CT Makes Push To Leverage, Market ‘Opportunity Zones’ In Urban Centers
Hartford Business Journal, October 31, 2019
By Joe Cooper
Opportunity Zones, established in 2017 to leverage tax-deferred investments to generate realty- and business-development, could give new economic life to some of Connecticut’s forgotten urban centers.
That’s why municipal leaders must take proactive steps to educate and inform potential investors who wouldn’t otherwise look to risk money in 72 of the state’s low-income neighborhoods that are federally approved as OZs, according to Ben Seigel, Baltimore’s OZ coordinator.
“Opportunity Zones are a reliable marketplace,” Seigel said. “There is no set allocation, there’s no minimum, there’s no maximum. It’s really about taking advantage of markets, of the capital gains.”
Seigel’s comments were made during a Wednesday conference at New Haven’s Omni Hotel that focused on Opportunity Zones in Connecticut. More than 400 people, including Gov. Ned Lamont, attended the event hosted by the state Department of Economic and Community Development (DECD).
The Opportunity Zone program was created as part of the 2017 federal tax reform law to spur realty- and business-development in the U.S.' neediest communities.
It allows taxpayers who invest in qualified OZs to be eligible for capital gains tax incentives. Besides investors, anticipated beneficiaries are the 72 low-income neighborhoods across Connecticut that have been tagged as OZs. That includes zones in Hartford, West Hartford, East Hartford, Bristol, Middletown, Meriden and Manchester.
Seigel, Baltimore’s first Opportunity Zones coordinator appointed a year ago, urged the 27 towns and cities in Connecticut with OZs to hire someone tasked with jumpstarting development.
“You need some individual who can serve as that liaison, as the go-to person for investors and project sponsors, in order to make sure that connections are being made between the capital and projects, and to make sure that good information is available,” he said. “We are finding that investors are now looking at good projects in neighborhoods that they hadn’t looked at. There are good projects they would historically overlook.”
Local leaders cautioned back to top
But Seigel cautioned municipal leaders to be wary about wealthy individuals, corporations, estates and developers eager to use the newest government-sanctioned vehicle for shielding some or all of investors’ capital gains from federal taxation.
“As you guys are building relationships with opportunity funds or investors, I really encourage you to do your due diligence on these funds,” he said.
Seigel encouraged cities and towns to build relationships with OZ development drivers, including local universities, educational institutions and hospitals.
That presents a major opportunity for a city like Hartford, which has 10 OZs in the city’s Parkville, Upper Albany and other neighborhoods. Meantime, major city employers, such as Aetna, The Hartford, Hartford Hospital, St. Francis Hospital and Medical Center and Trinity College, are all located within or near an OZ and could serve as springboards for development.
Last year, the U.S. Treasury Department and Internal Revenue Service (IRS) released the new OZ draft guidelines and are encouraging investment to begin as soon as possible.
In a decade, Seigel expects there will be droves of reporting and data that will guide future OZ development.
“We will know a lot in 10 years where this is headed,” he said.