By Lauri Lee
Northside Economic Development Coalition
City of Madison Business Resource Director Dan Kennelly presented to the Northside Economic Development Coalition (NEDC) Oct. 23 about Opportunity Zones (OZ), a new economic development tool that can be utilized for Northside development, putting a new incentive in our community’s economic development toolbox.
The OZ areas include major redevelopment opportunities, prime sites for new employment and numerous commercial corridors and neighborhoods that are well-positioned for new business and housing development. Investors, developers and companies have the possibility to leverage the OZ incentive.
These OZ were created in the 2017 Tax Reform Law. Each state’s governor designated the zones, with local input, and then they were certified by the U.S. Treasury Department.
This new economic development tool was designed to encourage long-term investment in designated census tracts possessing economic barriers. Ten Madison census tracts across the city, which are clustered in three areas, have been granted OZ status.
How it works
Investors can reinvest unrealized capital gains into Opportunity Funds. These funds in turn invest in projects located within designated OZ. Investors can then temporarily defer and reduce taxes on capital gains from their original investment and eliminate taxes on future gains if held for 10 years.
Northside Opportunity Zone Tracts
The Northside designated project areas include large-scale industrial development opportunities, a growing airport with direct service to major markets, a regional tech college, a planned public market and a portion of the vibrant and transforming Capitol East District. The four tracts and their key assets catalysts include:
Former Oscar Mayer Property – This 70-acre former manufacturing site has 400,000 square feet of existing office and manufacturing space available for lease. The city is working with the property owner on short and long-term plans for reuse of this visible and important property.
Airport Commercial Areas of the growing Dane County Regional Airport and surrounding commercial and industrial areas. This airport also has the advantage of Foreign Trade Zone (FTZ) status, a key economic development tool. An FTZ is a specific area within the U.S., located in or near a port of entry, where certain types of merchandise can be imported without going through formal customs entry procedures or paying import duties. Companies located in such zones are typically not charged tariffs on their product inventory until it is sold, which improves a company’s cash flow and saves substantial dollars. The Dane County Regional Airport owns two properties, totaling 123 acres.
Madison College, with its growing technology, is in the designated zone.
Capitol East District is an urban district that is rapidly transforming home to technology companies, a new entrepreneurial hub, new music venues, farm-to-table restaurants,and housing units filled with millennial technology workers.
Madison is well positioned for long-term investment due to our renowned quality of life, growing population and innovative economy. But the city also has high levels of poverty, unemployment and some people have limited access to opportunity. The city is committed to using OZ, leveraged with local incentives, to encourage inclusive growth and investment that benefits Madison residents and neighborhoods.