Mayor Frank Scott Jr., U.S. Rep. French Hill (R-Little Rock) and White House staffers are participating in a daylong discussion on Little Rock’s opportunity zones.
The 2017 Republican tax cut package, mostly known for its massive giveaways to the rich, also included a provision establishing special tax incentives for private investment in designated low-income areas, or opportunity zones. The Treasury Department determined what census tracts qualified for the new program; governors from each state were then tasked with selecting one-quarter of those. Governor Hutchinson selected 85 tracts last year. You can see an interactive map of the zones here.
In Little Rock, the opportunity zones are in East Little Rock (east of I-30 and north of I-440, including East Village, where there’s already a lot of investment, and the Bill and Hillary Clinton National Airport); south Little Rock (including the area around the Arts Center and the Pettaway neighborhood); and the 12th Street corridor.
Michael Orndorff’s planned commercial district along 21st Street, which Leslie Peacock reported on last week, would fall in an opportunity zone.
ProPublica, in reporting how a Baltimore billionaire won big with an opportunity zone, explains how they work as an investment vehicle:
Say you’re a hedge fund manager, you purchased Google stock years ago, and are sitting on $1 billion in gains. If you sell, you’d send the IRS about $240 million, a lot less than ordinary income tax but still annoying. To avoid paying that much, you can sell the shares and put the $1 billion into an opportunity zone. That comes with three generous breaks. The first is that you defer that $240 million in capital gains tax, allowing you to invest more money up front. But if that’s not enough for you, you can hold the investment for several years and you’ll get a significant reduction in those taxes. What’s more, any additional gains from the new investment are tax-free after 10 years.
It’s impossible to predict how much the tax break will be worth to individual investors because it depends on several variables, not least whether the underlying project gains in value. But one investment pitch projected 10-year returns would jump to 91% from 29% on a hypothetical $1 million investment. That includes $284,000 in tax breaks — money the federal government would have collected from taxpayers with capital gains but for the program.
Among the reps the White House sent is Ben Hobbs, a member of President Trump’s Domestic Policy Council, who previously was a policy adviser in the Department of Housing and Urban Development. There, he was the author of a plan to triple the minimum rent paid by families receiving federal housing assistance.
Here’s the city’s release about today’s events.
Rebekah Hall will have more later.
Mayor Frank Scott, Jr., in coordination with Representative French Hill, will host a roundtable discussion on the Investing in Opportunity Act and Little Rock’s Opportunity Zones with members from the White House Domestic Policy Council and other key senior Administration personnel. The day-long event will consist of a morning panel with key senior Administration personnel working directly on Investing in Opportunity Act rulemaking and implementation, and a mid-morning session of state, regional, and local economic development officials as well as private sector stakeholders focused on best practices that could be incorporated into Little Rock’s Opportunity Zone strategy. This event is designed to give stakeholders from Little Rock’s Opportunity Zone communities, local investors and developers, and other interested parties details on Opportunity Zone implementation from Washington and insight into how stakeholders across the Little Rock Opportunity Zone ecosystem can support efforts locally to encourage investment into Little Rock’s Opportunity Zones. A bus tour, provided by Rock Region Metro through each of Little Rock’s four Opportunity Zones, will conclude with a press conference in the Dunbar Community’s Opportunity Zone. It will also include the announcement of the Little Rock Opportunity Zone Task Force detailing next steps regarding the Task Force’s work and insight into how Little Rock will engage community stakeholders regarding the City’s Opportunity Zone strategy