LAC DU FLAMBEAU – Some 60 people met Thursday at one of Vilas County’s three “Economic Opportunity Zones” to hear a panel of experts explain how a new federal tax program could spur investment in their communities.
Layered on Opportunity Zones are “Opportunity Zone Funds,” a type of investment vehicle created for investors to take advantage of the recent tax code changes. They allow for a reduction in capital gains tax through investment in qualified Opportunity Zones.
The Lac du Flambeau Business Development Corporation and the Vilas County Economic Development Committee co-hosted the “Regional Opportunity Zone Summit” at the Lake of the Torches Convention Center.
In an interview before the meeting, LdF Business Development Corporation CEO Darold Londo outlined what they hoped to accomplish at the summit attended also by representatives of Oneida County Economic Development Corporation and Grow North, along with developers, business leaders and other agencies. “The purpose of the meeting is threefold,” Londo said. “One, is to build some awareness and understanding on the Opportunity Zones and how they might work with other tax incentives to help facilitate development in areas like Lac du Flambeau. Two, is to create an environment where all the right people can begin to collaborate and have discussions about ideas; and three, is to begin to talk about potential strategic projects that might be pursued in the Opportunity Zone.”
“The federal 2017 Tax Cuts and Jobs Act established Opportunity Zones to spur private investment in distressed communities throughout the U.S.,” according to the Wisconsin Housing and Economic Development Authority’s (WHEDA) website. “This new Opportunity Zones program will allow investment in some of our nation’s most economically challenged communities through tax incentives (that) encourage private investment to accelerate economic growth and job creation,” it says.
To do that, the program rewards investors and developers with tax savings and other financial incentives. “Opportunity Funds allow investors to defer federal taxes on any recent capital gains until Dec. 31, 2026, reduce that tax payment by up to 15%, and pay as little as zero taxes on potential profits from an Opportunity Fund if the investment is held for 10 years,” according to an IRS fact sheet.
Besides Lac du Flambeau, there are Opportunity Zones in St. Germain and Eagle River. All total, Wisconsin has 120 of these federal designated zones targeted for economic development and job creation. LdF Business Development Corporation COO Randy Soulier told the group Lac du Flambeau is “open for business.”
Earlier in that interview, Londo outlined those potential business developments. “I have three general categories that I think that define opportunities here in Lac du Flambeau,” he began. “One is to continue to build upon the entertainment district here. Obviously we have the Lake of the Torches Casino, which is a terrific casino/resort environment. But if you were to build upon that entertainment stake in the ground, if you will, what might you do? We think there is opportunity there. “There’s opportunity for multi-unit housing in Lac du Flambeau to support development (and) to support existing community demand. We think there’s opportunity in the retail district to complement the investment the tribe is making this summer to expand and develop the County Market area. We got $3.45 million already committed to begin construction in the spring. “We think there’s downtown opportunities to continue to develop this beautiful piece of land in and around the Fence Lake Chain. “
And fourth and maybe most importantly we got a grant from WHEDA this fall to build a Workforce Training and Business Development Center out in the business park. A $3 million grant. The first development in a business park is always the most difficult, that’s going to be ours. We hope to be the first domino with others to follow.”
The two groups brought in a panel of three experts from the private and public sectors. All three used Power Point presentations, delving deeply in the complex world of capital gains, tax laws and the like. Attorney Hal Karas, with the Husch Blackwell law firm, gave a comprehensive explanation of Opportunity Zones. “U.S. investors currently hold trillions of dollars in unrealized capital gains in stocks and mutual funds alone – a significant untapped resource for economic development,” he said.
“Opportunity Funds provide investors the chance to put that money to work rebuilding the nation’s left-behind communities.” He and others in the field are waiting for additional federal regulations. “The IRS has not given all the regulations to take full advantage of the program,” he said.
Stuart Kuzik, director of WHEDA’s Business and Community Engagement, explained how people could leverage financial resources for development projects in Opportunity Zones. “WHEDA has eight guarantee programs to help a wide range of businesses get access to capital in order to grow,” he said.
Mikaela Huot, vice president of Springsted Incorporation, addressed ways a community can prepare for investments in Opportunity Zones. She said the Opportunity Zone projects that will be most attractive to investors would be those considered to be “investment ready” before the end of 2019. “Local governments should conduct planning and pre-development activities to prepare projects for potential investment,” she said.
