Opportunity Zones generate prospects, puzzles for local developmentsSub: Valley Ranch, Grand Texas among areas included
If you zone it, will they come? East Montgomery County and the surrounding areas will soon find out.
With major developments designated as Opportunity Zones — a creation of the Tax Cuts and Jobs Act of 2017 that enables areas appointed by a state’s governor to attract investors through tax benefits — East Montgomery County could continue to redevelop quickly.
And communities nearby, such as the Lake Houston area, could see residual benefits as well, economic development experts said.
Governor Greg Abbott sent his list of 628 eligible census tract areas to the U.S. Treasury Department and welcomed “further growth” as much needed post-Hurricane Harvey. The designation stays for 10 years.
“As we continue to recover after Harvey, these Opportunity Zone designations will also provide a much needed boost for local communities impacted by the storm,” he said.
Montgomery County has 11 certified Opportunity Zones. Some notable developments are included within an opportunity zone, such as mixed-use complex the Valley Ranch Town Center and Big Rivers Waterpark & Gator Bayou at Grand Texas theme park, which are both just north of Kingwood in New Caney.
“The way that we see our area is growing — rooftops obviously generate retail, and with more retail they generate rooftops,” said Frank McCrady, East Montgomery County Improvement District’s president and CEO, “It’s a quality-of-life factor that feeds off of each other.”
The designation of Opportunity Zones within East Montgomery County will help the area attract the right types of developments, McCrady said.
“Our board is really setting the vision of how we want to develop our area — additional retail, additional family entertainment,” McCrady said. “It’s very important that we can attract those things to this area, and that’s the vision we’d like to go with as our district develops.”
McCrady said the area’s current businesses have been receiving patronage from residents in Kingwood, Cleveland, Dayton, Livingston and others. He believes it is possible for neighboring regions, which aren’t Opportunity Zones, to experience spillover benefits.
Mark Mitchell, president of the Lake Houston Area Economic Development Partnership, agreed, although he lamented that the eligible areas in his jurisdiction were not designated.
That said, he recognized the difficulty the governor must have faced during the nomination process due to the size of the state.
“Hopefully we’ll see some secondary benefits as far as investments due to proximity,” Mitchell said. “The last article I read there’s about $6 trillion in profits sitting on companies’ books that eventually would be taxed, but because they’re making these investments in these Opportunity Zones, it’s a great way for these investors to defer taxes while at the same time creating wealth and growth for themselves.”
Per their research for Rice University’s Kinder Institute in March 2018, Luis Guajardo and Alexandra Miller of the urban planning firm Asakura Robinson said funding for Opportunity Zones stem from Qualified Opportunity Funds. By “rolling investment earnings into” these, investors can defer capital gains taxes as well as lowering them.
Guajardo and Miller also put forth certain questions about Opportunity Zones in their write-up, such as how said designation can accelerate gentrification and allow detrimental industries to grow.
“We’re interested in trying to help communities in figuring out how to be proactive throughout this, but then as this program matures I want to know what actually gets invested where,” said Miller, a principal for the firm’s New Orleans office. “That will be some interesting data for us to have — to see who’s benefiting and how and what location.”
“Give or take five years,” said Guajardo, senior planner for Asakura Robinson’s Houston office, referring to an ideal time frame to return and evaluate the ripples of Opportunity Zones.
A virtual map of all the Opportunity Zones in the U.S., including Alaska, Hawaii and territories such as Puerto Rico, American Samoa and Virgin Islands, is viewable at the U.S. Department of the Treasury’s Community Development Financial Institutions Fund’s website.
“I am very excited about the prospects for Opportunity Zones. Attracting needed private investment into these low-income communities will lead to their economic revitalization, and ensure economic growth is experienced throughout the nation,” said Secretary Steven T. Mnuchin in a press release dated April 9, 2018.