Opportunity Zones

The Arizona Opportunity Zone Fund – Investments and Tax Incentives

By Robert Ferguson – Director

Financial Planning

Investing in the Arizona Opportunity Zone Fund LLC (AZ-OZ Fund) is similar to a Roth IRA – only better. With a Roth IRA you invest funds where you have paid tax on the funds before they go in. With the AZ-OZ Fund you can invest funds that you have earned capital gains on but before you pay the tax. Should you leave the funds in for 10 years or more (like a Roth IRA), there is no tax on the funds when they are withdrawn. That includes the tax that would have been owed had they not been invested in our AZ-OZ Fund.

You determine where you would chose for us to invest your funds. We suggest you have one on one conversation with us and after with your tax advisor to determine if it is a good fit to your financial or tax goals. We have several different growth investment opportunities that are available at the present time.  We will be happy to discuss our plans for our current and future projects with you. Each person’s tax situation is unique and these long term investments may or may not be a fit for you.

Some of our investments are in commercial buildings, single and multi-family housing real estate and provide you real estate depreciation each year (you will receive a K1 showing that loss) which can be used to offset some of your taxes. During the period of your investment with us, your capital gains earned and principal are available to be withdrawn from the Fund and the taxes owed could be 0% if the investment is for 10 or more years.. If your capital gains were invested, the amount of tax owed is based on how long your funds were invested with us and is set by the TCJA of 2017.

To take advantage of income tax savings using our AZ-OZ Fund investments, you can invest either capital gains funds you have earned already, or any funds you may wish to invest for future capital gains without income taxes, providing you leave them in the AZ-OZ Fund for at least 10 years or more. The law allows for the AZ-OZ Fund to continue until December 31, 2047.

Your capital gains investment funds need to remain in the AZ-OZ Fund for the periods of time specified by the IRS rules under the TCJA of 2017. They are: Five (5) years, for 10% reduction, Seven and a half (7.5) for a 15% reduction, or ten (10) or more years for a 100% reduction in your tax assessment including any new gains accumulated. The second form of investment is to invest non-capital gains funds in the AZ-OZ Fund and leave them in the fund for a period of ten or more years.

The AZ-OZ Fund can remain an opportunity zone fund until December 31, 2047, based on the TCJA of 2017 (30 Years). However, there may be amendments over time The AZ-OZ Fund can remain an opportunity zone fund until December 31, 2047, based on the TCJA of 2017 (30 Years). However, there may be amendments over time such as, “Bipartisan Proposed Legislation Released for Qualified Opportunity Zone Investments”.

There are Huge Investment Opportunities in Pinal County, AZ through the AZ-OZ Fund

The Arizona Opportunity Zone Fund has started to invest in and will be investing in properties and businesses in Pinal County Arizona. We are investing initially in the city of Casa Grande businesses. One is for the production plant for Cornerstone’s bagged R12 Stucco, their ultra high strength concrete, and their insulating roof paint products. This investment will be approximately $4 million.

Our first multi-family project is slated to be in Casa Grande as well. It consists of a multi-family project of 200 to 400 units. It will be built in phases of 40 to 80 units depending on height approved by the city planner of from three to six stories.

There are several new major employers’ who have or are building plants in Casa Grande. All with large number of employees that are coming to work there (Lucid 6,000 employees, Kohler 500 employees, Nikola 250 – 350  employees, and Attesa 13,500 employees) either producing products currently and expanding or being built and coming on line in a year or two in Casa Grande and Coolidge. (Add a link to each of the stories about the companies listed here.) This is creating a shortage of housing for these businesses’ employees. Lucid is already complaining to the City about it.

Lucid Motors, a competitor of Tesla Motors, has built a $700 million, 1 million square foot manufacturing plant in Casa Grande. The Lucid Air, Motortrend’s 2022 Car of the Year is being built there. Lucid now has Phase 2 of their plant, 2.8 million square feet, under construction (see the related article in the News Section). (add a link to our article in News)

Lucid Motors is a Qualified Opportunity Zone Business that may be invested in through the AZ- OZ Fund.

Nikola Motors, the manufacture of Class 8 electric trucks, is building their trucks at there US-based plant in Coolage Arizona. They have their headquarters located in Phoenix to take advantage of the very large technical work pool available in the Phoenix metro area. (add a link to our article in News) 50% or more of their income is generated at the Coolage plant.

Nikola Motors is a Qualified Opportunity Zone Business that may be invested in through the AZ- OZ Fund.

See the article “Despite challenges, Arizona looks ahead to economic growth” from the Arizona Commerce Commission by Sandra Watson, its President & CEO here about some of the new high tech companies locating to Arizona.

The Fund

The TCJA of 2017 made many changes to the US Tax Code. The one provision that created opportunity zones opened a new way to offset income taxes from capital gains and other investments. At the same time it provides for the growth of many areas in the US previously under developed. The AZ-OZ Fund has chosen to focus its investing in Arizona. Currently we are focusing on businesses and real estate in Pinal County Arizona for its growth potential overall.

See our article: What does it take to be a Qualified Opportunity Zone Business