By Mary Jo Coulehan
You hear a lot of buzz about Opportunity Zones these days, but what is it about this program that has communities and investors excited?
Opportunity Zones (OZ) were enacted as part of the 2017 tax reform package to address uneven economic recovery and persistent lack of growth. The OZ program provides a federal tax incentive for investors to invest in communities through favorable treatment of reinvested capital gains and forgiveness of tax on new capital gains. The deferral of inclusion in taxable income for capital gains is until December 31, 2026. There is a gradual reduction of tax if gains are held for only five years or seven years. Permanent exclusion is tax free if the gains are held the full 10 years or until 2026.
When first implemented, low income urban or rural communities had the opportunity to submit a census tract in their area for acceptance to the state of Colorado and then the federal government. The good news for Southwest Colorado is that every county had a census tract that qualified. In Archuleta County, census tract number 9744 was selected which encompasses Piedra Road northeast past Cloman Boulevard, the north side along U.S. 160 past U.S. 84 and southeast along U.S. 84. In this census track, there are many opportunities to build out on vacant land tracts from larger parcels to infill parcels such as in the downtown area.
Archuleta County developed a community prospectus for investors. Numerous work groups were held, always open to the public. This group formulated the community prospectus. Participants included realtors, town and county government, developers, business professionals, utility companies, nonprofit agencies, the Chamber of Commerce and the Community Development Corporation (CDC), who took the lead in preparing the document.
The Pagosa Springs Community Prospectus is an invitation for developers and investors to look at our community and invest in projects we feel are important such as housing, light manufacturing and lodging. The work group took into account the Town’s Comprehensive Plan, Smart Growth Plan and the County’s Community Development Action Plan (CDAP) to align OZ projects with the highest priorities in these documents. The town and county collaborated on local development incentives that can be added to federal and state tax incentives. Investors can “stack” incentives from a myriad of opportunities.
We encourage potential investors to look at the various districts and see what projects might be available, or they can match their particular area of interest, such as housing, and reference what types of projects are available in each district. The community prospectus is available for download from the Region 9 website, www.scan.org or from the CDC website at pagosaspringscdc.org/incentive-programs/. The key to the OZ program is the investment of capital gains. If you are moving to Pagosa, have some capital gains that you would be interested in investing, contact your financial advisor for more investment information or Mary Jo Coulehan at the Chamber of Commerce at (970) 264-2360.