Will Proposed Reforms Keep Opportunity Zones Alive and Effective?

Wednesday, May 14, 2025

• Opportunity reboot: Lawmakers aim to revive and reform the expiring Opportunity Zone program with stricter rules and rural incentives.

• Stage set: Live Nation’s 5,300-seat venue will anchor Atlanta’s $5B downtown revival at Centennial Yards.

• Coastal retreat: Carlsbad, CA is considering relocating its coast highway inland to proactively address beach erosion before it becomes an emergency.

• Multifamily market shifts: Join our webinar May 20 to hear how industry leaders are navigating tighter margins and rising renter expectations in the months ahead. Sign up

Editor’s Pick

Will Proposed Reforms Keep Opportunity Zones Alive and Effective?

The Opportunity Zone program is back in the spotlight as federal lawmakers attempt to extend and reform a policy that has long straddled the line between urban renewal and tax shelter. Created in 2017 to funnel private capital into distressed areas, OZs have attracted over $40 billion in investment, but with mixed results. With current designations set to expire in 2026, Congress is weighing a major overhaul that could reshape how and where capital flows.

The proposed legislation, folded into a broader House tax package, would extend the program through 2033 and authorize a second round of zone designations. This time, states would be required to include a portion of entirely rural tracts, shifting the OZ conversation beyond coastal metros and into small-town America.

Investments in rural OZs would receive enhanced tax benefits, including a 30 percent basis step-up after five years and a lower bar for substantial improvements, cut to just 50 percent of adjusted basis.

For the commercial real estate sector, the new framework could unlock new opportunities for multifamily development, adaptive reuse, and infrastructure projects in previously overlooked areas. Developers would also benefit from more flexibility, including the ability to defer up to $10,000 in ordinary income, not just capital gains, into qualifying investments.

The most consequential change may be transparency. Funds would be required to report key metrics such as residential unit creation, job impacts, and investment volume broken down by census tract. The Treasury Department would be required to publish annual data to benchmark zone performance, giving investors and policymakers a clearer sense of what’s working and what isn’t.

The proposed reforms aren’t without complications. A looming one-year gap between current and future designations—2026 to 2027—risks freezing capital deployment. And while reporting mandates aim to tie investment to community benefit, they also introduce new compliance burdens.

As the Senate prepares to take up the bill in the coming weeks, the question remains: Will these reforms retool Opportunity Zones into a more targeted, measurable development vehicle or simply rebrand business as usual under a new tax calendar?

Overheard

Live Nation Venue to Anchor $5 Billion Atlanta Revival Plan

Live Nation has signed on to lease a 5,300-seat concert venue at Centennial Yards, a $5 billion mixed-use development in downtown Atlanta. Set to open in 2027, the venue will be one of the largest indoor theaters in Live Nation’s portfolio and is intended to draw major touring acts to the area. The commitment is a major milestone for Centennial Yards, which has faced delays and slow progress since it was announced in 2019. The project is part of a broader trend where live entertainment and sports franchises anchor sprawling urban developments, with Atlanta Hawks owner Tony Ressler partnering with CIM Group, led by his brother Richard, to bring the vision to life.

Centennial Yards aims to transform 50 underutilized acres near the Mercedes-Benz Stadium and State Farm Arena into a vibrant district with housing, hotels, restaurants, and entertainment venues. So far, only $1.3 billion of the total development has been completed, including a brewery, 162 apartments, and pedestrian walkways. Backed by a $1.9 billion tax-incentive package, the project is both a test case and a symbol of how cities are turning to stadium-centric megaprojects to revive struggling downtown cores. Critics remain skeptical of the broader economic benefits, but developers—and companies like Live Nation—are betting big on the growing synergy between real estate and live events.

Carlsbad, CA Plans Retreat From Eroding Coastal Highway

Carlsbad, California, is considering a proactive “retreat now” strategy to relocate a vulnerable stretch of its scenic coastal highway before erosion and rising seas force an emergency response. Unlike many coastal cities, Carlsbad has the space, public land, and financial stability to plan ahead, and it’s exploring an inland realignment of Carlsbad Boulevard. The plan includes building a bridge over Encinas Creek and repurposing parts of the current road as pedestrian and bike paths, which would also help restore natural habitats and expand beach access.

While the move offers environmental and recreational benefits, it faces significant financial and political hurdles. The project could cost hundreds of millions, and city leaders are concerned about the lack of federal support under current climate policy. Public resistance is also a factor. Residents have expressed nostalgia for the existing oceanfront drive and worry about traffic changes like roundabouts. Still, recent safety concerns and erosion damage have started to shift public opinion. City officials continue to study the project’s scope and funding options, aiming to present a range of scenarios for public and council approval in the coming years.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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