So many interested investors, public officials, bankers, real estate and administrative representatives were on hand for a North Beach forum on emerging opportunity zone investment possibilities that chairs had to be added throughout the two-hour presentation, while some stood in the back.
Experts in opportunity zones — an investing mechanism to stimulate growth in communities that qualify — told the packed house that such a tool can be used to build new buildings, spur new business and add living-wage jobs to the local economy.
Greater Grays Harbor Inc. hosted the event last Thursday at Quinault Beach Resort & Casino, with Ocean Shores represented by Mayor Crystal Dingler, City Council members Susan Conniry and newly appointed Kathryn Sprigg, as well as grants coordinator Sarah Bisson and marketing manager Diane Solem. Other listeners included Michael Sand, president and CEO of Timberland Bank, Dave Murnen, executive director of Neighborworks Grays Harbor, and Tom Quigg, Port Commissioner, and Jim Donahoe, longtime area real estate salesman.
The Federal Tax Cuts and Jobs Act of 2017 was signed into law on Dec. 22, 2017. The Opportunity Zone program was included in that act, which was designed to provide tax incentives to investors who fund businesses in under-served communities. Investors can defer paying taxes on capital gains that are invested in distressed communities designated as opportunity zones by the governor of each state. Grays Harbor has three “opportunity zone” census tracts, which include parts of Aberdeen, Hoquiam and the coast from Ocean Shores to Moclips, as well as the upper coast.
At the event, participants learned how to take advantage of this new federal program. Speakers included:
• Grant Jones, Greater Grays Harbor Inc., director of business development
• Melissa LaFayette, National Development Council, assistant director
• Julie Knott, Emerald Coast Opportunity Zone, director
• Kyle Wiese, Opportunity Zone Investments, founder and managing member
• Craig Nolte, Federal Reserve Bank of San Francisco, regional manager
“The overall intent of this tax incentive is to spur private sector investment of those who have capital gains dollars into communities where investors generally have overlooked,” Lafayette explained to the crowd. “How can we unlock some of that capital and encourage it to go to other places. The way this is occurring in opportunity zones is through some incentives for individuals to invest capital gains.”
The federal tax break is for people who are able to invest earnings from selling stocks, bonds or property into a fund or funds that invest in businesses or property in an opportunity zone. Investors who put money into such a fund can defer paying taxes on their gains right away and earn a 15 percent tax cut on the gains after holding their shares for seven years. Investors who hold their shares for 10 years don’t have to pay capital gains taxes on money they make from those shares.
The list of potential projects includes grocery stores, manufacturing/industrial businesses, healthcare facilities, workforce housing, co-working spaces, hotels, research facilities and commercial real estate.
“We’re trying to bring investment into Grays Harbor for this area,” said Nolte, whose regional territory includes Washington, Idaho, Utah and Alaska.
Knott from the Emerald Coast Opportunity Zone formed on the upper north coast in Clallam County, noted her group received national recognition for its “aggressive effor to capture Opportunity Zone investment” with projects for a waterfront performing arts and conference center, a marine discovery center, the Lower Elwaha tribe longhouse, and multi-family housing. Other projects include one to convert cedar waste to wood bricks for heating in wood stoves, and one to fund a full-service fiber processing mill.
“We really mean business when we are attracting investments to rural, distressed communities out here,” Knott said.
The key element is for communities to identify the projects they want to fund and develop. “They don’t just arrive — you have to dig and find them,” Knott said. “Also, you need support to help them get investor-ready. In rural areas, that’s a really tough thing to fund.”
Another factor is to work with tribal economic development leaders, she stressed, which was important for the Emerald Coast framework to succeed: “We’re becoming quite a force, which builds investor confidence,” Knott said.
Nolte urged those in attendance to help “raise the awareness of Grays Harbor for these opportunity zones.”
“You have to raise the awareness of this area, and that’s one advantage of working with Emerald Coast,” he said.
LaFayette noted that other tax incentives and funding mechanisms can be combined with opportunity zone funding to make projects work. “That’s like my dream, to combine all of these projects and use all of these incentives and federal tools,” she said. “So if you have a business in an opportunity zone and you think that could be interesting, please come talk to me.”
Jones for Greater Grays Harbor also said he would like to hear those proposals: “What we’re hearing is that we have support at all levels. If you have an opportunity zone investment or you think you might, please come talk to me.”
LaFayatte of the National Development Council can be reached by email at firstname.lastname@example.org. Jones can be reached by email at email@example.com