The Internal Revenue Service (IRS) regulation on Investing in Qualified Opportunity Funds (QQFs) is
designed to attract private investment to census tracts designated as Opportunity Zones (OZs). The
program offers significant tax advantages to private entities who have profits they earned from selling investments
(known as "capital gains") if they choose to invest those capital gains in a QOF associated with OZ census tracts.
¦	The law1 allows investors who would otherwise have to pay taxes on their capital gains to defer those taxes
by instead investing the gains in a QOF.
¦	IRS rules state that a fund designated as a QOF must invest at least 90% of its assets in a qualified OZ
property or qualified OZ business.


Qualified OZ Business
Qualified OZ Property
A business where 70% of the property is within
an OZ and 50% of the business's total gross
income is derived from active conduct of a trade
or business within an OZ
Property within an OZ where the QOF investment
commences an "original use" on the property or
"substantially improves" the property (doubles
the basis in the property) within 30 months
A
Investing in Brownfields Located in Opportunity Zones
Local government agencies may choose to use their public resources2 to support assessment and cleanup
activities at brownfields within OZ census tracts. Their upfront investment in these sites (as well as improving the
surrounding infrastructure) demonstrates local commitment and clear redevelopment priorities. Clear commitment
and priorities often increase private investor confidence, opening the door to possible QOF investments and other
leveraging opportunities.
The final IRS regulation, which can be found in Volume 85 of the Federal Register on page 1866 (85 FR 1866), includes
several provisions to support QOF investment in brownfields assessment, cleanup and redevelopment, such as:
¦ QOF investment in a brownfield or in a property that was involuntarily transferred to local govern-
ment can satisfy the IRS requirement for commencing an "original use." (see 85 FR 1910-11)
¦ According to the regulations, all real property composing a brownfield site, including land and structures located
thereon, will be treated as satisfying the IRS's requirement for commencing an "original use" on the site. This
means the brownfield does not have to meet the strict time constraints of the IRS's "substantial improvement"
1	Qualified Opportunity Funds (QOFs) are an investment tool created under the Federal Tax Cuts and Jobs Act of 2017.
2	Such as resources from state, tribal and local governments, EPA's Brownfields Program or other federal programs.
Top caption: EPA brownfields funding allowed the City of Janesville. Wisconsin, to develop its own locally driven revitalization plan, which led
to demolition of a parking deck that spanned across the Rock River and subsequent outdoor recreational improvements along the river within
one ofJanesville's Opportunity Zones.	brownfields and
LAND REVITALIZATION

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test. To qualify as "original use," the QOF or OZ business investment
in the brownfield site must ensure that the site meets basic safety
standards for human health and the environment.
According to the regulations, the purchaser of real property from
a local government who held the property as the result of an
involuntary transfer (including through abandonment, bankruptcy,
foreclosure, or receivership) may treat all property composing the
real property (including the land and structures thereon) as satisfy-
ing the "original use" requirement.
Below is a summary of IRS requirements for QOF investment
needing to either commence an "original use" on the property or
"substantially improve" property:
In June 2018, the IRS certified OZ
census tracts nominated by the
governors of each state, territory,
and the District of Columbia.
Over 8,700 low-income census
tracts are designated as OZs.
Many of these census tracts
include properties that are (or
potentially are) contaminated
(e.g., brownfields).
For a site within an OZ purchased after December 2017
Satisfies "original
use" requirement
Must "substantially
improve" property
Site is bare land (including land purchased with buildings to be
demolished for new development)
X

Brownfield site (including the land and structures thereon) if within
a reasonable period the owner makes investments to ensure that
the site meets basic safety standards for both human health and the
environment
X

Site is vacant prior to and on the date of publication of the OZ
designation and was vacant for at least 1 year prior to purchase of site
X

Site not vacant at the time of the OZ designation but later became
vacant and remained vacant for at least 3 years
X

Non-brownfield site that does not meet vacancy requirements

X
¦	Expenses for site assessment and remediation qualify as eligible costs that demonstrate "substantial
improvement" at an OZ property if the costs add to the basis of a property improved during the 30-month
improvement period, (see 85 FR 1913-14)
¦	Permitting delays caused by the government that would otherwise cause the QOF to fail the IRS
requirement to deploy QOF capital within 31 months will be tolled3 for a duration equal to the
permitting delay. This includes delays associated with brownfields regulatory approvals if awaiting these
approvals precludes any further action to complete the project, (see 85 FR 1925-26)
It is recommended that Local Government Agencies review the IRS regulations and seek tax counsel before
considering QOF investment in brownfields assessment, cleanup and redevelopment. For more information,
visit https://www.irs.aov/newsroom/opportunitv-zones-freauentlv-asked-auestions.
3 "tolled" in this case means to delay, suspend or hold off the effect of a statute fhttps:/7dictionarv.Iaw.com/Default.aspx?selected=21341
The 1 enneco RCRA Site,
located in Cozad, Nebraska's
Opportunity Zone, is a
recipient of OBLR technical
assistance revolving around
strategic redevelopment
planning.

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Many Communities with OZ Census Tracts Received Assessment and/or Cleanup
Resources from EPA's Brownfields and Land Revitalization Program
EPA's Cleanups in Mv Community is an interactive online map that includes an OZ census tract map layer. You
can use the map to find which OZ census tracts include brownfields that were assessed or remediated using
EPA resources since 2003.
¦	EPA's data reflect that 25% of the OZ census tracts include at least one property that was addressed by
EPA's brownfields resources at some point.
¦	Many recent recipients of EPA brownfield grants are planning to use a portion of their brownfields resources
to address sites within OZ census tracts.
Brownfields Redevelopment in Opportunity Zones Requires Local Leadership
Local government agencies retain the power to control the development activities that occur in OZs to meet
local goals for equitable and sustainable development.
¦	Brownfield and other redevelopment projects require approval from the local municipality. The municipal-
ity can:
¦	Create and align their local plans and apply zoning rules to a potential project to promote community-driven
investments.
¦	Judiciously approve (or disapprove) development incentives for a potential project.
¦	Consider how community benefit agreements or inclusionary practices can help address concerns of
possible displacement due to economic growth in previously distressed neighborhoods.
¦	Communities can drive brownfields redevelopment by:
¦	Identifying promising brownfield redevelopment projects in OZs and eliminating barriers to redevelopment.
¦	Painting the picture of redevelopment. In general, push community vision by forecasting how the site
may look ten years from now, how the site can create value for the neighborhood, and what economic
returns are expected.
¦	Identifying specific redevelopment opportunities, or redevelopment categories (such as commercial,
residential, industrial, warehouse). Clarify the possible opportunities to attract interest from the manager
of the QOF (especially if the QOF specializes in certain types of development).
¦	Convening a local OZ & Brownfields Forum to promote collaboration. Engage partners to
demonstrate strong public support and well-organized local efforts to leverage investments in an OZ
(for more information, see EPA's Brownfields Stakeholder Forum KitV
In 2019, EPA
Administrator Wheeler
traveled to Dauphin
County's Opportunity
Zone to award the
Dauphin County
Redevelopment
Authority with $300,000
in Brownfields
Assessment funding.
piY m THf PRO! of
Dauphin County Redetfetopmwii Authority
OD/ 100 Pstowf
Hire* Hur»HriKl Thotrtand

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Many states have created
websites to highlight OZ
properties, including:
Additional Resources
EPA Websites
¦	Understanding Brownfields
¦	EPA Opportunity Zones
¦	EPA Land Revitalization Toolkit
¦	EPA Brownfields Grants
Providers of EPA Technical Assistance, Training, and Research
to Brownfields Communities
¦	New Jersey Institute of Technology (NJTQ
¦	Kansas State University (KSU)
¦	Center for Creative Land Recycling (CCLR)
¦	Groundwork USA (Equitable Development)
Other Federal Websites
¦	Brownfields Funding & Financing (Council of Development
Finance Agencies)
¦	White House Council on Opportunity & Revitalization
MEXICO
ECONOMIC DEVELOPMENT
©DELAWARE
PPORJU NITY
ZONES
OPPORTUNITY
ZONES
?,Ohio
1 OPPORTUNITY
ZONES
Examples
Several communities with OZ census tracts developed an investment prospectus to share with potential QOF
investors. Here are several examples:
fa. INVEST ATLANTA Tra Arthur M. Blank
Family Foundation
ATLANTA
DOWNTOWN
CITY OF PARKERSBURG,
WEST VIRGINIA
OPPORTUNITY ZONE PROSPECTUS
Prepared by:
DOWNTOWN PKB
wood County economic development
MARCH 20T9
City of Lansing
Opportunity Zones
Investment Prospectus
Office of Land and Emergency Management (5105T) | EPA-560-F-20-007 | March 2020 I https://www.epa.gov/brownfields

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