Jamestown Opportunity Zone a missed opportunity
Opportunity Zones in four south central North Dakota communities have gone unused although the incentives have "tremendous potential," said James Leiman, director of economic development and finance for the North Dakota Department of Commerce.
Opportunity Zones came out of the federal Tax Cut and Jobs Act of 2017 and allow people to defer and reduce capital gains tax from the sale of investment property by reinvesting those profits in selected "Opportunity Zones."
There are 25 Opportunity Zones in North Dakota including Ellendale, Jamestown, Linton and Valley City. All have yet to see the first project. Don Frye, economic development director for Ellendale, said it could be investors avoiding the small towns.
"People who have the resources for this program are not receptive to investing in rural communities," he said.
Leiman said the program is sound.
"We want people who have capital gains to invest in our state," he said. "It is an attractive tool from a business development perspective."
In Jamestown, the tract runs from the railroad tracks south and includes much of the traditional downtown area and 10th Street Southeast before extending south across Interstate 94 to Country Club Street. It does not include the area south of Interstate 94 and west of U.S. Highway 281.
According to Internal Revenue Service regulations, Opportunity Zones are "economically distressed" areas that are first nominated by state government officials and then approved by the U.S. Treasury Department. North Dakota's Opportunity Zones were approved by the Treasury Department in April 2018.
Leiman said investors can work through a group to pool resources for a project or invest individually. The North Dakota Department of Commerce is attempting to work with the local communities, educate investors and serve as a connection between fund managers and communities for larger projects, Leiman said.
The program has been utilized but it is still too early to measure success, he said.
Finding the right investor or group of investors is difficult, said Jennifer Feist, economic development director for Valley City and Barnes County.
"It is all about finding an investor subject to the capital gains tax and the right project," she said. "It is a balancing act but then most of economic development is."
Connie Ova, CEO of the Jamestown/Stutsman Development Corp., said while there has been no interest shown in the Jamestown Opportunity Zone, the JSDC continues to offer the program along with other available economic incentive programs.
"Anything we or the state has to offer could be applicable," she said, referring to incentive programs that could be used. "It all depends on the project."
Of the Opportunity Zones in south central North Dakota, Linton may be the closest to utilizing the program, according to Sharon Jangula, city administrator.
"Not as of yet," she said. "But there is interest."