Parts of Portage included in new Opportunity Zones
Opportunity is knocking in parts of Portage. The federal government says so.
Steve Sobiek, the city’s director of business development and planning, said it’s possible some developer might answer the knock soon.
It’s called an Opportunity Zone. There are 120 U.S. Census tracts in Wisconsin that have that federal designation, and the only one in Columbia County is located in the city of Portage, extending a short distance into the rural town of Lewiston.
For individuals or groups that acquire properties in the zones, the federal government is offering tax breaks, including deferment or forgiveness of capital gains taxes.
“The larger the development, the more capital gains there are,” Sobiek said. “If those taxes can be deferred or forgiven, that’s a huge incentive.”
The portion of the Opportunity Zone within the Portage city limits is bounded on the east by Highway 51 (New Pinery Road) and Highway 16, and by the city limits to the north, west and south. Sobiek noted that includes three of the city’s struggling tax increment financing districts — all of No. 4, the Portage industrial park; all of No. 5, encompassing the West Pleasant Street former location of Divine Savior Hospital and Clinic; and parts of No. 6 in downtown Portage.
Opportunity Zones were created with the 2017 Tax Cuts and Jobs Act, signed into law by President Donald Trump a year ago today.
According to background information provided on the Wisconsin Housing and Economic Development Authority website, the concept of Opportunity Zones was developed in 2015 by the bipartisan policy firm Economic Investment Group.
In addition to announcing the existence of the Opportunity Zone on the front page of the city’s website at portagewi.gov, Sobiek also is encourage current and prospective business owners to consider its benefits.
To qualify for the tax incentives, the business owner must have acquired the property sometime after Dec. 31, 2017.
That could include any entity that might buy the former Columbia County Health and Human Services building at 2652 Murphy Road — now vacant because the department occupies a new structure at 111 E. Mullett St., along the Portage Canal. The old Health and Human Services building, appraised at $773,000, used to be a light manufacturing structure.
It also could include K&M Tire, an Ohio-based wholesale company that next month will buy almost seven acres of city-owned property in the industrial park for a 50,000-square-foot distribution center.
But getting the word out about the Opportunity Zones is the extent of the city’s direct involvement, Sobiek said.
Neither state nor city tax dollars are expended for the Opportunity Zone program, nor does the city have any say in who does or doesn’t qualify.
Sobiek said any person or group considering acquiring and developing property in Portage’s Opportunity Zone should contact an accounting firm that specializes in programs such as this, and that firm can lead the developers through the federal process of getting approved for the program.
Sobiek said the program has not yet been tested in the courts, and it’s possible someone might challenge some aspect of it.
“It’s totally untested, but it’s a new frontier in economic development,” Sobiek said.