The investments would come through a new program aimed at luring money to federally-qualified, state-selected Opportunity Zones. At Tuesday morning’s regular monthly Development Commission meeting on the second floor of City Hall, newly minted City Plan Director Aïcha Woods and Deputy City Economic Development Administrator Steve Fontana gave a rundown on the city’s seven designated Opportunity Zones, which allow for investors to defer federal capital gains taxes by putting money into state-sanctioned areas within distressed municipalities.
New Haven has already seen one developer take advantage of the concomitant tax deferral benefits the New York City-based developers of the Wendy’s on Whalley, which falls within the city’s Dixwell Opportunity Zone. Those developers told the Independent earlier this year that one of the main reasons why they spent $3.1 million buying the rapidly constructed fast food joint was to save on capital gains taxes they would have had to pay following a much larger real estate sale in New York City.
Woods, who took the helm of the City Plan department on Monday, said that one of the city’s key strategies for encouraging Opportunity Zone investments into projects more aligned with the city’s development goals than a Wendy’s is to revise the city’s antiquated zoning code, particularly for commercial corridors like Grand Avenue, Dixwell Avenue, and Whalley Avenue.
Development Commission Chair Pedro Soto praised the state and the city for ensuring that New Haven’s Opportunity Zones fall within underdeveloped and relatively impoverished neighborhoods, so that the neediest parts of town are the most attractive to investors. “The right way is looked to redevelop impacted areas,” he said, “The wrong way is to figure out what’s the bare minimum to qualify and select your wealthiest portions that are already getting capital.” Seattle and New York City took that approach, he said, which has led to the most expensive real estate projects in town going up in Opportunity Zones.