Ohio Touts Additional Tax Breaks To Boost Opportunity Zones
The U.S. Small Business Administration hosted a conference Wednesday to discuss how Central Ohio residents can benefit from "opportunity zones"—a federal tax benefit approved in 2017.
Opportunity zones are census tracts where investors can defer or completely avoid taxes on existing investment earnings, depending on how long they leave their money there.
The program's usefulness is somewhat limited, though, because of those conditions on what investments qualify and the extended time frame. Matt Peters from Development Ohio says that’s why the state came up with an additional tax break.
“It has to be only in Ohio, and it has to come from a qualified Ohio opportunity fund, so we want to make sure the money is being spent only in our state,” Peters explains. “But that allows you to apply for a 10% income tax credit, capped at $1 million, that you can realize this year on your tax returns while you’re waiting for that federal benefit down the road.”
So far, Peters says they’ve fielded more than 250 applications representing almost $250 million in opportunity zone investments. The window to apply for the state incentive runs to the end of January.
Columbus economic development administrator Mark Lundine says that benefit gives the city an important window into how investors are utilizing opportunity zones, but they need more information.
“We’ve emphasized that with our contacts at the federal government that it’s imperative that we see where the investments are happening, what they’re happening in, and then ultimately getting the opportunity to change the zones and adapt as they grow," Lundine says.
At least anecdotally, Lundine says businesses already see the program’s benefit. He says his office helped Research Alloys build a short list of potential new locations, and the fact that one of them was in an opportunity zone made a difference.
“This is a big investment for them, this is a big moment for them, and as they looked at a number of different sites," Lundine says. "I think they found a site in the Hilltop that met their needs, but also the opportunity zone program allowed them to make an investment in their business."
He explains that translates to six new jobs, and although that might not seem like much, it’s important to continue “hitting singles and doubles.”
“These are significant,” he says. “It’s creating a momentum that ultimately may allow for a bigger investment by a company that’s going to create 100 new jobs.”