A tax credit opportunity zone designated for New Bern due to a purported high level of poverty is mostly made up of a decidedly well-to-do historic neighborhood, the city’s thriving downtown, and two major city parks. The zone also includes the New Bern Grand Marina, home port of some of New Bern’s nicest yachts.
The zone also includes Trent Court and a rundown section of town between downtown and the Riverside Historic Neighborhood.
“I believe we initially learned of the Opportunity Zones program from Alderman Jameesha Harris,” Colleen Roberts, New Bern public information officer, told the Post in an email. “She was briefed about the program during a conference she attended shortly after taking office. She brought up the topic under New Business at the end of a board meeting as something we should explore further.
“My understanding is all of New Bern’s eligible census tracks were submitted as potential Opportunity Zones, but the final determination of each county’s Opportunity Zone was decided on by the State.”
Alderman Harris provided other details.
“Back in March I brought up the Opportunity Zone designation for New Bern as a tool for the low income and distressed areas,” Alderwoman Jameesha Harris said on her official Facebook page. “I was told it wasn’t a good idea or a good tool. Then I stood my ground and demanded the Board of Alderman send a letter to the Governor to make sure the parts of New Bern and Craven County that were considered low income and distressed be added to the list for Opportunity Zone. I just received a copy of the map and I am completely shocked and disgusted because it doesn’t represent areas in distress!
Later, Harris commented, “The Governor actually played a very important role in the decision making with this. I am currently working on getting more information. Also, we didn’t have to send a map we just needed to request to be considered an opportunity Zone.”
BACKGROUND: PROGRAM OVERVIEW
From the state website: A new program with the potential to attract investment capital into low-income areas of North Carolina was created by recently passed federal tax legislation, known as The Tax Cuts and Jobs Act (H.R.1). North Carolina Opportunity Zones will offer qualified investors certain tax benefits when they invest unrealized capital gains into these areas.
North Carolina’s 252 zones were certified by the United States Treasury on May 18, 2018.
The federal law allows each state to designate up to 25 percent of its total low-income census tracts as zone candidates. North Carolina has just over 1,000 of these tracts, so only 252 census tracts could be selected as Opportunity Zones.
Guided by data and driven by local priorities, North Carolina’s process to identify these tracts, coordinated by the North Carolina Department of Commerce, included an extensive review of census data, public input collected from the Department’s website and direct outreach, and close collaboration with local officials from across the state.
H.R. 1 (the Tax Cuts and Jobs Act) was signed into law on December 22, 2017.
The Opportunity Zones Program (Sec. 13823) provides tax incentives for qualified investors to re-invest unrealized capital gains into low-income communities throughout the state, and across the country. Low-income census tracks are areas where the poverty rate is 20 percent or greater and/or family income is less than 80% of the area’s median income.
Investments made by qualified entities known as Opportunity Funds into certified Opportunity Zones will receive three key federal tax incentives to encourage investment in low-income communities including:
- Temporary tax deferral for capital gains reinvested in an Opportunity Fund
- Step-up in basis for capital gains reinvested in an Opportunity Fund
- Permanent exclusion from taxable income of long-term capital gains
For additional information on the treatment of capital gains invested and earned through the Opportunity Zones program, please see this summary published by the Economic Innovation Group based in Washington, D.C.
Designation of Opportunity Funds
The U.S. Department of the Treasury is still in the process of developing criteria to determine how qualified Opportunity Funds will be certified, and the process they will follow to certify those funds. The U.S. Department of the Treasury has not released a timeline for when capital may begin to flow, but earliest estimates point to late 2018 or early 2019.
The Opportunity Zones program is based on the bipartisan “Investing in Opportunity Act,” which was championed by Senators Tim Scott (R-SC) and Cory Booker (D-NJ) and Representatives Pat Tiberi (R-OH) and Ron Kind (D-WI), who led a regionally and politically diverse coalition of nearly 100 congressional cosponsors. The Economic Innovation Group (EIG) originally developed the Concept of Opportunity Zones in 2015.
Opportunity Zones Program and related Legislation
- H.R. 1 – Sec. 13823 contains the amendment for “Subchapter Z – Opportunity Zones”
- 115th Congress (2017-2018) H.R.828 – Investing in Opportunity Act
- Economic Innovation Group Overview on Opportunity Zones
For more information and program updates, please contact Business Link North Carolina (BLNC) at (800) 228-8443
- February 13, 2018 – Public notice regarding Opportunity Zones is released
- March 27, 2018 – Suggestion period closed
- April 20, 2018 – Formal recommendations to US Treasury
- May 18, 2018 – Federal certification by the US Treasury