ST. LOUIS (KMOV.com) — President Trump signed an executive order establishing the White House Opportunity and Revitalization Council. The council will be tasked in assisting communities in low income and impoverished areas, designated as “Opportunity Zones.”
As part of the tax reform passed last year, the treasury department established “Opportunity Zones” where businesses and investment groups can save on taxes if they invest and develop in “Opportunity Zones.”
Almost all of East St. Louis and several areas in North St. Louis and North St. Louis County have been designated “Opportunity Zones by the Treasury Department. A full list can be accessed on the IRS website as well as an interactive map on the Department of the Treasury’s website.
What is an Opportunity Zone?
An “Opportunity Zone” is an area of land designated by the Treasury Department, targeting areas where economic hardship and abandonment has taken place in the past.
According to the Department of the Treasury, new investments in these zones can receive preferential tax treatment.
An investor who rolls capital gains into an opportunity fund can eventually avoid up to 15 percent of the taxes otherwise owed on those investment gains.
The Opportunity Zone incentive offers capital gains tax relief to investors for new investment in designated areas. Investment benefits include deferral of tax on prior gains as late as 2026 if the amount of the gain is invested in an Opportunity Fund. The benefits also include tax forgiveness on gains on that investment if the investor holds the investment for at least 10 years. Opportunity Zones retain their designation for 10 years, but under the proposed regulations, investors can hold onto their investments in Qualified Opportunity Funds through 2047 without losing tax benefits.
“With the announcement of today’s council, the whole resources of the federal government will be leveraged to rebuild low-income and impoverished neighborhood that have been ignored by Washington in year’s past,” President Trump said.
Housing and Urban Development Secretary, Dr. Ben Carson, said on Wednesday the “Opportunity Zones” located in economically distressed communities across the country are home to approximately 35 million Americans.
Based on data from the 2011-2015 American Community Survey, the designated regions had an average poverty rate of over 32 percent, compared with the 17 percent national average.
Additionally, the median family income of the designated tracts were on average 37 percent below the area or state median, and had an unemployment rate of nearly 1.6 times higher than the national average.
The Department of the Treasury estimates that the “Opportunity Zone” legislation could attract over $100 billion in private investment, which will go a long way to spur on jobs and economic development.
How could this benefit the St. Louis area?
According to John Parker, who is the Director of Corporate Communications and Media at the St. Louis Development Corporation, initial attraction to build and invest within the designated Opportunity Zones will most likely be areas Downtown and around the Cortex.
These areas already provide shovel-ready opportunities for investors and that will hopefully translate into other investment opportunities for neighborhoods that may have otherwise been overlooked.
“We hope that by attracting this initial interest to St. Louis investors will become more aware of projects and business in other Opportunity Zones that they they may have otherwise overlooked.”
Examples of other investment opportunities could include projects around the NGA site, Makers Village, Delmar Divine, and the Kingsway Redevelopment area on the north side of Delmar.
The SLDC is also hopeful that interest from Opportunity Zone investors might tip the balance for projects that have proven too difficult in the past like the redevelopment of Cleveland High School on South Grand.
What about areas North and South of Downtown?
North and Southeast of Downtown are areas the SLDC is focused on redeveloping and it just so happens there are Opportunity Zones mapped out in those communities.
They’re hoping those Opportunity Zones in areas North and Southeast of Downtown, areas that are typically overlooked by high income investors, will spur a harder look from them.
In some cases, the Opportunity Zone incentive could be the bridge to close the gap on projects that were unattainable because of how difficult it has been to access state and federal tax incentives such as low-income housing tax credits and historic tax credits.
“We hope the Opportunity Zone investment can close the gap in some projects that may have otherwise would not have continued.”
The SLDC also thinks the Opportunity Zone program will attract new investors to the region that might not otherwise have considered investment in the St. Louis area.
“The amount of capital on the coasts looking to take advantage of the benefit may be larger than coastal projects can accommodate, so these investors will be looking for projects in new markets such as St. Louis.”
The SLDC says they have been receiving at least one call a day from developers and business startups interested in attracting Opportunity Zone investors or looking for more information about the program.
In addition to local projects, the SLDC says they have met with interested investors and fund managers from outside St. Louis. Some of these investors are looking to specifically invest in North St. Louis.
The SLDC says they are doing their best to promote the Opportunity Zone program and potential investments within the zones.
For more information on Opportunity Zones in and around St. Louis, you can visit the SLDC website.
Author:
Originally Published on December 21, 2018 at 06:27AM
Article published originally via “opportunity zone” – Google News https://www.kmov.com/news/president-trump-s-tax-breaks-for-businesses-could-spell-good/article_e599b83c-ff10-11e8-aa82-a3ec8b6ffa76.html