Date of Award

Spring 5-18-2020

Document Type

Undergraduate Honors Thesis

Degree Name

Bachelor of Business Administration in Real Estate

Department

Real Estate

Advisor

John Demas

Abstract

In 2017, President Trump’s landmark Tax Cuts and Jobs Act introduced one of the most prolific federal incentives for real estate development in decades. In an effort to stimulate investment in neglected neighborhoods across all 50 states and five territories, the Federal Government authorized the designation of almost 9,000 blighted census tracts across the country as eligible for tax incentives. Investment in these tracts, deemed Qualified Opportunity Zones, allow investors to receive substantial capital gains deferral and possible capital gains exclusion at the end of the designated holding period, assuming they comply with the regulations of the program. While designed to revitalize economically distressed communities and reward risk-taking investment, these programs have come under scrutiny from both community residents and investors alike. In the eyes of many, this program has thus far seemingly failed to yield the intended outcome, with reports that the actual total investment pales in comparison to the expected figures. This paper seeks to examine the financial, social, and bureaucratic factors driving the program’s perceived failure to excite investor capital into Qualified Opportunity Funds, the investment vehicle of QOZs. Moreover, this paper will provide data analysis as to whether early figures show a substantial increase in investment in these communities. Ultimately, this research will provide an assessment of the efficacy of the QOZ program based on the tangible improvement it provides in distressed communities, its correlation with the characteristics of gentrification, the successful translation of QOF investment into completed developments, and investor return.

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