2A — March 13 - 26, 2020 — M id A tlantic Real Estate Journal WE FIX: CRAWLSPACES
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Mid Atlantic Real Estate Journal
Mid Atlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Section Publisher ............................................. Steve Kelley Section Publisher ............................................... Kim Brunet Editor/Graphic Artist ......................................Karen Vachon Office Manager ............................................... Kerrin Devine Contributing Columnist . Brad A. Molotsky, LEED AP O+M, Duane Morris LLP Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 350 Lincoln St., Suite 1105 Hingham, MA 02043 USPS #22-358 | Vol. 32, Issue 5 Subscription rates: $99 - one year, $148 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion 781-740-2900 | Fax: 781-740-2929 www.marej.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
BEFORE
AFTER
Top 10 Opportunity Zone Clarification/Expansions of Final Regulations W BradA. Molotsky, LEEDAPO+M Duane Morris LLP ith the issuance of final regulations by the IRS and Trea- sury in December 2019 which will become effective onMarch 13, 2020, I thought it might be helpful to create a personal top ten clarifications or expan- sions of the final regulations. As an aside, deal flow remains frothy in the Opportunity Zone arena where we are focusing on real property acquisitions and development, business creations and equity raising in various OZs in New Jersey, Pennsylvania, Delaware, New York, Florida, California, Or- egon, Ohio, etc. Here are my personal top ten: 1. Working Capital Plan Timing – the Final Regu- lations increased the total months one is able to utilize a working capital plan up to 62 Months from the original 31 month safe harbor for QOZBs with a working capital plan; 2. Ability to sell assets from a QOZB – we now have
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clarification to enable a de- veloper more time to plan her/his adaptive reuse; for vacant property which was one year vacant when desig- nated as an OZ in 2018 and which remains vacant until purchase or real property that was vacant for three years prior to purchase – both with now count as “Original Use” property and represents a reduction from 5 years. This clarification will also enable a developer more time to plan her/his adaptive reuse of va- cant property; 5. Aggregation – the Final Regulations allow an owner to aggregate assets within a site and within adjacent sites for purposes of qualifying for the continued on page 6A
clarity that after ten years one can sell assets or interests from a QOZB and still have the capital gain elimination benefit. Huge clarification albeit expected from the IRS. 3. Real Property Strad- dling a site – two enumer- ated tests were clarified and articulated for qualifying real property that straddles a zone and a non-zone – the two tests are square footage and value; if you meet either test, you have met the overall test; 4. “Original Use” for Brownfields investments so long as they are made “safe” under applicable code. This expansion enables develop- ment of brownfields without the mandated substantial improvement test – good
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