Marion County is trying to take advantage of a new vehicle for attracting business investments into high-poverty communities through federal tax incentives.
The tax cut package Congress passed last year provides advantages to investors in capital projects in census tracts designated by the governor as “Opportunity Zones.”
Lori Watts, president of the Marion County Development Partnership, told the Board of Supervisors Monday that the county’s applications have been submitted.
According to Watts, Gov. Phil Bryant will be allowed to designate only 25 percent of the state’s eligible as Opportunity Zones.
“Because of this, counties will be competing for a one-time designation,” Watts said. “We learned about the program on Feb. 8. We had to submit our application by March 5, and the governor has until March 21 to submit his recommendations to the IRS. It’s not the same as when we offer an incentive to an industry. This is for an individual or a corporation for investment of funds into capital projects.”
Watts said there are about 400 eligible tracts in the state and Br yant will be able to select only about 100. The MCDP identified three census tracts in Marion County that qualify.
“They are three contiguous tracts – they all touch one another,” she said. “They sort of move from within the city upward toward the northeast. The benefit to this is that there will be a high visibility advantage for attracting investors through developments and projects. The exact rules for this have not been released by the Treasury Department yet, but there will be tax deferment. In other words, if they take profit from an investment they have and invest it here, they will defer the taxes on those profits, those capital gains taxes. It will also decrease (taxes) and on the project, it will exempt them. That’s income tax; it wouldn’t be anything to do with county tax.”
According to Watts, existing businesses would also be offered the same incentives.
“It’s not just for new businesses,” she said. “People that invest in those areas would qualify. There is a wide flexibility in the type of investments. It can be startups, Main Street businesses, real estate, manufacturing facilities, entrepreneurial incubators, affordable house and rental housing development.”
Watts said Marion County would be a good candidate.
“Mississippi would benefit from Marion County being chosen because we are centrally located in the middle of South Mississippi,” she said. “The opportunities that we would have designated could affect this whole region of the state.
“We offer investment opportunities within a short commute time of one of the fastest-growing population areas of the state. An Opportunity Zone incentive can serve as a catalyst to help Marion County boost local employment, wages and investment, therefore decreasing poverty, which in turn will boost the state of Mississippi’s economic position.”
Watts told the Board that while the application has been made, the governor has a lot of discretion on which tracts to designate. She urged Board members, as well as businesses and individual stakeholders, to contact the governor’s office.
Watts said after the governor’s decision, the federal government’s decisions will be made within about 60 days.
She also said the incentives are “stackable” and could be used with other credits, such as historic tax credits.
“Let’s say somebody wanted to build a new restaurant in an old historic building,” she said. “They could take those historic tax credits and could also get this and it would help their return on investment be a lot better. It really spurs that investment on.”
County Board Attorney Joe Shepard will draft a letter to be sent to Bryant on behalf of the Board.
County officials hope to find something out before the end of the month.
Pictured Above: The colored areas show the three census tracts that Marion County is applying to be made federal “Opportunity Zones,” which would provide income tax breaks for business investment. The areas include Columbia and a large area northeast of the city.
