City economic officials looking at new Opportunity Zone

BY CHUCK VANDENBERG
PCC EDITOR

FORT MADISON – A new incentive program aimed at generating private investment in lagging Iowa communities, could be coming to Fort Madison.

The program was born out of the Tax Cut and Jobs Act of 2017, where private investment helps spur economic development in areas designated as Low Income Community Census Tracts, or Qualified Opportunity Zones. The initiative allows private investors to roll what are called unrealized capital gains, or gains on investments in stocks that haven’t been sold, into O-Funds.

The incentive is to allow the private investors to defer capital gains taxes on the earnings until Dec. 31, 2026, while at the same time seeing possible earnings in the O-fund which, depending on how long the investor leaves the money in the fund, could result in no capital gains tax on the earnings in the fund. The initial money rolled over into the fund, would be subjected to capital gains rates at the time the fund is sold.

If an investor leaves the money in the O-fund for a minimum of 10 years, there would be no capital gains tax on the money earned in the fund, minus the original investment. There is a sliding rate at seven and five years in the fund.

According to the Iowa Economic Development Authority, the state has 239 areas that would qualify for the the program, but Gov. Kim Reynolds would only be able to submit 25%, or 60, of those areas to the U.S. Department of Treasury to be eligible for the zone status.

Officials need to act quickly as a March 19 deadline is pressing.

Fort Madison Partners Executive Director Tim Gobble, who said he didn’t even hear about the Opportunity Zone until late last week,  is preparing the application for the governor to consider. He said this is another opportunity to access possible grant funding.

“Obviously, it gives us another opportunity to look for potential investors,” Gobble said Wednesday. “Whether we’re looking at something for kids or some other venture where someone didn’t have all the capital to build, they might have access to these funds. This is another opportunity for grant money or some type of funding to help get projects off the ground.”

Gobble said he wasn’t sure what the Governor’s timeline was on getting the designated areas to the government, but he had to have his done by March 19.

He said Fort Madison should have a shot at getting one of the 60 state designations because Lee County is still labeled as a stressed county and the state has seen, and been a part of, some of economic projects including the Iowa Fertilizer plant.

“They have a presence here and they want to build on that,” he said.

The map below shows what parts of Fort Madison have been identified as qualified zone areas, as well as areas along Hwy 61 and Hwy 2 in North Lee County. Much of the Keokuk area is also a qualifying area.

Most of Fort Madison’s east and west corridor are included in the zone, but there is a stretch north of Avenues E and D from 2nd to 18th Streets, as well as a six-block area south of Avenue H at 18th-20th Streets and a six-block by six-block area north of Avenue H from 18th to 24th Street.

About Chuck Vandenberg 3132 Articles
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