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Opportunity Zones Across the Region

The federal Opportunity Zone program received widespread publicity when it was first announced over 2 years ago.  The program’s goal was to foster interest in investing in disadvantaged locations across the country, especially those with significant economic development potential. The Opportunity Zone (OZ) program offers states, cities, and communities a resource for working with local, regional, and national partners to attract new investment in their economic development projects and local businesses.

The program is being administered through the US Treasury Department, and the State of Maryland has received federal designation for 149 Opportunity Zones (OZs), a designation that will be effective for ten years.  Of the State’s 149 OZs, 65 are in the Greater Baltimore Region, with 42 lying within Baltimore City.  This article will not include a detailed description of the Region’s OZs, but this map provides a geographic breakdown of the OZs within each of the Region’s jurisdictions.


Similarly, our intent is not to describe in great detail the criteria or benefits of the OZ program; rather, the information included in this article is intended to broaden awareness of the program’s benefits to investors and provide resources for accessing more detailed information.

The OZ program allows investors to defer capital gains taxes by directing investment income into commercial, residential, and mixed-use real estate properties as well as operating businesses located in OZ designated areas. The capital gains must be invested into a “Qualified Opportunity Fund (QOF),” within 180 days of realizing those gains.  A QOF can be created by any investor or group of investors through filling out forms with the IRS, the basic requirement being that 90% of the Fund must be invested in an Opportunity Zone.  There are several levels of tax deferral or forgiveness of a percentage of capital gains taxes for investing in an OZ project or business depending on the length of time the investment is held in the QOF.  The specific requirements for establishing a QOF and the benefits for investing in a QOF are detailed here.

In Greater Baltimore, the inclusion of both “shovel-ready” development projects, such as Port Covington, and tracts that comply with Federal requirements but do not have substantial investment opportunities, is in line with national trends.  The first of Baltimore City’s Opportunity Zone deals is the investment by Prudential Financier’s QOF in the$150M Yards 56 project across from Johns Hopkins Bayview Medical Center in East Baltimore, not far from the booming neighborhoods of Brewers Hill and Canton.  Through the Baltimore Development Corporation’s Opportunity Zone Coordinator, Ben Siegel, the City is in discussions with potential OZ Investors for a number of development projects including the Perkins Homes in the Perkins Somerset Old Town neighborhood; the Madison Park North site along North Avenue between Bolton Hill and Reservoir Hill, and a mixed-use project in Coppin Heights. 

While much of the attention on the OZ program has been focused on real estate and the tax advantages for capital investment in OZ real estate development projects the tax benefits could be more significant as a catalyst for investing in businesses located in or moving to an Opportunity Zone. One reason why there is relatively little known about the benefits to operating businesses is that the federal regulations concerning tax benefits for existing business were issued much later than those for real estate.  Again, rather than detail the somewhat complicated eligibility requirements in this article, the information can be found at the site for “Opportunity Zones Frequently Asked Questions.” 

An example of how the addition of an investment from a QOF can impact a business’s decision to locate to an OZ is Galen Robotics. A College Park-based venture capital fund recently created to invest in OZ businesses provided a major investment to Silicon Valley start-up Galen Robotics for relocation to an OZ property in Southwest Baltimore. The investment, together with the package of additional incentives the City and State provided for companies moving to OZ, was key in Galen’s decision to expand in Baltimore.

The State’s support for OZ projects was also highlighted by an award of $500,000 by the Maryland Department of Housing and Community Development to Clene Nanomedicine for operating costs associated with planned expansion. Since 2017, the company has established a manufacturing platform in Cecil County’s Principio Business Park for a pipeline of new drugs used to treat a spectrum of diseases. The state funding helped to offset critical operations as the company embarked upon its second phase of testing a multiple sclerosis medication.

MDHCD's award to Clene is but one example of the State’s robust bundle of incentives to layer on top of an OZ investment for businesses and projects located in or moving to an OZ. Under the State’s Opportunity Zone Enhancement program, businesses may qualify for enhanced tax credits under a number of programs administered by the State’s Department of Commerce, including Job Creation, One Maryland, Enterprise Zone, Biotechnology Investment Incentive, Cyber Security Investment Incentive, and More Jobs for Marylanders. Detailed information about the incentives available to OZ businesses and projects can be found here.


While angel and venture capital investors often look for an exit strategy that is earlier than the required length of time a QOF must remain in the OZ business or project, the attractiveness of deferring and/or reducing capital gains could alter that dynamic.  The State has also stepped in to make investment in growing technology companies by creating an extra benefit for investing in Maryland biotech and cybersecurity companies in OZs. Investors can get a tax break of up to $250,000 on their investment, which could substantially change the risk profile for the investor.  If the investors don’t owe a significant amount of taxes in Maryland, they might qualify for a rebate of the remainder.

There is the potential for significant upside for investors who contribute their capital gains into QOFs, particularly within Baltimore City and the Greater Baltimore region with its wealth of industry assets.  Building awareness of the benefits for OZ investment AND of the major incentives the State is layering on for OZ projects and businesses will hopefully bring more attention to and interest from the investment community, resulting in achieving the goals of the OZ Program – to create sustainable growth in economically-challenged communities.


Galen Robotics is moving to 5,000 sq ft of space, with an option to expand to as much as 50,000 sq ft, within one of Baltimore City’s Opportunity Zones at 1100 Wicomico. Galen started out in 2016 in the Silicon Valley area based on research and inventions that bring robotics to microsurgeries - technology originating from the lab of Dr. Russell Taylor, director of the Laboratory of Computational Sensing and Robotics at The Johns Hopkins University, and researcher Dr. Kevin Olds. Galen quickly realized that the engineering talent they needed was also located in Greater Baltimore, and their relocation to Baltimore City quickly followed. They are ramping up to grow again with investment from the Maryland-based Verte Opportunity Fund which uses the Opportunity Zone program to invest in operating businesses. The move solidifies Galen’s presence in Baltimore with their new headquarters location made possible in-part by investment and real estate matches made by BDC’s Opportunity Zone Coordinator Ben Seigel, and a package of additional City and State incentives.

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The biopharmaceutical manufacturing center for Clene Nanomedicine, located in North East, Cecil County, has benefitted from State support for Opportunity Zone projects. Clene Nanomedicine is known for their creation of a manufacturing platform for new drug candidates that have application across a spectrum of diseases, including Parkinson’s, multiple sclerosis (MS) and amyotrophic lateral sclerosis (ALS). A Maryland Opportunity Zone program “Neighborhood BusinessWorks” loan of $500,000 was announced by the Maryland Department of Housing and Community Development earlier this year, and was made available because of the company’s location within one of Cecil’s OZs. The investment will assist Clene with operating costs associated with a 15% workforce increase at their 21,000 sq ft manufacturing facility in 2019. In Cecil County since 2017 and under the leadership of Clene’s CEO/President Rob Etherington, the company is embarking upon its second phase of testing a multiple sclerosis medication.

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