SC among first states to seek ‘Opportunity Zone’ status for economically-distressed communities
South Carolina is among the first states to submit communities eligible for the new federal “Opportunity Zone” program.
Gov. Henry McMaster said Friday his office submitted the maximum number of economically-distressed communities to the U.S. Treasury Department so investors seeking to build businesses in those areas could be eligible for tax incentives.
“This gives us the extra punch, the extra opportunity that will transform economic growth and development and one more tool to usher in a new era of prosperity in South Carolina,” McMaster said during an announcement ceremony at a Fairfield County industrial park.
The program was placed in last year’s tax overhaul by South Carolina’s junior U.S. Sen. Tim Scott. It would allow investors to use capital gains returns to reinvest towards a business in one of the 135 Opportunity Zones involved. The investor would have any taxes on those capital gains deferred for at least seven years if they a stake in the business for that time.
The Department of the Treasury says nearly half of South Carolina’s 1,097 Census tracts meet the required “distressed” or “severely distressed” low-income status required to participate. However, the new law only allows a governor to designate 25 percent of those areas as Opportunity Zones.
State Commerce Secretary Bobby Hitt hopes it will spur new development. “It’s hard to attract investment in some of our less affluent areas,” he told reporters. “This is the type of incentive that could get someone, or a group of people, to say, ‘Hey, I’ve got an idea.’”
Hitt said the incentives could help sway development to those areas which have not benefitted from the resurgent manufacturing industry. “What we now have is another thing to sell, and I expect we’ll see some results from it,” he said.
The governor made the announcement at the Fairfield County economic office outside Ridgeway, one of those communities seeking the designation. McMaster said the community north of Columbia was hard-hit when two utilities abruptly abandoned work on two nuclear reactors last year.