Flint and Genesee County have shown remarkable growth in recent years, as the economy has rebounded. But some areas have still proven to be more attractive to real estate developers and investors than others for various of reasons.
However, there now exists a mechanism to encourage more economic development in some of the untapped or otherwise under-the-radar areas of opportunity. In fact, they’re called Opportunity Zones, which are designated census tracts generally comprised of economically distressed communities that qualify for the federal program.
Created by the Tax Cut and Jobs Act (2017), the program is designed to spur economic development and job creation in rural and low-income urban communities by using tax incentives to encourage private investment in an impact fund, known as a Qualified Opportunity Fund (QOF).
A QOF is an investment vehicle set up as either a partnership or corporation for investing in an eligible property located in a qualified Opportunity Zone. Taxpayers who invest in a QOF are eligible to benefit from a reduction in their tax liability on realized capital gains in one of several ways: tax deferral, partial forgiveness of the tax liability on the deferred gain or full forgiveness.
Genesee County is home to 16 such zones – spread among Burton, Flint Township, Flint, Genesee Township, Grand Blanc Township, Grand Blanc and Mt. Morris Township – with developable land available land within each.
Consider that more than half of America’s most economically distressed communities contained fewer jobs and businesses in 2015 than they did in 2000, according to the Economic Innovation Group (EIG), a Washington D.C.-based think tank focused on advancing solutions that empower entrepreneurs and investors for a more dynamic American economy. In addition, the average distressed community saw a 6-percent decline in local businesses during the prime years of the national economic recovery, the EIG found.
Meanwhile, the EIG estimates that there is approximately $2.3 trillion in unrealized capital gains available for the investment program nationwide.
Opportunity Zones exist in every state in the country, and nearly every county in Michigan. To make the most of this new tool locally, the Economic Development Team at the Flint & Genesee Chamber of Commerce worked with local municipalities and other stakeholders to develop a prospectus for prospective investors. We unveiled it June 18 at a well-attended informational session held at the Ferris Wheel.
In attendance at the meeting was a great mix of people, including housing developers, entrepreneurs, grocery store developers and leaders in the social service sector, all of whom came wanting to address key community challenges or gaps in accessible products and services to residents. The forum also gave attendees the chance to network with individual investors, wealth advisors and attorneys on what could be a source of much-needed income as well as how to realize short- and long-term benefits from their continued commitment to Flint & Genesee.
Opportunity Zones, while a seemingly complicated tax nuance, are the latest tool that economic developers across the country can use to spur investment in areas that tend to be underserved. In Genesee County, these locations may have historically lacked resources for development, or have lagged when economic momentum was high, but there is no shortage of ideas for development that could directly benefit our communities.
The prospectus is the newest way that we can start to cultivate this investment, create jobs and improve the quality of life for residents. For more information or for a copy of the Opportunity Zones Prospectus, contact Tyler Rossmaessler at firstname.lastname@example.org. (You should consult a tax attorney or Certified Public Accountant before making any investment decisions.)
Kristina Johnston is the chief operating officer of the Flint & Genesee Chamber of Commerce.