Business could soon be booming in Lexington Park as interest in the county’s only federally designated “opportunity zone” ramps up, local leaders said.
During a public information session last Thursday organized by St. Mary’s County Department of Economic Development in Lexington Park, Frank Dickson, director of strategic business initiatives at the Maryland Department of Housing and Community Development, gave an overview of the program to a room of business owners and investors.
The section, which encompasses the area roughly within the confines of Chancellor’s Run Road, Buck Hewitt Road, Three Notch Road and Great Mills Road, has been designated as an “opportunity zone” by the U.S. Department of the Treasury, along with 148 other census tracts across the state.
The designation is meant to bolster low-income communities “that need some help from an investment standpoint to raise those people up,” Dickson said.
“Lexington Park is an area that needs to have some significant rebirth to it,” Commissioner Todd Morgan (R) said at the meeting.
“For investors that are interested and it fits their profile, it’s a very good set up,” Dickson said before “getting in the weeds” of the program.
The opportunity zone program allows investors to defer paying federal taxes on the capital gains they make from selling assets such as stocks, bonds and real estate for up to 10 years, provided that they deposit the money into a specially designated opportunity fund.
Investors all receive tax reductions of up to 10 percent for five-year investments and up to 15 percent after seven years, and can receive capital gains tax exemption after a 10-year investment.
The money in the opportunity fund is then used to invest in small businesses and development projects in the opportunity zone areas.
Unlike other federal tax credit programs, the amount of money that can be made available through the opportunity fund is not capped.
“Opportunity zones will mean more jobs in areas of the state that need them the most,” Maryland Secretary of Commerce Mike Gill said in a release announcing the selection of the state’s 149 zones in April. “We expect that this program will supercharge economic growth in Maryland.” The Lexington Park zone is the only one in St. Mary’s County. Calvert and Charles counties have three zones each.
The Maryland Department of Housing and Community Development will oversee the opportunity zone program in the state, in conjunction with the Maryland Department of Commerce.
The opportunity zone program is a new national development initiative established as part of last year’s federal tax reform law. Each Maryland county submitted to Gov. Larry Hogan (R) its nominations for census tracts that met the federal criteria of an individual poverty rate of at least 20 percent and a median family income that was no more than 80 percent of the area median.
In the Lexington Park opportunity zone, the median household income sits at $48,782, according to the state housing and community development department.
The county could possibly request more opportunity zone designations in the future, but Dickson said it would probably be “about 5 to 6 years” down the line before any changes to the designated areas are made in order to “see how these opportunity zones are impactful to the areas.”