After months of speculation and national jockeying by states, cities and towns across the United States, Amazon announced on Nov. 13, 2018, that Long Island City, New York will be one half of its planned HQ2, its second headquarters (LIC HQ2). While there is an ongoing debate over the effects of the cost v. value to the taxpaying residents of Long Island City, New York City and New York State for winning the LIC HQ2, the fact remains that most of the land that is planned to make up the LIC HQ2 is in opportunity zones; as designated by Internal Revenue Code, Section 1400Z.

On Jan. 31, 2019, in the middle of a stream of protests against and negative articles on the LIC HQ2, Amazon announced that it will not be utilizing the hot-topic federal Opportunity Zone Program as part of its acquisition and construction of LIC HQ2. While the timing of this announcement appears to be orchestrated to act as an olive branch to local politicians, residents and protestors so as to deflect from the tax breaks that Amazon is already receiving by altruistically passing on the tax benefits of the opportunity zone program, the question remains would or could Amazon have utilized the opportunity zone program anyway? Through an analysis of the opportunity zone regulations and public knowledge of the proposed plans for LIC HQ2, it appears that only in a narrow time period could Amazon have utilized the tax benefits of the opportunity zone program. However, local developers with shovel-ready projects in LIC and the surrounding areas are positioned to greater benefit from being in opportunity zones.

Tax Implications