In a city that is already booming, it may seem odd for any group to focus on what are described as “economically distressed” communities, but that’s precisely what officials with the Aurora Economic Council are doing with the advent of federal Opportunity Zones.
“We look at it as just one more tool, and perhaps one of the best tools for economic development,” says Yuri Gorlov, the vice-president of the Aurora Economic Development Council.
“These zones are certainly one of the best pieces of last year’s tax legislation,” continues Gorlov, “and we’re just excited to help connect people with the opportunities.”
That connection has seen the council, along with the Colorado Office of Economic Development and International Trade, hosting conferences on the creation of the zones and trying to get the word out on how businesses can use them to their advantage.
“We’re reaching out to developers, investors, small business owners, consulting firms, and large corporations,” continues Gorlov of a plan that was a part of the historic Tax Cuts and Jobs Act passed by Congress in December.
As defined by the Internal Revenue Service, the Opportunity Zones are specifically designed to “spur economic development by providing tax benefits to investors.”
They also target areas of any given state that have lower income averages and higher rates of poverty, and through their use, make Opportunity Funds available for developers who want to invest in those areas, allowing them to defer or reduce capital gains taxes.
In essence, the program incentivizes new development with both a favorable treatment of reinvested capital gains, along with an equally important forgiveness of taxes on those capital gains.
“We now have seven such zones that have been approved in Colorado,” says Gorlov, “so we’re really all set to go.”
Three of the zones are in Aurora.
One borders land along East Colfax Avenue on a stretch of road that is populated with a number of older and smaller businesses and has been lacking in new development since the Great Recession.
“Having an Opportunity Zone for this area is going to prove extremely helpful because it will attract investors who perhaps haven’t been attracted to redevelopment,” says Gorlov.
A second zone encompasses what is known as the Fitzsimmons Innovation Community, to the west of Interstate 225 and also including a large swath of land between Interstate 70 and the always-growing Denver International Airport.
“The crown jewel for us is Fitzsimmons and the Anschutz Medical Campus, which is on the south side of the Fitzsimmons Investment community,” says Gorlov. “That area really represents a tremendous opportunity for people and businesses to go in and develop more than 100 acres of open land.”
The land hugging the Denver International Airport, notes Andrea Tilliss, marketing manager for the Aurora Economic Development Council, “is what is known as the Aerotropolis and is one of the largest defined Opportunity Zones.”
“The potential there is limitless,” continues Tilliss, who adds: “The development in that area is not taking off right now to the degree that it will in the future, but it’s really a great opportunity for a significant amount of development over the next decade.”
On a visit to Aurora earlier this summer, Ben Carson, the Secretary of the Department of Housing and Urban Development, touted the Opportunity Zone concept, noting, “You combine that with the public activity bonds, the private sector and the non-profits, and there are the things that will make a difference.”
According to a map compiled by the Washington-based Economic Innovation Group, the nominations for Opportunity Zones submitted to the U.S. Treasury now represent every section of the country, taking in dozens of smaller communities and metro areas in the South and Midwest, along with larger tracks of land in the geographically more spacious West.
Crunching the numbers, the Economic Innovation Group said the current in-place Opportunity Zones are home to more than 31 million people, with 56 percent of that number made up of minority populations.
On average, the unemployment rate in these areas remains a stubborn 14 percent, with 38 percent of what is described as “prime age adults” without jobs. That’s a figure that is nearly 10 percent higher than the national average.
Because of the size of the effort, and the fact that is still a new program, the real benefits and impact of the Opportunity Zone concept will most likely not be fully realized for years.
But the potential is there, say Opportunity Zone enthusiasts, not only for new investment in distressed areas, but for development, construction projects, and increased employment.
“At the end of the day,” says Gorlov of the companies that may end up investing and building new facilities in such zones, “this is a big tax break.”
By Garry Boulard
Timely, reliable news since 1949