Editor’s Note: To read the Forbes article that references this blog post about Opportunity Zones, visit here.
Last week’s Opportunity Zone Summit in Lac du Flambeau showed regional momentum building around what’s been described as the largest federal economic development program in the last 15 years.
State, county, tribal and municipal leaders, as well as private developers and investors, learned about Opportunity Zones. Created under the federal 2017 Tax Cuts and Jobs Act, Opportunity Zones are designed to drive long-term capital to rural and low-income urban communities.
Coming out of the summit, it felt like we had the right people in the room to build a foundation. Equally as important, event collaborators—business and economic development agencies—shared a commitment to identifying qualified projects and taking the necessary steps to make those projects shovel-ready.
Enthusiasm, sense of urgency, and collaboration were key takeaways among the 65 attendees. Legal, financial and government experts shared Opportunity Zone insights with representatives of the LDF Business Development Corporation, Vilas and Oneida County Economic Development Corporations, Grow North, Wisconsin Housing and Economic Development Authority, tribal agencies, developers and investors.
Discussions centered on Opportunity Zone structure, benefits, as well as guidelines for municipalities, investors and developers to engage private investment in impact funds. Experts also defined qualified projects and discussed investment enhancer tools, such as New Market Tax Credits.
Qualified Opportunity Zone projects typically fall into four categories. Commercial real estate and renovation. Opening a new business. Existing business expansion into an Opportunity Zone. And, existing business expansion within an Opportunity Zone.
Our early stage Opportunity Zone prospectus, for example, includes Lac du Flambeau project areas. We have five distinct districts. Each has an anchor tenant, making future development projects attractive.
LDF’s entertainment district is anchored by the resort casino. Our retail district will be anchored by an expanded Country Market retail center. Our industrial and business park on Thoroughfare Road prepares for construction of the new Workforce Training and Business Development Center. And, our downtown district qualifies with many opportunities to revitalize buildings. Finally, demand for housing exists and will only grow as more development occurs within the Opportunity Zone.
Attorney Hal Karas of Husch Blackwell Milwaukee discussed three types of Opportunity Zone funds and the likelihood of actual investment in various regional Opportunity Zones. The most likely scenarios will be investors investing in what they know. Leading contenders for investment in our region will be individual investor funds with a specific project in mind or a group of investors pooling their capital gains into a regional fund for qualified projects. Huge, national Wall Street funds are unlikely investors here.
The potential for local investors to invest in what they know, I believe, will be a driving force for development in the region’s Opportunity Zones. The benefits of investing in a local Opportunity Zone go beyond tax savings. Area investors now can fuel the regional economy, creating jobs, revenue and a brighter future for the northwoods. -MORE-
There are some things local governments within Opportunity Zones can do to become “investor ready,” Springsted’s Mikela Hout says.
Conduct a survey of development opportunities. Secure control of key properties. Conduct planning and pre-development activities. Invest in public transportation or other infrastructure. Consider targeted incentives. Create an Investment Ready Prospectus. Market qualified projects. Work with civic-minded local and regional business leaders. Watch out for speculators.
From there, Hout says, it’s imperative projects become “shovel-ready,” meaning a project is past the planning stages and can start construction quickly. Adding, shovel-Ready Site Certification is one of the most effective site marketing tools for creating a competitive advantage for your Opportunity Zone. Finally, she concludes, municipalities need to get into marketing mode.
To view slide decks presented at the Opportunity Zone Summit, please click their links here: