ALBANY — The state Thursday announced it would participate in a new investment vehicle created by federal government, designed to drive development in lower-income areas.
Opportunity Zones were created as part of the Republican tax package of late 2017. They allow Opportunity Funds to invest clients’ money in projects in census tracts with an individual poverty rate of at least 20 percent and median family income no greater than 80 percent of the area median. Depending how long they hold the investment, the investors pay a reduced capital gains tax or pay none at all.
Individual states must opt into the program, and must decide which census tracts to include. They can include no more than 25 percent of the eligible tracts.
Empire State Development is leading the effort for the state. “Participating in the Opportunity Zone Program demonstrates New York’s commitment to revitalize and develop local communities, which is a key component of our economic development strategy,” ESD President and CEO Howard Zemsky said in a news release Thursday.
In the Capital Region, only a few areas will be eligible to become opportunity zones, including Schenectady, Albany, Cohoes and Troy. Farther west, the cities of Amsterdam, Gloversville and Johnstown qualify, as do a swath of rural Fulton County near the Great Sacandaga Lake and a large chunk of rural western Montgomery County.
Ken Rose, CEO of the Montgomery County Business Development Center, said he’s examining how the opportunity zones could benefit his county, particularly the redevelopment efforts underway in Amsterdam.
“We will be having those discussions with the mayor of Amsterdam,” he said. “Obviously, for the city it could be a very big thing.”
Canajoharie, where the massive former Beech-Nut factory is awaiting redevelopment, is another good candidate for an opportunity zone, Rose said.
“It could be extremely beneficial in relation to redevelopment of that site.”
Schenectady County Metroplex Development Authority Chairman Ray Gillen, leader of economic development efforts in the city and county, said he and Mayor Gary McCarthy would push hard for the city to be designated an Opportunity Zone.
He said Opportunity Zones are similar to the New Markets Tax Credit, which dates back to Bill Clinton’s presidency, in that both offer incentives for private investment in poorer areas.
“We have a proven track record of bringing investment to the areas that are eligible in Schenectady,” Gillen said. That’s important, he said, because opportunity funds won’t pick zones out of a hat to invest in, they’ll look for the zones with the best opportunity for the best profits.
“This could be a useful tool,” he said.
New York state did not rush to opt in to the program, which was part of the late-2017 Republican tax overhaul that many Democrats objected to so strenuously. Unlike many announcements issued by New York state agencies, Thursday’s announcement about the Opportunity Zone was not credited to Gov. Andrew Cuomo, a Democrat fiercely opposed to many Republican initiatives in Washington.
Because of the state’s late decision to opt in, there’s only five weeks to pick a list of areas to designate. Empire State Development and other agencies will gather data about the eligible zones and forward it to Cuomo’s office for a final decision by the April 20 deadline.
The opt-in delay was worrisome enough that four Republicans representing New York in Congress sent a letter to Cuomo on Feb. 16 urging him to set the process in motion.
Two of the four, Elise Stefanik, R-Willsboro, and John Faso, R-Kinderhook, represent parts of the Capital Region. On Thursday, both expressed gratitude in prepared statements.
“This new program will be an incredible asset to our North Country economy, and I am pleased New York will be participating,” said Stefanik. “We must work together at the federal, state and local level to ensure that the families and businesses we represent across New York receive the benefits from this new tax law that they both deserve and have earned. I look forward to working with New York officials to identify areas in our district that will be most positively impacted by the economic development and investment this program will bring, and I encourage constituents and stakeholders to reach out to my offices with their thoughts as well.”
Faso expressed similar comments.
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Categories: Business, News, Schenectady County