‘Responsive to our unique needs’
UNION COUNTY — Among the benefits of economic development and efforts to promote it is that it brings people together to improve the community and the lives of its residents and that’s what the Opportunity Zone program is doing according to Union County Development Board Executive Director Kathy Jo Lancaster.
On Friday, March 23, Gov. Henry McMaster announced the nomination of 135 Opportunity Zones throughout South Carolina including one in Union County.
According to the South Carolina Opportunity Zone website (scopportunityzone.com), Opportunity Zones “are a new community development program established by Congress as a part of the Tax Cuts and Jobs Act of 2017, they are designed to encourage long-term private investments in low-income communities. This program provides a federal tax incentive for taxpayers who reinvest unrealized capital gains into ‘Opportunity Funds,’ which are specialized vehicles dedicated to investing in low-income areas called ‘Opportunity Zones.’”
The opportunity zone in Union County nominated by McMaster, its potential impact on the county, and what local officials can and must do to help maximize that impact was the subject of a visit by US House of Representatives Fifth District Rep. Ralph Norman to the Spartanburg Community College — Union Campus on April 10. Norman said Union County’s opportunity zone “is something to be excited about” and urged the local government and economic development officials and business representatives present to also focus planning for the kind of development that will truly benefit the community.
One of those officials was Lancaster who on Monday discussed the opportunity zone, its innovative approach to economic development, how it has brought people together, and the steps that must be taken to realize and maximize its potential.
“One thing I think that is really good to know about this that is bipartisan, both sides came together to pass the Tax Cuts and Jobs Act,” Lancaster said. “Our (US) Senator Tim Scott was a key leader in this initiative which provides an innovative approach to capitalize on long-term private sector investments in targeted urban and rural communities, especially in low-income census tracts.”
The site in Union County nominated by McMaster as an Opportunity Zone is “Tract #45087030100” which, according to a press release issued by Norman’s office, encompasses parts of Union.
It offers the following information about the tract:
• Population 2,186
• Population — White 1,248 (57.1%)
• Population — Black 847 (38.7%)
• Population — Other 91 (4.2%)
• Poverty Rate 23.4%
• Labor Force Participation Rate 47.7%
• Unemployment Rate 4.4%
• Median Household Income 30,806
Lancaster pointed out that the innovative aspect of the Opportunity Zone program is its emphasis on the area designated as an opportunity zone and how it promotes private investment in the nominated tracts and brings together the private sector with the local public sector to make it happen.
“What I think is really beneficial to Union County is the program is designed to be place-based and responsive to our unique needs,” Lancaster said. “It is not a cookie cutter approach to every community.
“What that means for economic development is opportunity funds can be used to invest in a wide variety of assets, real estate, affordable housing, and more,” she said. “It’s not your typical economic development incentive, it is designed to influence investors by tying private capital to local needs. This is not something we’ve had access to before.”
The Opportunity Zone website states that the program “offers investors the following incentives for putting their capital to work in low-income communities:
• Investors can roll existing capital gains into Opportunity Funds with no up-front tax bill.
• A 5 year holding increases the rolled-over capital gains basis by 10%
• A 7 year holding increases the rolled-over capital gain investment basis 5% for a total of 15%
• Investors can defer their original tax bill until December 31, 2026 at the latest, or until they sell their Opportunity Fund investments, if earlier.
• Opportunity fund investments held in the fund for at least 10 years are not taxed for capital gains.
Lancaster said that by providing “a federal tax incentive for reinvested capital gains,” the Opportunity Zone program “will give us access to options which we have not had before, specifically for smart investments leading to revitalization, redevelopment, and economic renewal. The opportunity zones will give us a new tool and formula to leverage the county’s assets through innovative programming to encourage private investments which positions Union County for greater success with future economic development projects.”
That new tool and formula and the options that come with them will not, however, generate economic development if the county does not develop the plans and strategies necessary to fully and successfully utilize them.
In his address, Norman called on local officials to do the preliminary work necessary to attract business, including ensuring the area has the needed infrastructure — water, power, sewage, gas, roads — as well as focus on planning for the kind of development that will truly benefit the community. He urged them to “encourage quality development” that will increase in value, and brings in more business, development that “will fit the community” and then to go out and recruit the companies that can made that development happen.
Lancaster agreed, saying that local government and private sector officials must be proactive in preparing to fully maximize the potential of the local opportunity zone.
“The investment will not be automatic, it will not happen by osmosis, it will take planning,” Lancaster said. “We need to put together a team to look at the tract and identify some options. We’re going to have to plan. It’s going to take a team of individuals working together. We’re going to have to put together that team and have it plan and strategize options for the tract.
“We’re going to have to raise awareness with the local business community about the program,” he said. “We’re also going to have to get on the radar with local, regional, and national investors. We have to connect investors to local needs.”
By: Charles Warner
Source: The Union Times
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