Ventura County can benefit from new tax incentives
What if I told you that there were trillions of dollars of private capital waiting to be invested in economic development in Ventura County?
The Investing in Opportunity Act, sponsored by U.S. Sen. Tim Scott, R-South Carolina, became law with the passage of the 2017 Tax Cuts and Jobs Act. The Opportunity Act created tax incentives for investment in “opportunity zones” — areas with high levels of concentrated poverty and still recovering from the Great Recession. Despite the financial crisis officially ending over five years ago, many areas have still not seen the reinvestment enjoyed by larger metropolitan regions, meaning jobs and businesses have never returned.
Although last year’s tax reform as a whole caused a bitter divide, the portion that included the Opportunity Act received broad, bipartisan support in the Senate, with co-sponsorships coming from influential senators such as Cory Booker, D-New Jersey; Kirsten Gillibrand, D-New York;, Lindsey Graham, R-South Carolina; and Rob Portman, R-Ohio.
Earlier this year, California Gov. Jerry Brown designated nearly 900 census tracts within the state as opportunity zones. My organization, Peoples’ Self-Help Housing, was instrumental in guiding some of those designations, having noticed that certain areas in our footprint had been overlooked.
So where are the opportunity zones in Ventura County? According to a map released by the Department of the Treasury, Ventura County has seven. Four are in Oxnard and three are along Highway 126 — one between Ventura and Santa Paula, another in Santa Paula itself and the third in west Fillmore.
So how do opportunity zones work? To help recovery, Congress created the Opportunity Act as a new tool to provide tax incentives for investors in businesses or projects in designated areas. Individuals or businesses may defer, reduce or eliminate taxes paid on capital gains income by investing in a special qualified opportunity zone fund. The longer an investment is held in these funds, the less taxes an investor pays. By the 10th year of investment, the investor could receive a complete elimination of their tax obligation.
So why is the CEO of a nonprofit affordable housing developer concerned with opportunity zones? It is estimated there are approximately $6.1 trillion in unrealized capital gains in the United States. If we were to bring even a tiny fraction of this amount to Ventura County, we could tap into millions of dollars for economic development that could bring both economic and social change to our community.
This untapped source could be used to start new businesses, develop underutilized properties and rehabilitate existing buildings. My organization can utilize these resources to leverage even more investment, making it easier to build homes for struggling seniors, those who have served our country, hardworking families, and individuals with special needs looking to live independently.
Peoples’ Self-Help Housing is staying on top of this emerging opportunity by meeting with congressional leaders, speaking at conferences and learning anything and everything about how this program would benefit Ventura County. This month, I traveled to the East Coast to meet with staff of a co-sponsor of the Opportunity Act, Sen. Shelley Moore Capito, R-West Virginia, to hear firsthand how we can make this important funding flow faster to our community.
As we anxiously await important rules and regulations from the IRS and the Department of the Treasury, which will ultimately shape how this program works, be assured that we’ll be reaching out to potential investors and keeping you apprised on how together we can use this incredible source of funding to make a real difference in Ventura County. For more details about Peoples’ Self-Help Housing, visit pshhc.org.