Opportunity Zones: Private Sectors Investing in Low-Income Communities

Updated: February 13, 2019 07:41 PM

Sparking growth in low-income neighborhoods is a goal a new federal government program is working on and they're doing this with the help of the private sector.

The program is known as Opportunity Zones. It's a new federal tax incentive for private sector investment in rural and low-income communities.

A workshop explaining the mission of the tax incentive was offered to local developers, businesses, and employers at Clyde Iron Works with hope to get more people on board. 

"The federal government has come up with a brilliant program to incentivize investors to pour capital in areas they otherwise wouldn't. It is going to create long-term jobs that will have multiplier affects in all areas,” Brian Forcier, the managing principal for Titanium Partners, said.

"It’s an incentive for people to take earnings that they have on past investments called capital gains, and take the investment and invest it in a designated opportunity zone neighborhood,” Pam Kramer, an executive director for Duluth Local Initiatives Support Corporation, said.

Opportunity zone neighborhoods are communities that need more job opportunities and economic growth. Duluth has opportunity zones stretching from west Duluth to downtown Duluth, Lincoln Park, and the Hillside.

"Some neighborhoods are not benefiting from increase in economy and some neighborhoods need extra investment," Kramer said.

This new incentive benefits neighborhoods in need and benefits investors as well.

"The deferral of capital gains tax through 2026 is a meaningful benefit. Money that they invest in funds, if they hold it for 10 years, they don't pay any capital gains taxes,” Jamie Stolpestad, a Minnesota Opportunity Zone advisor, said.

"Any operating business whether it's a product service or real estate developer can benefit from opportunity zone,” Forcier said.

Examples of investments eligible for the program include commercial real estate, multi-family housing, single family housing, operating businesses, and equipment leasing.

The program hopes to attract investors who truly want to make a difference in opportunity zone neighborhoods.

"We're focused on social impact investors not focused just on those tax benefits. They're not just focused on the money, they want beneficial things to occur where they're investing,” Stolpestad said.

Minnesota has a total of 128 opportunity zones.

There’s plenty of opportunities statewide for private sectors to get involved in the effort.

A link with more information on opportunity zones: http://www.lisc.org/duluth/

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