Opportunity Zones 2.0 - Renewal and Enhancement: Maritime Prosperity Zones, Maritime Property Zones and Rural Investment Stimulus

Background

Opportunity Zones (OZs) were originally established in 2017 during President Trump’s first term in office as a federal tax incentive created by the Tax Cuts and Jobs Act. The program was designed to spur development in geographically designated low-income communities across the United States, many of which were in urban areas adjacent to or encompassing old industrial hubs. Essentially, the program provides property and business owners (propco and opco) capital gains tax deferral and exclusion benefits for sites located within OZs. Existing OZ program capital gains deferral benefits are set to expire in 2026.

Tax and Spending Bill

Over a weekend session, the House Budget Committee advanced the Trump Administration’s tax and spending package. Needing no further explanation, the draft “One Big Beautiful Bill Act” (the “Bill”) has wide-reaching impacts across the industrial complex including manufacturing, energy and mineral resources, renewable energy, transportation, infrastructure, data centers and industrial technology.  

The draft bill provides further details to Section 11 of President Trump’s April 9, 2025 Executive Order “Restoring America’s Maritime Dominance” where he formally laid the groundwork for renewing and enhancing opportunity zones. The Order stated to ‘Establish Maritime Property Zones modeled on the opportunity zones established pursuant to section 13823 of the Tax Cuts and Jobs Act of 2017’. Now in the draft Bill, maritime property zones are specifically addressed in Title XI Subtitle B - Make Rural America and Main Street Grow Again under Part 2 - Additional Tax Relief for Rural America and Main Street.

Maritime and Rural Industrial Development

Coastal and inland waterways across the country, particularly in older manufacturing centers, are riddled with dilapidated and obsolete waterside infrastructure and landside facilities. Some of the sites are owned by state, cities and municipalities, others are privately held or in a no-man’s-land control by a quasi-government organization due to, for example, environmental conditions. 

Old terminal facilities- piers, docks and wharves require complex, capital-intensive engineering and construction lines items including geotechnical, environmental remediation and civil engineering. Site redevelopment and adaptive reuse as modern marine logistics and transport infrastructure are typically cost-prohibitive for developers and undercapitalized business operators. For developers specifically, project costs are exacerbated by high land acquisition costs for waterfront sites in general.

Critics are quick to mock the United States’ ability to re-create a significant maritime industrial sector, but dismissive opposition fails to capture the bigger picture. Revamped legislation is an *opportunity* to properly incentivize economic development in waterfront communities that are specifically adjacent to former industrial centers for shipbuilding and supporting engineering, construction and supply chain materials and services. While some OZs in large cities with growing populations have rejuvenated neighborhoods and positively impacted entire cities, other zones have experienced less success. Adding incentives and easing the entitlement process for maritime industrial sites are essential layers to this legislation to fulfill the Bill’s goal of establishing successful maritime prosperity zones. Property, logistics, manufacturing and transport sectors all stand to benefit.

Furthermore, efforts to bring the shipbuilding industry back to the United States is more of a play on industrial defense tech and advanced manufacturing than pure blue collar labor steel fabrication. The Bill clearly prioritizes intelligence, land and maritime border security. Technology is at the heart of these efforts and Silicon Valley is playing a big role in collaborating with the United States Department of Defense. ‘Shipbuilding’, therefore, is a simplified description that can be better described as industrial defense technology. Opportunity Zones a.k.a. Maritime Property Zones would play an integral role in providing the tax incentives and streamlined entitlement processes for investors and businesses to re-develop maritime industrial real estate.   

Beneficiary Markets

The Bill specifically addresses geographic diversity and provides for areas outside of coastal port markets. Interior waterways, including the Great Lakes and navigable rivers that comprise the Mississippi River watershed, Pacific Northwest and Northern California, provide access to more rural regions that stand to benefit from OZ renewal and enhancement.

Multifamily residential housing, and to a lesser extent hospitality and retail developers, were the most active builders in OZs since the programs inception. Currently, the language clearly states that modified opportunity zone programming will include more rural areas, which is a shift away focus on low-income urban communities that were the focus of original legislation. While stakeholders will fight for continued benefits in urban cores, shifting priorities to include more rural zones has the potential to create opportunities and stimulate investment in other areas.

A number of states including Pennsylvania, which has the 3rd largest rural population in the country, Texas and North Carolina are well-positioned for ‘Rural America and Main Street tax relief and spending’. Nevertheless, program renewal is needed, and potentially made permanent, in order to offset costs associated with multi-modal transport and maritime logistics infrastructure investments. Extended or permanent inclusion in the tax code would solidify project commitment and investment.

Bigger Picture

Despite multifamily developer success during the course of the existing program’s run, not all OZs are suitable for new residential development. Cities at the forefront of creating policies that stimulate the development of alternative mobility, transport and logistics infrastructure such as New York City’s Blue Highways initiative. A new waterfront transloading facility developed by Con Agg Global in the South Bronx near the Fulton Fish Market at Hunts Point Food Distribution Center is scheduled to open in 2025 and is projected to eliminate 1,000 truck trips into one of the busiest industrial submarkets in the state. In order for short sea and inland waterway logistics transport to be viable at scale in the United States, more coastal and inland waterway port districts must also prioritize incentives for redeveloping maritime industrial submarkets.