Seven Clark County communities were dubbed “Opportunity Zones” by the governor’s office Friday, positioning them for more investment — although it is unclear when.
Parts of Vancouver, Hazel Dell and Washougal were named among 139 underserved” census tracts in Washington that can now house projects with special tax breaks for developers.
The hope is that investors who might have shied away in the past might now see the communities as better places to build affordable housing, expand businesses and create jobs.
“I think it’s a huge win,” said Mike Bomar, president of the Columbia River Economic Development Council.
Update
Previously: The passage of the U.S. Tax Cuts and Jobs Act of 2017 allowed states to designate Opportunity Zones, offering tax breaks for investments in underserved communities.
What’s new: The state on Friday designated 139 Opportunity Zones, including seven in Clark County.
What’s next: Local officials await rules from the Internal Revenue Service and the U.S. Treasury Department that will govern how Opportunity Zones function.
Three zones cover Vancouver’s core from The Waterfront Vancouver to Clark College, while a fourth zone spans the neighborhoods of Bagley Downs, Meadow Homes, Northcrest and Harney Heights.
Zones outside of Vancouver include Hazel Dell between 78th and 99th streets; and two zones covering almost the entire southern half of Washougal, including downtown and properties owned by the Port of Camas-Washougal.
The Fourth Plain Corridor, a stretch of multicultural businesses and a focal point for concerns of gentrification, lies within the Opportunity Zones. City officials say they are mindful of helping spur economic growth without pushing families and businesses out.
“We’ll specifically work with Fourth Plain and with the business district there,” said Theresa Brum, the city’s economic development manager. “We have been working with them for the past three years and we’ll continue that relationship to avoid any kind of negative gentrification.”
Arrested development
Money won’t pour into these areas overnight.
State officials say they are still waiting for formal rules from the Internal Revenue Service and the U.S. Treasury Department. The latter has been administering the program since it was created by Congress in December as part of the federal tax cut package.
Many of the current questions revolve around how these investments will work in practice. Investors will be able to put money into an “opportunity fund” and thus either skip or defer paying capital gains taxes. But details are still unknown.
“How does a fund become designated? What are the rules for those funds? How do they operate? They might (answer) some of that later this year,” said Chris Green, assistant director for the state Department of Commerce. “What we do know is that the capital markets are very interested.”
Once those rules do get sorted out, local officials say they are excited to see what’s next.
Paul Dennis, president of the Camas-Washougal Economic Development Association, said his organization is hoping to talk with potential investors while the rules are getting sorted out. He could not get specific, but said the zones in Washougal could help.
“There’s still large tracts of land that are ripe for development,” he said.
Dennis added that costs saved by the zones might help builders who are fighting against the rising costs of construction materials and labor.
“You’re starting to see the costs… are outstripping the percentage increases in lease rates or values,” he said. “This would help as kind of a readjustment.”
The zones also could help projects get built that will help low-income communities, said Jennifer Rhoads, president of The Community Foundation for Southwest Washington.
From her standpoint, she’d like to see the program trigger investments in affordable housing and small business. “In my mind it would not be a success if it results in gentrification,” she said.
