Opportunity Zones

Colorado designated 126 census tracts as “opportunity zones” where investors can reduce and eventually avoid any federal capital gains generated from investments made there. The goal of the program is to allow investors to take built-up capital gains and put them into a fund that can be used to invest in distressed areas.  Federal Heights was one of the municipalities in Adams County whose census tract 93.21 received this designation.  Census tract 93.21 includes the area between Federal west to Zuni and 104th South to 96th. 

Congress established the opportunity zone program under the Tax Cut and Jobs Act in December of 2017 with a goal of assisting areas left behind in the economic recovery. Investors can use built-up capital gains to invest in distressed areas.  If those investments are held for 10 years or more, any capital gains generated are waived. The expectation is that billions of dollars could flow into opportunity zones in every state.

To qualify, a census tract had to have 20 percent or more of its population living in poverty, and the median income had to be at 80 percent or less of the state median. Of the tracts that met those criteria, states could designate 25 percent as opportunity zones.  The selection process involved local enterprise zone administrators and occurred over three months during the first quarter of 2018.

The expectation is that large up-front investments, such as the purchase and renovation of old buildings or new infrastructure, such as wind turbines, will be more common than business startups.  New business ventures typically receive their investment over a number of years in stages. The zones stretch across the state, with Alamosa, Bent, Rio Blanco, Crowley, Cheyenne, Lake and Las Animas counties home to some of the larger land parcels. But small tracts are peppered throughout more populated communities up and down the Front Range. Of the tracts that met those criteria, Colorado could designate up to 25 percent as opportunity zones.