The QO Zone policy relies on collaboration between state governments and private investors. State governors are responsible for identifying the areas of greatest need within their jurisdictions, and private investors are responsible for creating funds that will provide capital to the designated areas. Thus, the starting point for implementing this policy is identifying and classifying QO Zones.
Pursuant to Section 1400Z-1, QO Zones are low-income communities that meet the same conditions as the NMTC provisions. [1] The Conference Report to the legislation instructs Governors to use the following criteria in the QO Zone selection process: (1) areas that are currently the focus of mutually reinforcing state, local, or private economic development initiatives to attract investment and foster startup activities; (2) areas that have demonstrated success in geographically targeted development programs such as promise zones, the NMTC, empowerment zones, and renewal communities; and/or (3) areas that have recently experienced significant layoffs due to business closures or relocations.
The law limits the number of QO Zones; specifically, the number of census tracts designated as QO Zones may not exceed 25% of the number of low-income communities in the state. Once an area is designated as a QO Zone, the area will maintain its QO Zone status for 10 years. The Treasury Department has established an Opportunity Zone Resource website that includes a current list of QO Zones. [2]
[2] Section 1400Z-1(c)(1).
[3]”Opportunity Zones Resources.” Community Development Financial Institutions Fund. https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx.