Pastor Donte L. Hickman Sr. says opportunity zones have the potential to transform Broadway East from blight to new heights.
The leader of Southern Baptist Church at 1701 N. Chester St. said the federal program — ramping up in 2019 amid promises of federal tax breaks for private investors — could meld religion and politics for the better in his distressed community, kind of like divine intervention meets the perfect storm.
“We have hopes and dreams,” Hickman said. “And the opportunity zones are an answer to our prayers.”
Across Baltimore, Hickman’s grassroots optimism is being shared by business and community leaders alike. From Park Heights to Madison East, Hollins Market, Pimlico and Port Covington in South Baltimore, the potential for millions of new capital flowing into some or all the 42 designated zones has created a wave of promise.
The 10-year opportunity zone program was made to do just that — and offer tax incentives to private investors in return.
Created last year as part of the federal tax package, opportunity zones are being administered by the U.S. Department of Treasury. They are part of a program that is still being crafted by the agency, even as it has set off a national frenzy to inject private capital into low-income communities. Baltimore drew national attention after President Donald Trump accepted Pastor Hickman’s invite to visit the city on Dec. 12 to talk about the zones. (The trip was later canceled).
For some areas in Baltimore, it has jackpot potential.
“We want Baltimore to get as many dollars as possible and be able to maximize as much of it into the city,” said Robert C. Embry Jr., president of the Abell Foundation, which is funding a newly created position at the Baltimore Development Corp. focused on opportunity zones.
“I know there’s a lot of money allegedly available,” said Embry, a former city housing commissioner. “Hopefully it will make something happen in depressed areas of the city that are not always eligible. I want Baltimore to get its share.”
Under the Abell grant, Benjamin Seigel is already focused at the BDC as opportunity zone coordinator. He said he has identified five out of about 25 national opportunity zone funds that could potentially invest here and he has scheduled a Dec. 17 tour with representatives from one fund based in Chapel Hill, North Carolina, to show off potential workforce housing and transit-oriented development sites.
“We need to be pro-active and work with investors,” Seigel said, adding he is keeping a running spreadsheet and remains in regular contact with city, state and national experts on the zones.
William H. Cole IV, president of the BDC, said most of the city’s 42 designated zones are places where development projects are either shovel ready or in the planning stages.
“We didn’t throw darts at a map,” Cole said.
Maryland has a total of 149 opportunity zones and there are 8,700 in the U.S. Some of the funds already established have up to $500 million in private investment ready to go even though only the first of three sets of guidelines from the Treasury Department have been released. More regulations are expected in the coming six weeks.
But time is of the essence.
“There’s a big push to have the opportunity zone funds established by the end of the year so they can be ready to go in 2019,” Seigel said. He said the legislation has a timeline that allows for the largest federal tax break on capital gains if investments are held in the funds from 2019 through 2026.
Other areas like rural Cecil County are also in the hunt for OZ fund investors to fuel ongoing industrial growth. In Cecil, there are three opportunity zones including one along the industrial corridor of Route 40 near a large Amazon.com Inc. distribution center in North East.
“It will open people’s eyes who have not thought of Cecil County,” said Chris Moyer, economic development director for the county. “We are going to market this opportunity to the JPMorgans, Morgan Stanleys and PNC Banks. We want the big institutional players to know about the raw land and the big opportunities here.”
Opportunity zones are scattered throughout Greater Baltimore, based on ZIP codes and census tract demographics: Baltimore County has 10, Harford County has four, Howard County has one and Anne Arundel County has four. Further outside of the metro area, Prince George’s County has a total of 25 zones and Montgomery County has 14.
In the city, OZ funds could go toward affordable housing development planned and needed in places like Park Heights and Pimlico. The funds could also help to develop commercial and office projects in Mondawmin, Upton and the central business district. A planned 200-acre redevelopment of East Baltimore, including Perkins Homes and the former Somerset Homes sites, is also an opportunity zone.
Port Covington, the high-profile, $5.5 billion redevelopment by Sagamore Development and Weller Development, also made the list of opportunity zones. The project was awarded a $660 million tax increment financing package from the city in September 2016 to help pay for infrastructure work at the site. Goldman Sachs became a joint venture in the project through its investment.
The project didn’t make the shortlist for Amazon’s HQ2. But it has since been designated a planned cybersecurity hub, Cyber Town USA.
Steven Siegel, a partner in Weller Development, said the group’s partnership with Goldman Sachs was a plus because of Goldman’s relationship with other potential investors. One potential opportunity zone fund investor is the family of Kevin Plank, the founder of Under Armour who purchased the land in South Baltimore for the Port Covington development.
“We have seen a tremendous amount of focus on the project for many reasons, one is we are a very large project and the other is we are shovel ready,” Siegel said. “And this is a project where people see that there’s an opportunity for long-term capital appreciation.”
Back in Broadway East, Pastor Hickman said tithing by his congregation has helped to jumpstart certain projects like the 88-unit mixed-income Southern Views apartment development set to break ground early next year. That $20 million project would be used in the push to attract opportunity zone funds to further build out the community.
Hickman said solicitation for OZ funds include the need for a 112,000-square-foot health and wellness center and a grocery store.
“The potential for our community is we are restoring people as we rebuild properties,” Hickman said. “If we sow the seed, an abundant harvest can be had.”
Originally Published on December 13, 2018 at 04:23PM
Article published originally via “opportunity zone” – Google News https://www.bizjournals.com/baltimore/news/2018/12/13/land-of-opportunity-zones-can-a-new-federal.html