Three census tracts spanning major transportation corridors, downtown and other areas in Gainesville were approved this week for a new federal tax benefit designed to spur investment in economically disadvantaged areas.
But city officials are still looking into the details of the program that was created as part of the Tax Cuts and Jobs Act, the $1.5 trillion tax reform legislation enacted late last year.
The Qualified Opportunity Zone was created to incentivize growth in lower-income communities by allowing investors to defer federal taxes by taking capital gains from other investments to fund commercial development in these designated areas.
The zones are intended to facilitate investment in areas where poverty rates are greater than 20 percent.
Georgia submitted 260 nominations from 83 counties, comprising 60 percent rural communities and 40 percent urban communities.
“By attracting more private investment to underserved areas, the tax incentives for Qualified Opportunity Zones will further encourage businesses to invest in the communities that need it most, while also creating meaningful employment opportunities across the state,” Gov. Nathan Deal said in a statement. “The areas we nominated for this distinction include both rural and urban communities that experienced a slower economic recovery in the last few years, and these tax incentives represent another step forward in their economic revitalization.”
Gainesville City Manager Bryan Lackey said officials were just made aware of the opportunity zone designation.
“It’s different from the state’s designation (a job tax credit program) … that has been in place in Gainesville for several years,” he added. “The Georgia Department of Community Affairs will administer the program, and they tell us they will be providing more information on this program.”
The three census tracts approved in Gainesville stretch from McEver Road and Browns Bridge Road on the west to Interstate 985 and Jesse Jewell Pkwy on the east.
Tim Evans, vice president of economic development at the Greater Hall Chamber of Commerce, said the opportunity zones had been a topic during a recent chamber event.
“It is a very bold and creative experiment to encourage capital reinvestment in a very limited number of areas,” Evans told The Times.
Across North Georgia, only census tracts in Gainesville, Winder, Elberton, Rome, Ellijay and Rossville were approved as Qualified Opportunity Zones.
“All in all, the early indications are that it could be a great benefit to the limited number of communities, like Gainesville, that will have a new source of development capital,” Evans said. “It could also be an attractive way for individual and institutional investors to get a tax benefit by investing their capital gains into Gainesville.”
Evans did add one caveat.
“With a new program such as this, there are often intended and unintended consequences that may take years to materialize,” he said.
Evans added that creating a qualified investment fund requires being certified by the U.S. Treasury Department, “but there are good reasons developers, real estate firms, investment firms and large individual investors might want to do that.”
An interactive map of Georgia’s designated federal Qualified Opportunity Zones is available here.