Kentucky’s 144 Opportunity Zones certified by U.S. Treasury

The U.S. Treasury Department and Internal Revenue Service certified 144 Kentucky census tracts submitted for designation as Opportunity Zones. The program was designed to encourage private investment in qualifying low-income areas by providing favorable treatment for certain capital gains.

Kentucky was among the first group of states to receive certification under the federal incentive created by the 2017 tax legislation. The selected tracts were spread across 84 counties, and the Kentucky Cabinet for Economic Development was assigned to coordinate the state initiative.

State officials had invited local governments to recommend eligible tracts. According to the announcement at the time, every county that submitted a proposal received at least one designation.

Louisville’s selected tracts

Louisville officials recommended roughly 20 census tracts, and 19 were certified. The selected geography included downtown and nearby areas to the west, south and east, as well as portions of west Louisville.

The designations arrived amid public discussion about whether the tax incentive could direct capital to communities that had experienced long-term disinvestment. Officials promoted the program as a possible tool for rural and urban development, while policy analysts urged careful safeguards.

At the time, as many as 58 percent of Kentucky’s roughly 1,000 census tracts were eligible for consideration. Eligibility generally depended on a poverty rate of at least 20 percent or median family income below 80 percent of the applicable benchmark.

Under the program, investors could place eligible capital gains into private investment vehicles commonly called Opportunity Funds. Those funds were required to hold most of their assets in designated areas, while investors could qualify for deferral or reduction of certain gains taxes under the rules then being developed.

Questions about development and displacement

Louisville’s certified areas included communities with high poverty rates, but they also included places already attracting major development. Downtown, NuLu, Butchertown, Phoenix Hill and the University of Louisville’s Belknap campus were among the areas within selected tracts.

The NuLu and Butchertown tract included the planned soccer stadium district, where developers anticipated substantial private investment in hospitality, dining and office projects. A tract containing the Kentucky Exposition Center and fairgrounds was also selected while officials were pursuing private development proposals there.

An analysis of 2011–2015 census figures found that seven of Louisville’s 18 tracts with the highest poverty rates were not selected. Portland, Russell, California and Park Hill were included, while much of Shawnee, Chickasaw and Parkland was excluded.

A Brookings Institution analysis cited in the original reporting warned that weak guardrails could steer benefits toward projects already planned for appreciating neighborhoods rather than toward the most economically distressed areas. The analysis also noted that incentives based on asset appreciation did not automatically create local jobs, services or affordable housing.

City officials said they welcomed the designations and expected to work with state officials and private investors. At the time of publication, an open-records request seeking the city’s complete recommendation list remained pending.

Rules were still taking shape

The initial announcement drew support from members of Kentucky’s congressional delegation and state legislative leadership. State economic-development officials said they intended to promote the selected zones to prospective investors.

Treasury and the IRS had not yet finalized all rules governing Opportunity Funds when the tracts were certified. That uncertainty meant investment could not be expected immediately. Readers evaluating the program today should consult current federal and state guidance rather than relying on the preliminary framework described in this archive report.

Archive note: The original report was corrected to clarify that the Parkland neighborhood was mostly excluded from the certified Opportunity Zones.