Zones of opportunity
The Portland Metropolitan area has seen a high level of growth. Even through the Great Recession of 2008 and the Great Recovery ever since, people have still wanted to move here. I still remember when South Waterfront was being constructed. I remember thinking "Wow, so many units, who is going to live in all of these?"
Now, you can drive through St. Johns, Lents, Kenton, Hawthorne,
Irvington or any Portland neighborhood and see various construction projects and new business. While many see the nuisance of construction, I see investments. Investments are an adherent belief in the financial viability investment and by extension, the area. One thing we know about the recovery is that much of the wealth regained was concentrated in specific areas (see the work of Metro on the Economic Value Atlas).
Not to sound biblical (which, of course, means I am about to sound biblical) but investment begets investment. It takes an initial investment to get the next investment and so on. Investments also need to stay in an area so more in the area can receive the benefit of that investment and those with resources have "skin in the game" in these communities. The tax cuts of last year have provided a literal 'opportunity" for this.
The Tax Cuts and Jobs Act of 2017 established a new federal tax incentive to encourage long-term, private-sector investments in certain low-income communities newly designated as Opportunity Zones. According to Business Oregon, "Through Opportunity Funds, private investment within a designated Opportunity Zone may earn tax relief on both the capital gains invested in the funds and those generated through the investment by the fund." This program denotes, "A qualified Opportunity Fund is the required vehicle to invest into Opportunity Zones. As certified by the U.S. Treasury, at least 90 percent of an Opportunity Fund's holdings need to take one of two forms, direct ownership in business property that the fund essentially runs itself, or equity stake (company issued stock or partnership interest) in qualified opportunity zone businesses. Qualified Opportunity Zone business property needs to be newly acquired from unrelated parties and either used for the first time or substantially improved for use inside an Opportunity Zone."
In short, someone could invest in an area designated as an opportunity zone though a qualified investment and lower (and in some cases eliminate) their capital gains tax liability depending on the length of their investment. As stated earlier, it does encourage long-term, private-sector investments in specific communities.
The East Metro Region has three areas designated as Opportunity Zone. They are located in Gresham, Fairview and Wood Village (see Business Oregon's Opportunity Zone page for the map of specific census tracts designations). The East Metro region is leading in this area and working to establish qualifying funds, including the newly created Oregon Community Capital Inc.
Oregon Community Capital Inc. and Rockwood CDC will be hosting the first conference in Oregon on Opportunity Zone Investing on Sept. 14, at the Sunrise Center in Gresham. Brad Ketch, President of Rockwood CDC, stated recently, "This conference brings together government leaders, investors, faith leaders, service providers, developers, non-profits, academia, and foundations that are discovering how the Opportunity Zone federal tax incentive will impact our communities. Americans are sitting on trillions of dollars of unrealized capital gains that could be unlocked."
This is a great "opportunity" to provide investment in census tracts that have traditionally been left out of opportunities. The incentives are structed in a way to encourage long term investments and capital projects. It encourages investors not to just put their money in but to be truly invested in the long-term viability of these zones.
Chris Camacho, President and CEO of the Greater Phoenix Economic Council, said it best in a quote on the Economic Innovation Group's website: "While the post-recession recovery has led to a widened gap of cities and regions experiencing economic prosperity and those experiencing distress, specifically focused resources in the areas that need it the most can lead to job creation, stimulate economic activity, and drive financial stability. In a time where bipartisan efforts are needed most, the Investing in Opportunity Act provides a bridge to connect more than our communities."
I am excited to see investors, developers and businesses excited to invest in the growing East Metro region. Investment begets investments. I am excited to see the collaboration between business, government and nonprofit that this has encouraged, and I am very excited to see economic prosperity hit areas that need it.
Jarvez Hall is the Executive Director of
the East Metro Economic Alliance and
an Adjunct Faculty in the School of
Management at Concordia University.