Investors in portions of Jefferson City could receive federal tax credits after three census tracts were selected as opportunity zones.
Opportunity zones are low-income areas with slow job growth that will receive tax incentives to encourage long-term economic investment and job growth. Investors could receive Treasury-certified capital-gains tax deferrals based on their investments in opportunity zones, Maggie Kost, Missouri Department of Economic Development director of communications, told the News Tribune in April.
Jefferson City and the Jefferson City Area Chamber of Commerce nominated three census tracts, which include the downtown area and the Missouri State Penitentiary redevelopment site. The tracts are roughly bordered by the river, Clark Avenue, Ellis and Southwest boulevards, and Industrial Drive.
The nearly 32-acre Missouri State Penitentiary redevelopment site is located in one of the census tracts, Jefferson City Area Chamber of Commerce President Randy Allen said, adding this could be "another layer of potential incentive" to future developers.
"We can let (developers) know that (public) incentives are available as they create these ideas and projects," Allen said. "Then, on top of the local incentives, then here comes this federal incentive for this particular area. You can't go, let's say, down to Stadium Boulevard and offer these because they are outside the area. So this is made perfect (sense) for something like MSP."
Allen announced the opportunity zones' approval during a Friday meeting of the Missouri State Penitentiary Community Partners, which is considering implementing a pre-qualifying process for potential developers for the 32-acre former prison redevelopment site in Jefferson City. The group agreed Friday not to set limitations on the types of public incentives a developer could use when developing the property, meaning opportunity zone tax credits could be offered in addition to incentives like tax increment financing and community improvement districts.
Each state governor could nominate up to 25 percent of eligible census tracts as opportunity zones and submit these nominations to the U.S. Department of Treasury as part of the 2017 Tax Cuts and Jobs Act.
The U.S. Department of Treasury approved 161 census tracts in Missouri, the maximum number the state could nominate, according to its website.
Allen said they are waiting for the U.S. Department of Treasury to give more specific information regarding the tax credits and incentives associated with the opportunity zones.
To be considered an opportunity zone, the census tract must have a poverty rate of at least 20 percent, or the tract's median family income not does not exceed 80 percent of the metropolitan area's and statewide median family income, or the tract does not exceed 80 percent of the statewide median family income in non-metropolitan areas.
If a census tract is in a high-migration rural country, then it can't exceed 85 percent of the statewide median family income. A high-migration rural county is a rural county that "during the 20-year period ending with the year in which the most recent census was conducted, has a net outmigration of inhabitants from the county of at least 10 percent of the county population at the beginning of such period," according to the Department of Economic Development.