Lehigh Valley Tracts Proposed for New Qualified Opportunity Zones
By Colin McEvoy on April 23, 2018
Governor Tom Wolf has announced that 14 census tracts in the Lehigh Valley have been included in his proposed list of Pennsylvania tracts submitted to the federal government for the newly-created Qualified Opportunity Zones.
Created as a result of the federal tax overhaul legislation in December, Qualified Opportunity Zones are a new tool for promoting and incentivizing long-term investment in low-income communities.
The Lehigh Valley Economic Development Corporation (LVEDC) provided input to the state about possible Lehigh Valley tracts to include in the proposal. Final approval from the U.S. Department of Treasury is expected in May.
“These zones are a great tool to attract capital into often difficult to develop areas of the Lehigh Valley,” said LVEDC President & CEO Don Cunningham. “We will work to ensure that the region is able to maximize the potential of this new investment incentive.”
The governor’s proposed list includes eight tracts in Northampton County and six in Lehigh County, with all 14 falling in the cities of Allentown, Bethlehem and Easton. They can be seen in the maps above. Other tracts suggested by LVEDC were not included in Wolf’s list.
“After gathering input from individuals and organizations throughout the state and examining where the areas of need intersect with potential investment, I have submitted nominations for Pennsylvania’s Qualified Opportunity Zones,” Wolf said. “We are hopeful this new incentive will bring much-needed investment to many distressed areas across the commonwealth.”
This tax incentive is for private investors making private equity investments in funds that will then invest in businesses, real estate, and other ventures in low-income communities, Wolf said. The incentive offers deferral, reduction, and potential elimination of certain federal capital gains taxes.
“LVEDC was glad to provide input on economic development viability to our state senators, state legislators, and the state Department of Community and Economic Development,” Cunningham said.
This was a very competitive process, and Cunningham thanked the Lehigh Valley legislative delegation, particularly state Sen. Pat Browne, for ensuring that the Lehigh Valley was adequately represented in the Commonwealth’s plan.
“These federally-designated low-income rural and urban communities that qualified as Opportunity Zones are communities that currently are not financially viable for private businesses to consider investing in them,” said Browne, who chairs the Pennsylvania Senate Appropriations Committee.
“This new designation provides a valuable incentive program to encourage and capitalize on private, long-term investment for the betterment of these challenged and underused parcels of property,” Browne said. “I believe this will be a real game changer even in prosperous and growing communities like the Lehigh Valley.”
Wolf’s proposed list includes 300 census tracts across the state. Pennsylvania had 1,197 census tracts eligible for Qualified Opportunity Zone status, and the state was given the opportunity to designate 25 percent, or a maximum 300 low-income community tracts as zones.
The list of all nominated tracts, additional data, evaluation criteria, and an interactive map can be found at DCED’s Qualified Opportunity Zones website.
The U.S. Treasury Department is in the process of developing the Opportunity Zones program, and the Internal Revenue Service is expected to provide further information regarding opportunities for investment in zones in the coming months, Wolf said.
U.S. investors currently hold trillions of dollars in unrealized capital gains in stocks and mutual funds alone, making it a potentially significant untapped resource for economic development, according to the Wolf administration.
Opportunity funds that invest in Qualified Opportunity Zones provide investors the chance to put that money to work rebuilding the nation’s distressed communities, Wolf said. The fund model will enable a broad array of private equity fund managers and investors to pool their resources, increasing the scale of investments going to underserved areas.
Lehigh Valley Redevelopment Success Stories Highlighted in Site Tour
Dozens of developers, environmental consultants, location consultants, and economic development professionals visited the Lehigh Valley this week to see a few of the regio[...]Continue to Next Page