Grand County Community and Economic Development Director Zacharia Levine at the Moab Chamber of Commerce luncheon Dec. 18 presented ways the local economy stands to benefit from a new federal government program.
A large portion of Grand County excluding Main Street between Kane Creek Boulevard and the river bridge north of town has been designated an Opportunity Zone by the U.S. Department of Treasury.
As Levine puts it, the Opportunity Zone program is designed to provide tax incentives to investors who choose to invest in low-income, underserved communities. Investors who choose to invest their capital gains in Opportunity Zone funds will be able to temporarily defer taxes on that income, and the amount that’s taxable will decrease as years go by; 10 percent in five years and 15 percent within seven years. If the investment is held for 10 years, any capital gain from the investment would become permanently tax exempt.
Levine said, “There is $17-trillion in capital gains currently realized by investors,” and that it was an excellent way to “attract capital investment that would otherwise not make its way to Moab, but some other urban center.”
The OZF program was included as part of the Tax Cuts and Jobs Act, the first major tax break from the Trump administration in December of 2017. It’s been largely overshadowed by the controversy of the act, which opponents argue only benefitted large corporations and the extremely wealthy. The designation of Opportunity Zones wasn’t complete until June and has only recently made its way towards implementation.
Some criticism of the incentive involves the process of designating Opportunity Zones by state governors, their lack of transparency on areas chosen, and the potential for areas adjacent to struggling communities to receive the benefit due to the allowance of contiguous designations. Of the 46 communities designated Opportunity Zones by Utah Gov. Gary Herbert, 19 were rural communities.
When asked how to combat the potential for developers to take advantage of loopholes that might not work, counter to the intention of the program, Levine said the solution was “through incentives and indirect support of desirable, inclusive and beneficial development – the less our community needs to be preoccupied by playing defense.”