When Ralston City Administrator Dave Forrest heard about a new federal tax incentive program, he and other city leaders decided to “throw their hat into the ring” and see what happened.
Their application was confirmed, but now they’re waiting to find out how big of an impact it will have.
A sizable portion of Ralston was designated a Qualified Opportunity Zone in April. Opportunity Zones, created by Congress’ 2017 Tax Cuts and Jobs Act, are designed to spur investment in “distressed communities” by providing federal tax deferments on capital gains of businesses, real estate and other investments based in the area.
A zone retains the designation for 10 years and investors see more tax relief the longer the investment is held.
Census tracts were eligible for OZ designation based on poverty rate or median family income thresholds, and 44 such tracts in Nebraska earned the designation. One of them is an area of north downtown Omaha, where a $300 million renovation dubbed Millwork Commons is planned with tech company Flywheel as the headline business.
Ralston’s zone is bounded by L Street to the north, 72nd Street to the east, 84th Street to the west and train tracks to the south. The median family income in the tract was around $57,000 and had a poverty rate of 8.1 percent in 2016, according to US Census Bureau estimates.
That tract includes the area in the city’s Hinge Project, centered on the area near 72nd and Main Streets, which featured prominently in the Ralston’s OZ application.
Forrest said he viewed the OZ designation as another source of funding for the Hinge that could be coupled with tax increment financing or other incentives, but he is unsure of the size of role it will play.
The Internal Revenue Service and Treasury Department released proposed guidelines for the program on Oct. 19. Since the regulations are only a few weeks old, Forrest said many are still trying to figure out the mechanics.
“I’m not sure anybody is an expert,” he said.
Ralston is also waiting on an environmental study of some of the properties that make up the Hinge, the city’s plan to redevelop the area near 72nd and Main streets. Once it receives that report, Forrest said the city will send out requests for proposals, and once developers show their vision for the Hinge, the city will have a clearer picture of which funding mechanisms will be needed.
“We’re not going to know until we get proposals from the developer community and work with other technical experts,” Forrest said.
Don Gross, community and economic development manager at the Metropolitan Area Planning Agency, agreed with Forrest that it’s too soon to tell how much of an impact OZ designation will have on any given area and what the procedures are to put them to good use.
“I assume there are people who understand it better than we do at the local level,” he said.