Opportunity & Innovation
The Arrival of Opportunity Zones.
Article by Joshua Mongé | Graphics created by Alondra Flores
Opportunity Zones are here—and Eugene is building a powerhouse of local experts to help us embrace this beneficial economic development tool. So what do we do with them, and how can we use them to forward our efforts for innovation?
First, we have to understand the nature of the Opportunity Zones and the subsequent incentives. This program is attempting to entice investors to divest themselves of stock or under-performing holdings and encouraging them to reinvest them in to communities. To put it another way, these incentives are attempting to create “new capital” by encouraging investors to take capital gains that they typically wouldn’t have, and reinvest into an Opportunity Fund to be used in the zones.
These funds can be used two ways:
Both of these avenues must be new ventures and have strict tests to ensure projects are creating an economic benefit to the community.
Next, we have to understand the mechanics that make this program different from other programs. Here are a few highlights:
Finally, we have to think about how we can use this program to help our community. There are many challenges facing developments in our community. Construction costs are on the rise, taxes are going up, and the costs of doing business are increasing. Ask new business startups about one of their biggest challenges and you will likely hear access to capital. If you look around Eugene, you see empty buildings and under-developed areas because often times redevelopment just won’t pencil out. This program can help activate property and spur new businesses to come to these low income communities.
Let’s look at a theoretical example: Say you are a doctor that currently practices with a group of doctors, with some ownership in the partnership. You’ve thought about starting your own practice but the startup costs are more than the cash on hand, and getting a loan is difficult. You could start a practice by selling your owner interest in your partnership, and using the capital gains to invest in an opportunity zone using opportunity funds. This is just one example.
Eugene is ripe with opportunity and the Opportunity Zone program could be just what our community needs to kickstart some great action. We will continue to have conversations about how we can engage with this program. If you would like to learn more or talk about options please contact us.
If you would like to learn more, or talk about options, please contact Joshua Mongé at firstname.lastname@example.org.
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