On March 21st the Lorain County Board of Commissioners learned that the State has nominated 5 tracts within Lorain County to be Opportunity Zones as part of the Investment in Opportunity Act. The nomination of 5 tracts, 4 in Lorain and 1 in Elyria, is notable as it is more than double the number of tracts that were nominated within other counties similarly situated within the region.
The Investment in Opportunity Act was signed into law in December 2017 as part of the Tax Cut and Jobs Act. The law seeks to bolster economically depressed areas across the U.S. by offering deferred taxes and significant tax breaks to those parties willing to sustain investment in low-income areas. Incentives for a broad array of investors in designated “Opportunity Zones” will deploy capital in vulnerable and underserved areas at a low risk to investors. Opportunity Zones will act as a compliment to the New Market Tax Credit Program to help underserved communities promote community development projects.
The Benefits to Selected Opportunity Zones include:
- Investors may temporarily defer the recognition of capital gains that are invested in the Opportunity Zones. A new class of private investment vehicles called “Opportunity Funds”, which are investment vehicles organized as corporations or partnerships that hold at least 90% of their assets in opportunity zone assets, have been created.
- Investments in Opportunity Zones or Opportunity Funds that are held for at least five years are eligible for capital gains tax reductions, and investments held for at least 10 years are eligible for capital gains exemptions.
- As the incentives are linked to the duration of the investor’s commitment to the Opportunity Zone rather than an upfront subsidy, the program provides an incentive for investors to re-invest their capital gains in Opportunity Funds to provide patient capital for low-income communities.
Furthermore, Lorain County will benefit directly from the opportunity zone designation through:
- Attraction of new type of investors into a project area,
- Expansion of capital to fund redevelopment,
- Encourages local reinvestment in community,
- Strengthens financial security in areas adjacent to designated tracts.
Team NEO, the Fund, Lorain City Port Authority and City of Lorain worked together on the request for nominations, which made the Lorain requests attractive to the State which put a priority on tracts that had regional support.
Commissioner Lundy stated “The announcement that the County now has 5 Opportunity Zones nominated by the State will allow us and our partners to have every tool we can provide available to stay competitive, drive investment and create jobs in our two downtown areas and our waterfront in Lorain.”
“Working with local and regional partners allowed us to pull together a strong list of tracts that were nominated. Now we will be working to see these zones put to work and attract needed investment in our communities through the actions of the County and its partners in the Port, Land Bank and the cities of Lorain and Elyria.” said Commissioner Kalo.
Each of the nominated tracts in the City of Lorain were located within a planning area designated by the County and funded by the USEPA. This planning effort will result in 6 strategic developable land areas being brought to market. The designation of these as Opportunity Zones should enhance the level and speed of development.
The tracts nominated were:
- 39093097300 – Downtown Lorain with Broadway Hotel redevelopment and Black River Landing
- 39093022400 – Finger piers and First Energy lakefront land
- 39093023100 – US Steel and Republic with announcement of pig iron line – Job Hub
- 39093023000 – Riverbend Commerce Park, Rowland Property and Emerson Buildings
- 39093070800 – Downtown Elyria Streetscape and TLCI Plan – County Investment – Developers – Job Hub
For additional information please call 440-328-2322 and ask for Don Romancak.