The initiative is meant to spark development in certain low-income neighborhoods by deferring taxes for investors. Debi Durham, director of the Iowa Economic Development Authority, says the effort has great potential.
“I think this could really, again, implemented correctly, could really propel forth some pretty transformational projects,” Durham says. The state has seen good outcomes from other tax credit investment deals, according to Durham, but she says a lot depends on how the federal government structures the effort. Under the program, people can defer taxes on certain capital gains if they invest in the opportunity zones, selected tracts that have higher poverty levels or lower family incomes. Alan Kemp, with the Iowa League of Cities, says this kind of targeted investment in disadvantaged neighborhoods is novel.
“And I think that’s the real benefit of it,” Kemp says. “I think cities can see benefit that they could see investment for new businesses or existing businesses that they might not otherwise be able to take advantage of.” Kemp says the success of the new federal program relies on how it’s implemented. The U.S. Treasury Department is still developing rules for investors and local agencies.
(Thanks to Kate Payne, Iowa Public Radio)