Opportunity Zones: Nebraska Could Serve as a Model.
Economic and Housing Developers in Nebraska have been talking about creative ways they can drive investment to "Distressed Communities" to maximize the use of the 2017 Jobs and Tax Cut Opportunity Zone tax benefit. These communities are sometimes called "Disadvantaged Low and Moderate Income Communities," often identified by their Census Tract characteristics such as HubZones, New Market Tax Credit Zones, Blighted Areas or Targeted Tax Increment Financing Areas. Nebraska Developers are talking about using a combination of state and federal tax credits together with the Opportunity Zone benefit to create an intriguing set of opportunities for visionary entrepreneurs. Visionary developers are needed in this case because the 2017 Opportunity Zone allows for capital gains relief for investments that meet specifications in the law and are held for ten years. Nebraska Developers are seeing the potential already because it takes at least ten years of concentrated effort to make a dent in the revitalization process and, hopefully, help reverse the ravages of poverty in business and residential neighborhoods.
Some Nebraska Developers, legislators and policy makers are even discussing the possibility of writing and passing legislation to create a state level Opportunity Zone benefit. The total package of what Nebraska has to offer investors, given the popular use of current incentives, commonly called LB 775 and TIFF, could be intriguing to investors. This new Opportunity Zone tax benefit could drive resources to the designated zones because the 2017 Trump Jobs and Tax Cut Act allows a new set of investors to become involved. These include high wealth investors, trust departments and capital investment companies. They will come forward and take advantage of the capital gains benefits the 2017 Tax Cut Act allows. With the popularity of impact investing, the ever growing social responsibility ecosystem and the relatively lean restrictions in the 2017 Opportunity Zone law, I believe the most skilled and creative financiers will come forward to take advantage of this opportunity.
To actually use the opportunity in the 2017 Opportunity Zones, I believe entrepreneurs who once competed against each other for deals will actually start collaborating to make them work. Similarly, government and political leaders will need to cast off territorial boundaries to create the infrastructure for the Opportunity Zones to live up to their name. In this new land of OZ, I believe Nebraska Developers can build upon their decades long success in using advanced economic development tools. This is because Nebraskans made headway with tax credit incentives for investment in jobs and equipment 20 years ago under a law known my locals as LB 775. From there, they built up an $80 million state New Market Tax Credit (NMTC) fund to match the federal NMTCs. Meanwhile, Nebraska Investment Financing Authority built up its capacity to invest in workforce housing and broad based Industrial Revenue Bonds. In other words, different financial entities, including banks, have been developing mutually reinforcing economic development programs in Nebraska. Our Native American Tribes have contributed significantly to reinvestment entrepreneurship in Nebraska. For example, Ho-Chunks lead with SBA 7a financing, employment and corporation ownership. Similarly, the Ponca Tribe of Nebraska is leading with a model housing and entrepreneurship program.
The challenge is out there for all states, not just Nebraska. What can each state do to gather resources that can be brought to bear on Opportunity Zones to help developers make deals work? Can we include all types of incentives from broadband grants to Small Business Investment Corporation support to Labor Training Grants? Can we create a resource database? This is the time to think outside of the "box" or the traditional "Zone." For example, a Rotary friend of mine just told me about an energy savings program that will save a developer property taxes for the next 30 years for investments in energy saving equipment and windows on a multifamily apartment complex. The list of cost saving and profit generating incentives for investing in the 2017 Opportunity Zones is long.
As one Nebraskan, I plan to be part of this good fight to help align existing capital with new investors eager to explore the "Land of OZ" under the 2017 Jobs and Tax Cut Opportunity Zone Act. Will you join me in the discussion?