A little-known provision in the Trump tax cut bill has the potential to bring economic investment in some of the poorest areas of the country, including all across Western North Carolina.
Many local governments have economic incentive policies designed to lure new businesses, but an overlooked provision halfway through President Donald Trump’s Tax Cuts and Jobs Act of 2017 gave poverty-stricken census tracts a new tool for their economic development toolboxes, called “opportunity zones.”
“Honestly, I think it is exactly what it says it is,” said Zeb Smathers, Mayor of Canton. “This is an opportunity zone. It brings attention, especially attention to major investors that are looking to reinvest their money through the mechanisms and what is provided in this package.” Haywood County’s opportunity zone encompasses part of Canton, and rural areas to the south and east.
Here’s how it works: investors that use capital gains to invest in a designated opportunity zone get an immediate deferment on those gains. But to encourage what the state Department of Commerce calls “patient development,” additional federal capital gains tax breaks get sweeter after five and seven years, and after 10 years, they’re permanently exempt from capital gains taxation.
Coupled with existing Haywood County and Town of Canton incentive packages, the opportunity zone is generating lots of interest, according to Smathers.
“Especially in our downtown, with the economic incentives we’re putting our money where our mouth is,” he said. “We’re very hungry in attracting new businesses, but also attracting new housing opportunities, new commercial development, and I think when the word gets out about the opportunity zone, there is going to be in increase investors seeing what we have to offer.” Zones were designated based on higher-than-average poverty rates, and almost 40 percent of them are in rural counties like Haywood.
North Carolina has more than 250 opportunity zones in 98 of 100 counties, including all of Western North Carolina. Jackson County Economic Development Director Rich Price said his zone encompasses much of Cullowhee, home to Western Carolina University, and could be a good place for housing.
Buncombe County’s zone runs west of French Broad River north and west of downtown Asheville, and then east of the river south and east of downtown.