HELENA – Business development groups say, in places like downtown Helena, it can be hard to attract investment.
“Getting access to capital – patient capital is what we would call it – is very difficult,” said Brian Obert, executive director of the Montana Business Assistance Connection.
Obert is hopeful the creation of an “Opportunity Zone” downtown can help change that.
Opportunity Zones were created as part of the major federal tax overhaul Congress passed last year, and designed to bring more development into lower-income communities.
Through the program, investors will be able to create Qualified Opportunity Funds. They can then defer taxes on gains from other investments, if they reinvest the money in one of the designated Opportunity Zones.
Obert said the Opportunity Zone program will provide more tax incentives if an investment is maintained for at least ten years.
“This is an incentive that forces you to want to have a long-term investment,” he said. “That gives us more opportunity to bring funds into downtown.”
Opportunity Zones are based on census tracts. Eligible tracts had poverty rates of at least 20 percent or a median family income at 80 percent or less of the surrounding area’s.
In Montana, local governments proposed possible Opportunity Zones, and Gov. Steve Bullock nominated 25 – the maximum allowed to each state. Last week, the U.S. Treasury Department officially confirmed Montana’s choices.
The new Opportunity Zones include city centers, entire rural counties and tribal reservations. In Helena, the zone covers most of the downtown area, as well as the Great Northern Town Center and the area around Carroll College. It also stretches south as far as Unionville.
Sharon Haugen, Helena’s community development director, said the city is optimistic about what the downtown Opportunity Zone can accomplish.
“It’s an exciting kind of a tool,” she said.
The Opportunity Zone designation comes as the Helena City Commission is moving forward with the creation of an urban renewal tax increment financing district downtown, another plan to attract more investment. A TIF district would let the city reinvest some of the property tax revenue collected downtown into improvement projects there.
“It was coincidental that we were working on the urban renewal district the same time this opportunity arose, but it’s indicative of the possibilities that were identified in the Downtown Master Plan,” Haugen said.
Obert agreed that the Opportunity Zone and urban renewal district could work together very effectively.
“Sometimes, it’s good to be lucky,” he said.
Obert said those two initiatives, combined with downtown’s historic character and the active preservation community, could make Helena especially attractive for investors.
“If we can drop a million dollars’ worth of investment in a couple of the old buildings downtown, those buildings are a significant asset and an attractor for the next 40, 50 years going forward.”
There are still many unanswered questions about the Opportunity Zone program. The Treasury Department and the Internal Revenue Service have to finish their final rulemaking processes in the next few months.
“We really can’t answer when this will take effect,” Haugen said. “We hope it’s soon, because we see a lot of opportunity in the downtown area.”
You can find more about Montana’s Opportunity Zones, including a map of all 25, at the Montana Department of Commerce website.
Montana’s Approved Opportunity Zones:
Blackfeet Indian Reservation (Glacier County)
Crow Indian Reservation (Crow Agency and northeast section)
Flathead Indian Reservation (Sanders County)
Fort Belknap Indian Reservation (northern section)
Fort Peck Indian Reservation (Poplar and east section)
Great Falls (downtown/Lower North Side)
Kalispell (center, excluding downtown)
Meagher County (full county)
Miles City (downtown)
Mineral County (St. Regis and west county)
Northern Cheyenne Indian Reservation (Rosebud County)
Rocky Boy’s Indian Reservation (Hill County)
Sanders County (Thompson Falls and west county)
Toole County (Shelby and south county)
Wheatland County (full county)