CLARKSBURG — Communities in North Central West Virginia were recently certified as “Opportunity Zones” by the U.S. Department of Treasury. The designation will provide tax incentives for private investors who make capital investments in these areas.
Gov. Jim Justice and Sen. Shelley Moore Capito, R-W.Va., announced Friday the establishment of 55 of opportunity zones in West Virginia. These sites include locations in Clarksburg, Fairmont and Grafton and Upshur and Randolph counties.
“For Grafton to be included is encouraging for us,” said City Manager Kevin Stead. “It does not guarantee economic development, but it does give an extra tool for the communities that have this to receive private investment.”
According to information from the Internal Revenue Service, the Opportunity Zones program was established under the 2017 Tax Cut and Jobs Act to spur long-term private-sector investments in low-income communities nationwide.
“Investors can defer tax on any prior gains until the earlier of the date on which an investment is sold or exchanged, or December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor would be eligible for an increase in basis equal to the fair market value of the investment on the date that the investment is sold or exchanged,” according to the IRS website.
To be eligible, opportunity zones had to be located in census tracts deemed to be economically distressed. They then had to be nominated by the state. Municipalities and economic development organizations submitted applications to the state earlier this year for consideration.
“This allows an opportunity designed to spur economic development. How it becomes successful is by providing a tax incentive for investors,” explained Clarksburg City Manager Martin Howe. “You don’t have to live or work within that (opportunity) zone, so it’s really an opportunity for larger corporations or individuals who may have a tax liability that they want to offset by making this investment within these zones.”
According to Howe, the Clarksburg opportunity zone includes the Central Business District, the Anchor Hocking property, Hite Field, a residential area on South Chestnut Street and a small portion of Glen Elk.
“What we’ll do is put together a list of potential properties that can possibly reap the benefits from being within the opportunity zone, and then we’re going back to community development entities that we’ve worked with in the past to see if there’s any potential investors within their qualified opportunity fund that we can utilize,” he said. “This will be a very competitive market to attract investors.”
The opportunity zone in Grafton includes part of the downtown area and along U.S. 50 and U.S. 119, according to Stead.
“We’re very excited and think it’s a wonderful opportunity to be included,” he said.
In Fairmont, two opportunity zones have been certified.
The goal is redevelopment of Speedway Business Park, formerly the Owens-Illinois Glass Co. plant, and the downtown Fairmont historic district stretching from Fairmont Avenue near Second Street, Merchant Street in East Fairmont and a small portion of Pennsylvania Avenue, said Fairmont City Manager Robin Gomez.
“In the last couple of years, a corporation called Merit Development has been cleaning up the (Speedway) property, getting it ready to be redeveloped, and they’ve had a few companies, corporations who are leasing space for certain operations,” Gomez said.
According to Gomez, the establishment of the opportunity zones adds a federal tax incentive to the four city and one state tax incentives already available to investors in Fairmont.
“The IRS still has to come out with more information and documentation on how it’s all going to work. They’re still working on that, and they’ll be working on that in the next couple months,” Gomez said.