City/County applying for ‘Opportunity Zones’

City/County applying for ‘Opportunity Zones’
March 15
11:05 2018

“Opportunity Zones” that give tax breaks for investing in low income areas are coming to Winston-Salem.

Opportunity Zones were created by a provision in the 2017 tax overhaul bill. The zones will be census tracts that have either 20 percent of households living below the federal poverty line or where median family incomes don’t exceed 80 percent of statewide median incomes. Contiguous tracts that don’t exceed 125 percent of the qualifying adjacent tract can also be included.

Investors will be able to use Opportunity Funds, certified by the U.S. Treasury, for investing in properties in these tracts. These funds will have capital gains tax relief that grows the longer the investment is held, with investments that exceed 10 years being exempt form capital gains taxes. Funds can be used for company stocks, infrastructure, real estate, affordable housing, transit systems, machinery/equipment and other assets.

Only 25 percent of qualifying census tracts will become Opportunity Zones. City and county staff met to select just over 10 tracts for the program. The recommendations will go through the Piedmont Triad Regional Council of Governments, the Governor’s Office and then, ultimately, the U.S. Treasury Department, which is expected to accept at least 10 tracts in Forsyth County.

The intention of Opportunity Zones is to bring investment to distressed areas and opportunity to lower income communities.  However, nearly half the census tracts in Winston-Salem qualify for the program and many contain projects that are already attractive to investors.

The first six tracts that were selected include Whitaker Park, which is a 1.7 million square foot facility donated by  R.J. Reynolds Tobacco Co. for economic development. It also includes the booming downtown central business district, Wake Forest Innovation Quarter, Smith/Reynolds Airport, Winston-Salem State University and Union Station, which the city is transforming into a transit center.

The other five tracts listed contain areas of East Winston that include the Happy Hill community, Boston-Thurmond neighborhood, Martin Luther King Jr. Drive and Lakeside Villas.

“We wanted places that we think will start growing,” said the county’s Housing & Community Development Director Dan Kornelis, during a briefing last week.

County Commissioner Everette Witherspoon questioned if poor people would see any benefit as investors continue to avoid their communities while getting tax breaks for investing in places like the Innovation Quarter or Whitaker Park that they would’ve normally put their money into.

“(Tracts) 1-6 are going to get that money anyway,” said Witherspoon “7-11, I’ll be surprised if they get anything.”

County Chair Dave Plyler actually heard another concern about the zones from a resident, who was worried they would cause white investors to buy up East Winston and push the low income people out of the community.

While the city and county were largely in agreement on their recommend tracks, the county did recommend two other tracks to substitute for one of the three Boston Thurmond tracks and the Lakeside Villas tract recommended by city staff. County staff suggested a tract contains the Ralph Lauren Distribution Center and a tract in the Kernersville area that has attracted interest in business and industrial development.

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Todd Luck

Todd Luck

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