Opportunity Zone may spur investment in distressed part of Craig
March 28, 2018
CRAIG — An area in Craig is one of 126 across the state nominated to become eligible for new federal tax incentives through the Opportunity Zones Program, established in the Tax Cuts and Jobs Act of 2017.
"I am excited by the news that one of Moffat County's Census tracts has been included in the governor's recommendations for inclusion in this program," said Michelle Perry Balleck, executive director of Craig/Moffat Economic Development Partnership. "We are hopeful that this program will be another strong incentive for reinvestment in our community to help strengthen and grow our economy."
The program seeks to address the uneven economic recovery and persistent lack of growth that have left many communities across the country behind.
Though Colorado’s economy is healthy, some parts of the state have not rebounded as quickly as others. In the broadest sense, the newly enacted federal OZ program provides a tax incentive for investors to reinvest unrealized capital gains into low-income urban and rural communities.
"Opportunity Zones are a new tool available to revitalize Colorado communities," said Gov. John Hickenlooper. "Our goal is to support sustainable growth and quality jobs for all Coloradans. Opportunity Zones will help us attract investment in businesses, workforce, housing and infrastructure where it is needed most."
Colorado has 1,249 census tracts; 531 are eligible for OZ designation. The law allows for the designation of 126 census tracts in Colorado. This tract lays West of Pershing Street, North of West First Street, East of Great Divide and mostly South of the by-pass road.
The Colorado Office of Economic Development partnered with the Department of Local Affairs and other state agencies to collaborate with a broad group of stakeholders — including economic developers, community partners, local governments, state legislators and investors — before selecting areas to be nominated.
CMEDP worked with the Associated Governments of Northwest Colorado on nominating the Craig tract to the governor. Neighboring tracts were not nominated, due to the demographic data points used to determine eligibility.
"Of course, we would have loved to have included an even larger portion of Moffat County in this program. However, we are optimistic about the reinvestment this program can mean for our community," Perry Balleck said.
The Opportunity Zone designation is expected to lead to a new class of investment — Opportunity Funds — that must be organized as a corporation or a partnership. The funds will specialize in attracting investors with similar risk/reward profiles to aggregate and deploy their capital in rural and low-income urban communities.
Fund assets must create new business activity. If invested in an existing business, the fund must double the investment basis through the course of 30 months. The funds can create new businesses. or new real estate or infrastructure. Funds may not be invested in certain types of business, including golf courses, country clubs, gambling establishments and a few other specifically excluded business types.
The U.S. Treasury is finalizing its regulations to implement this new law, which sunsets in 2026.
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Colorado’s nomination for Opportunity Zones now goes to the U.S. Treasury for certification. The certification process is anticipated to take 30 days.
Colorado is exploring state initiatives to support and complement the federal Opportunity Zone effort.
Updates about Colorado's Opportunity Zone program will be posted online at choosecolorado.com/oz.