New York State Gets One More Shot at Opportunity Zones

When equity for ground-up development disappeared in 2022, Opportunity Zone capital didn’t. 

Four years later that dynamic is largely the same. But Congress has now rewritten the Opportunity Zone (OZ) program, and New York has just over 60 days to decide where the next decade of OZ capital can go.

The reason Opportunity Zone funds kept investing anyway is because the statute obligated them to deploy into qualifying tracts or forfeit the benefit. In addition, OZ capital (a) has a mandatory 10-year investment horizon, which suits development projects in emerging neighborhoods much better than opportunistic capital, which typically has a three- to five-year time horizon; and (b) it is priced less expensively by allocators because of its tax-advantaged treatment. 

In 2022, as conventional equity pulled back from ground-up development, my platform closed equity investments into more than 2,000 units of multifamily construction across the country. We have since funded close to 5,000 housing units. With inflation and interest rates repricing the capital stack, OZ equity was the money that showed up.   

That is the lesson worth carrying into the next round. OZ 1.0 proved that private equity under a statutory obligation keeps investing when conventional capital retreats. OZ 2.0 gives cities a short window to better aim that capital where it’s needed. Leaders who treat the next 60 days as a formality will spend the following decade watching the money go elsewhere.

New York designated 514 census tracts in 2018 as qualifying Opportunity Zones. The Treasury’s latest accounting puts national OZ investment at $112 billion through 2024, up from $44 billion through 2020. New York accounted for roughly $8.2 billion of it, behind only California and Florida. On volume, the state did well. Targeting is the harder verdict.

Critics predicted from the start that the money would land in neighborhoods that didn’t need it. In New York City, they were partly right. OZ investment did go into districts like Greenpoint and Long Island City, which had rezonings and momentum that predated the program and were selected for being contiguous to low-income districts. However, districts like Mott Haven in the Bronx and Gowanus in Brooklyn qualified based on household incomes being below 80 percent of the area median income (AMI) and have been economic development success stories. 

Mott Haven had almost no development despite a 2005 rezoning until Brookfield’s Opportunity Zone platform invested in Bankside. Gowanus wasn’t zoned for housing until 2021, and most of the largest projects in the neighborhood have been funded with OZ capital after interest rates rose in 2022.

While choosing the right census tracts for designation that boost economic development was a challenging task, where stakeholders had to weigh what areas would have the ability to attract private capital, provisions that permitted states to select tracts contiguous to areas with low median incomes was clearly at cross purposes with what the objectives of the program should have been.  

The One Big Beautiful Bill Act, signed July 4, 2025, made the program permanent and tightened its aim. To qualify, a tract now has to have median family income at or below 70 percent of AMI, rather than 80 percent — and the controversial provision that let higher-income tracts qualify merely by being adjacent to a lower income one has been eliminated.

Two other changes matter. Zones are redrawn every 10 years, so a bad choice is not permanent. And rural investment gets a real premium: Investors who hold five years receive a larger tax relief for the gain they roll in, and the rehabilitation requirement is halved — instead of spending as much fixing up a building as you paid for it, half is enough.

That last change is the most underrated provision in the bill. Picture a vacant three-story building on a small town’s main street — retail at grade, two floors of dead space above. The old rule required spending at least as much on the rehab as you paid for the building, which in a market with modest rents pushed total cost past anything the finished property could support. It is why such buildings sit empty for decades. At half the threshold, the arithmetic starts to work, and the same applies to processing plants, cold storage and energy infrastructure.

So, there are three things local leaders should do before the window closes.

First, identify your eligible tracts now. New York has roughly 1,702 census tracts that qualify under the tightened income and poverty thresholds — of which the state can nominate no more than 426. Knowing which of yours are on that list is a week of work, and a prerequisite of making a request to the state.

Second, assemble investable projects, not just boundaries. A designation with no site, no zoning, and no willing ownership behind it is just a line on a map.

Third, demonstrate that approvals arrive predictably. It is the only item a municipality fully controls, and the one a developer prices. Ohio required local nominations by July 10, months ahead of the federal deadline. New York advisers say the same: Advocacy through Empire State Development and the regional councils must happen now — not in September.

Designation is necessary and nowhere close to sufficient. Time is of the essence. Whether OZ capital moves toward the places that need it most in our communities over the next decade is being settled in the next 60 days.

Jeffrey Deitrich is head of equity investments at Silverstein Properties, where he oversees a portfolio of more than $1.2 billion in Opportunity Zone investments nationally.