Governor Jay Inslee has designated six Tacoma neighborhoods “Opportunity Zones” under a federal program that encourages private investment by providing tax benefits to people who invest in job-creating ventures with the targeted areas.
Tacoma’s “Opportunity Zones” are located in the Hilltop, Old City Hall, Tacoma Mall-Nalley Valley, the Brewery District, the Lincoln and East Tacoma neighborhoods.
The designations came through an effort by Tacoma’s Community and Economic Development office, Pierce County, the Tacoma-Pierce Economic Development Board, and the Puyallup Indian Tribe. The current and would-be business owners and developers with eyes on these neighborhoods could receive special federal tax breaks for reinvestments in these traditionally disadvantaged or economically distressed neighborhoods as another way to increase local employment and business activity
“We are pleased to receive these designations,” said Mayor Victoria Woodards. “The location of six Opportunity Zones in Tacoma will offer a boost to our local economy, help us create living wage jobs, and facilitate additional development and investment.”
The Treasury Department has not released specific details about which tax breaks will be offered to investors but investing in these areas will result in deferment or elimination of federal taxes on their capital gains the span of up to 10 years. The details will be out in the late summer and fall.
“As we gather more specifics about what this means for Tacoma, we will be reaching out to the development and investment community to determine next steps,” said acting Community and Economic Development Director Kim Bedier.
Needless to say, these Opportunity Zones will further incentivize investing in these neighborhoods to continue development already underway. “These designations will strengthen our communities by encouraging capital investment as we work to bring sustainable growth to Tacoma,” said City Manager Elizabeth Pauli.
The six zones in Tacoma were among a slate of 139 neighborhoods in 36 counties around the state to receive the “Opportunity Zone” designation.
“Opportunity Zones have the potential to provide a much-needed boost to communities and target development projects, strengthening the local economies and creating jobs,” said Inslee.
The program was a bipartisan proposal in Congress incorporated into in the U.S. Tax Cuts and Jobs act, allowing the governor of every state to designate up to 25 percent of eligible census tracts as Opportunity Zones. Investments made through special funds in these zones will be able to defer or eliminate federal taxes on capital gains. To qualify for Opportunity Zone status, a census tract must have had a poverty rate of at least 20 percent and a median family income of just 80 percent of the median income of the surrounding areas. A total of 555 census tracts in Washington met the eligibility criteria, though only 139 could receive the designation following an impartial selection process lead by Lt. Governor Cyrus Habib and Treasurer Duane Davidson.
“The Opportunity Zone program is an innovative way to attract private investment into struggling communities. This has real potential to boost economies in geographic areas that today feel bypassed by Washington’s overall prosperity,” Davidson said.
The new program is just one of the latest business-boosting efforts Tacoma can use, particularly for historically distressed areas of the city that also include energy efficiency credits and tax breaks for targeted development types such as affordable housing projects.
“Tacoma has a history of incentivizing the creation of family-wage jobs, and businesses that create these types of jobs in Tacoma can already qualify for up to four different credits. These credits – which can total up to $1,500 per year – can be claimed for up to five years for each qualifying job created,” Woodards said. “Ultimately, as the Puget Sound region as a whole evolves and grows, Tacoma and Pierce County benefit. I will continue to pursue cooperative and collaborative strategies with other cities and counties throughout the area to ensure that the Puget Sound region remains a desirable place to start or grow a business.”