which must meet the income thresholds, meaning the poverty rate is at least 20 percent or the family income is less than 80 percent of median income.
“So now, there’s this additional source of capital to invest in businesses or in redevelopment or development of property, and it’s just a matter of where there are either businesses or development proposals that are ready to receive that investment,” said Tyler Mulligan, a UNC associate professor of public law and government.