By DON FLETCHER
News Staff Writer
Twenty-one local and area realtors, bankers, timber growers and others spent a little more than an hour at Wind Creek Hotel on February 1 learning the basics of the newest governmental economic development tool.
Alex Flachsbart, founder of Opportunity Alabama, filled the group in on the possible tax-deferral and tax-savings benefits of the state’s 158 Opportunity Zones.
Opportunity Zones, of which each Alabama county has at least one, are census tracts with a poverty rate of at least 20 percent and a median family income of less than 80 percent of the statewide or area median income.
Institutional investors and individuals with a huge capital gain may delay paying taxes on those gains by investing their money in economic development projects within the designated zones.
The program was established as part of the Tax Cuts and Jobs Act of 2017 in hopes of spurring new investment into these zones. Opportunity Alabama is a first-of-its-kind non-profit initiative dedicated to connecting investors with investable assets in the state’s Opportunity Zones.
Flachsbart, who warned the 21 attendees that the guidelines for Opportunity Zones are still being written and the regulations wouldn’t be finalized until late in the year, told them their presence showed their interest in and care for Atmore and the surrounding area.
“It speaks volumes to your community that it is a Friday morning, and there are a lot of people here,” he said. “This is a $100 billion program. That’s 25 times bigger than the next biggest economic development program, New Market Tax Credits.”
One of the most important players in such investments, he said, will be accountants and tax attorneys who know how to navigate the red tape that comes with most new tax laws or incentives.
Most of those in attendance seemed to grasp the basics of the complex series of financial transactions, but many were disappointed that most of the Escambia County’s Opportunity Zone is north of Interstate 65, where most of the land is either part of the three-facility Alabama Department of Corrections prison complex, timber land or farm land.
“Everything is on the north side of the interstate, so that means most of that land is prison land, so unless we can form a private-public partnership with the prison system …,” said local Realtor Ann Gordon.
“It’ll help some, but it’s a 20- to 30-year project,” agreed Debbie Rowell, also a local Realtor. “We’ll all be gone, but it will take this age group to make it start. It’s all about the future.”
Jess Nicholas of Coastal Gateway Economic Development Alliance said anyone with a large capital gain could make use of the program, although most of the local reinvestment of capital gains would come from one group.
“Downtown Atmore didn’t make it in,” he said. “If you look down and take a bullseye of Nashville Avenue and Highway 21, just about everything north is an opportunity zone. A lot of people in the timber business have capital gains, and they can make use of the program. But remember, you’re not investing in a security, you’re investing in a project. If the project goes belly-up, there goes your gain, but anybody with a capital gain can make use of the Opportunity Zone program.”
Among the potential investments that qualify under the program are active businesses, startups and businesses that have been around that comply with certain tax rules. Also included are new real estate construction projects and qualified rehabilitation of older buildings.
Flachsbart told his audience that an such investment would not only create tax benefits for them, but would benefit the community, too.
“What it does is provides people who have capital gains with an incentive to put those gains back into low-income communities, to redeploy that capital to places that really need it,” he said. “This is one of the best incentives in helping attract new capital and to leverage private sector dollars. It can also be combined with incentives that a district or community has in place already.
“When you talk about the scope of the market for Opportunity Zones, you’re talking about the potential for $6.1 trillion worth of capital gains that could be flowing into communities all over the country.”
Another local Realtor, Lisa Reynolds, agreed that the program was a long-term one. But, she said, she intends to see what she can do to make the program work.
“We help a lot of investors over time,” she said. “I’m excited to try and introduce this program. I think investing in our community, even though it’s north of the interstate, is a great way to help the community grow.
“It could be tricky to find the money locally, but I think it’s a worthy endeavor and we need to try and help make this program a success.”