Buried more than 300 pages into the late December tax overhaul signed by President Donald Trump is what some officials think might be a route to economic prosperity for rural America.
And, pending approval by federal regulators, neighborhoods across the Lakelands could reap the benefits of these “Opportunity Zones” championed by U.S. Sens. Tim Scott, R-S.C., and Cory Booker, a New Jersey Democrat.
“This legislation provides a resource into high-potential areas that may be struggling. Our legislation gives the opportunity to say ‘yes’ to single mothers by bringing more jobs, better resources and better infrastructure without gentrifying a community,” Scott said on March 6 during a panel discussion in Washington as part of the National Association of Counties’ legislative conference. “You start watching areas that are old become brand new, become transformed.”
A community development program written into the Tax Cuts and Jobs Act of 2017, these so-called “Opportunity Zones” are designed to encourage long-term private investments in low-income areas by providing federal tax incentives.
South Carolina is among the first states in the country to submit a list of designees to the U.S. Department of the Treasury, offering 135 such zones — with at least one in each county. Under guidelines of the program, states can identify 25 percent of their low-income Census tracts for inclusion as an “Opportunity Zone.”
Booker, who aggressively pursued private capital investment when he served as mayor of Trenton, New Jersey, said the bipartisan work will strengthen the nation’s economy.
“It creates a powerful tool to draw capital off the sidelines and get it into communities. We know that genius is equally distributed in the United States of America, but capital is not,” he said.
In Greenwood, the areas being targeted are corridors around Piedmont Technical College and along Highway 246 near where Teijin is planning to build a $600 million plant, City Manager Charlie Barrineau said.
There’s also a large tract in Abbeville County that portion of the city and runs to the Greenwood County line near Hodges and land in McCormick County along S.C. Highway 28 that abuts Troy.
Local officials worked in tandem with state officials to create a list of prioritized sites, ultimately approved by the state Department of Commerce.
“The Partnership worked collectively with the county and city to identify appropriate zones that would best realize the benefit of their intent,” Greenwood Partnership Alliance CEO Heather Simmons Jones said. “Our interest in the Opportunity Zones lies in increased enterprise and workforce housing in these underserved Census tracts.”
Roy Charles Brooks, a Tarrant County, Texas commissioner and president of the National Association of Counties, also sang the praises of Scott’s program during the March 6 conference.
“One of the issues that unites us is ensuring that the American dream remains alive. Despite the economic progress so many of our counties have achieved, for significant portions of our country, economic recovery has yet to arrive,” he said.
At a news conference earlier this month, Gov. Henry McMaster said the zones mark the best chance in a generation for impoverished communities to compete for jobs.
“This gives us the extra punch that will transform economic growth and development and is just one more tool to usher in a new era of economic prosperity in South Carolina,” he said. “Similar things have been tried before, but the difference was there was not a supportive Congress at the time and another difference is, this is 2018 and we in South Carolina have a team that is strong, disciplined and experienced in this more than anybody else in the United States, so this is something we’ve been waiting for.”
Here’s how investment in an “Opportunity Zone” works:
No up-front tax bill for investors converting capital gains into Opportunity Funds
A 10 percent increase in rolled-over capital gains for a five-year holding
A 15 percent increase for a seven-year holding
No capital gains tax for investments held in a zone for at least 10 years
Deferment of original tax bill until Dec. 31, 2026 or until an Opportunity Fund investment is sold
Greenwood City/County Planner Phil Lindler said efforts locally to plan for future growth mean “Opportunity Zone” investments could result in a quick and favorable return.
“Anything that local governments can do to facilitate local businesses and encourage private investment into low-to-moderate income areas is always a positive thing. Our recent designation shows how local long-range planning and cooperation between various agencies sets us above other communities in the designation process,” he said.
State Commerce Secretary Bobby Hitt said the emphasis on private sector investment makes the program different from others in place around South Carolina.
“This is not government money, this is a private partnership investment, so in these designated zones, a private investors who has some profit and can take that and invest it in a new investment in one of these zones and the longer they leave it there, the better tax benefit they get,” he said. “This is not just about industrial, which is primarily where our team works directly. Almost anything an investor wants to do in a zone can be done in concert with local authorities, so I think this is a wide, flexible device.”
Scott, who spent 13 years on the Charleston County Council and grew up in a single-parent household where his mother put in 16-hour days, said those experiences informed his pursuit of creating economic opportunity zones.
-“Thirteen years in County Council prepares you for almost any other political service you will find yourselves involved in, and one of the things I found as a council chairman is the need to get things done always exceeded the budget, and the areas that suffered the most were the areas where poverty was high, crime was high, graduation rates were low, but the people were fantastic,” he said. “The energy level and enthusiasm about working hard to make a difference was sky high.”