In many ways, redeveloping a city comes to down money, and access to it. Obviously, if a deal doesn’t make sense financially, it won’t work, both for the business/property owner or the city.
A key job of any city — especially one focused on redevelopment, like South Milwaukee — is to determine creative ways to bring dollars to the table.
Our economic development team is working hard to do just that.
From the Bucyrus Foundation grant earlier this year to the work we’re doing in studying the future of our tax incremental financing districts to our strengthened relationships with key state agencies like the Wisconsin Economic Development Corp. and Wisconsin Housing and Economic Development Authority, we are getting creative in bringing potential funding solutions to the table for the developers of today and tomorrow.
Add Economic Opportunity Zones to that list.
Last week, Gov. Scott Walker announced his recommendations for areas that could be eligible for funding as part of the new tool made available through the federal Tax Cuts and Jobs Act of 2017. From his press release …
“We are excited to embrace Economic Opportunity Zones as a new tool to build on our track record of economic growth,” Governor Walker said. “Right now, more people are employed in our state than ever before in our history, and Wisconsin is at near record lows for unemployment. These recommendations reach communities across our state – urban, rural, and tribal – that are positioned for strong and sustained growth.”
The Economic Opportunity Zones Program is a federal community development tax incentive program which creates an incentive for businesses and community members to invest in designated EOZs. These investments will help communities in designated areas develop, and the return on the investment will have reduced tax liability.
Governor Walker recommended the maximum number of Economic Opportunity Zones: 120 recommendations within 44 counties in rural, urban and tribal areas. These designations were made based on recommendations from an interagency working group comprised of WHEDA, WEDC, DOA, and DCF; public comment; and an independent analysis conducted by a nationally respected consulting firm.
The U.S. Department of the Treasury will make the final selection for EOZs in Wisconsin based on the Governor’s recommendations. These designations represent ten years of potential private investment into these communities.
I wondered, what does that last sentence really mean?
A qualified Opportunity Fund is any investment vehicle organized as a corporation or partnership with the specific purpose of investing in Opportunity Zone assets. The fund must hold at least 90 percent of its assets in qualifying property. The U.S. Treasury must certify new Opportunity Funds and is responsible for prescribing regulations regarding certification. …
The statute allows for broad participation in the creation of Opportunity Funds with the goal of drawing a wide array of investors to support the broad variety of needs in low income communities nationwide. Any entity, including regional economic development groups, can establish a fund as long as they follow the guidelines set out by the statute and Treasury (forthcoming). …
The policy enables funds to be responsive to the needs of different communities, allowing for investment in operating businesses, equipment, and real property. For example, funds can make equity investments in or purchase the stock of a company if substantially all of the company’s tangible property is and remains located in an Opportunity Zone. Funds can take interests in partnerships that meet the same criteria. Funds can also invest directly in qualifying property, such as real estate or infrastructure, if the original use of the property commences with the fund or if the fund substantially improves the property.
I’ll keep you posted as the federal government considers including South Milwaukee in this redevelopment opportunity.
I’m excited we are being considered, for the future of this city.