Opportunity Zone Tax Breaks Back on the Chopping Block

By Mark Hallum May 31, 2023 2:03 pm

New York State Senator Michael Gianaris. Photo: Michael M. Santiago/Getty Images

A Queens lawmaker is taking another shot at passing a law that could end state tax breaks for qualified opportunity zones.

New York State Senate Deputy Leader Michael Gianaris’s bill against opportunity zone tax breaks passed the state Senate once again on Tuesday.

The bill previously cleared the state Senate in May 2022, but never made it to the floor for a vote in the New York State Assembly after getting clogged in the Ways and Means Committee.

“New year, new session, so we needed to pass it again,” a spokesman for Gianaris told Commercial Observer.

The Senate voted 41 in favor and 20 against for the bill this week, compared to the 44 in favor and 17 opposed in 2022.

Opportunity zones were passed in 2017 under former President Donald Trump as part of a federal tax overhaul meant to incentivize investment in economically underserved areas. However, Gianaris argued it often included neighborhoods already “overdeveloped and gentrified” and used by developers like Related Companies to build projects such as Hudson Yards.

“The opportunity zone program was intended to help economically distressed areas but is being abused to grant tax breaks to already overdeveloped neighborhoods, including Hudson Yards,” Gianaris said in a statement. “This giveaway to wealthy investors does little to help communities in need and should be eliminated.”

Gianaris previously dealt a blow to opportunity zones in 2021 by eliminating state tax breaks for money going into them. The new bill aims to cut state tax breaks on money after it remained in the opportunity zones for 10 years, but federal tax breaks will remain in place.

After the bill’s first passage in 2022, Gov. Kathy Hochul’s office did not comment on whether the governor would or would not kill the bill and save opportunity zone tax incentives, simply stating that Hochul would consider all the options.

The Real Estate Board of New York (REBNY) told CO at the time that taking away the benefits of excluding gains from properties in opportunity zones would only push developers to other states, making New York a less competitive destination for companies.

“New York City is in an economically precarious position,” a spokesperson for REBNY said in a statement Wednesday. “We should not remove tools to create jobs, new housing production and more investment in historically underserved communities.”

Mark Hallum can be reached at mhallum@commercialobserver.com.