Fayetteville city officials are hoping that a new federal program that offers investors breaks on capital gains taxes will convince them to open businesses along the Murchison Road corridor.
The City Council has made the revitalization of the road a top priority to address this year.
The Murchison Road corridor from Rowan Street to Country Club Drive is one of the eight designated “opportunity zones” in the city. The program allows investors to delay payment or reduce the bill for capital gains taxes.
The idea is that investors get federal tax breaks, while the neighborhoods get new businesses and upgraded properties.
“People who have made gains in other investments — whether they are stocks or properties or whatever — they can take those gains, and instead of paying taxes on them, they can invest them in these designed areas,” Mayor Mitch Colvin said. “It benefits us by having another tool in the tool box to be able to offer to investors.”
On April 1, the council will get an update on the opportunity zone program.
“What I wanted to do was to make sure that the council understood this and that policy can be built around making it advantageous to bringing people in,” Colvin said.
He said other communities are developing five-year or 10-year plans for opportunity zones.
“This is an opportune time since we are talking about (improving) Murchison and some of these other (low-income) areas,” Colvin said.
The opportunity zone program was created under the Tax Cuts and Jobs Act, which was signed into law on Dec. 22, 2017.
In October 2018, the U.S. Treasury and Internal Revenue Service proposed regulations on new opportunity zone tax incentives, but it has taken time for the rules to be adopted.
North Carolina’s 252 zones were certified by the U.S. Treasury on May 18, 2018.
“They are still finalizing the rules on this,” said Robert Van Geons, president and CEO of the Fayetteville-Cumberland County Economic Development Corp. “If you have the income, you could certainly establish a fund now. You could put that investment in a fund and can acquire property and go ahead with the activities.”
The funds let investors postpone federal taxes on recent capital gains until the end of 2026. They also can reduce the taxable portion of those gains by as much as 15 percent after seven years.
Van Geons said the opportunity zone program is one of many that can help people who want to start up businesses in lower-income neighborhoods in Fayetteville.
“It is completely different than anything else that has been done before,” he said. “It’s another tool in the tool box.”
Councilwoman Tisha Waddell said it will be critical for the city to reach out to investors, not just locally but regionally, who may want to participate in the opportunity zone program.
“It is a very coordinated effort and I think that it can be very impactful if we can coordinate effectively,” she said.
Staff writer John Henderson can be reached at firstname.lastname@example.org or 910-486-3596.