Bullock selects rural 'opportunity zones' to stimulate investment

Gov. Steve Bullock has designated 25 census tracts in the state, including several in Northwest Montana, as federal “opportunity zones” that will offer tax incentives to area investors.

The program is part of the $1.5 trillion Tax Cuts and Jobs Act that Congress passed last year.

Included in the list is a significant portion of Kalispell; a large swath of the southwestern corner of the Flathead Indian Reservation, including Hot Springs and Dixon; Libby; and much of the Blackfeet Reservation, extending north to the Canadian border.

Local economic development organizations in some of the nominated areas are excited to see the investments spurred by this legislation.

“Any opportunity to incentivize investment in Libby will promote wealth-building projects for our community,” said Amber Pacheco-Holm, president of the Libby Chamber of Commerce. “We see the outcomes in three primary and related areas: jobs, increase in property tax base and increase in services, which will also serve the outcome of attracting more visitors dollars. Ultimately, Opportunity Zone funding is a financing tool to catalyze near-term and future business investment and create an environment that is more productive for business growth and job creation.”

Kalispell Chamber of Commerce President Joe Unterreiner said the Opportunity Zone program gives the city a new economic development tool to attract investment capital and help create good-paying jobs.

“The Kalispell Chamber welcomes the inclusion of Kalispell as an Opportunity Zone,” Unterreiner said. “These zones ... will allow for the temporary deferral of inclusion in gross income for capital gains reinvested in a qualified opportunity fund. The [program] encourages private investment through the permanent exclusion of capital gains in certain cases.”

Much of the Columbia Falls area and the rest of Lincoln County were also eligible, but did not make the final list supported by the governor. Also included in the list are areas of Bozeman, Billings, Great Falls, Helena and Missoula.

As the national economy has continued its long march out of the Great Recession over the last decade, many rural communities have been left out of the picture. Since 2010, only 3 percent of job growth has come from rural areas. Meanwhile, the portion of American jobs that are in cities has risen from about half to nearly three-quarters.

The federal tax bill identifies criteria to identify “opportunity zones,” which will use tax incentives to help direct more private investment into lower-income areas that show potential for economic growth.

Montana had 106 areas eligible for this designation, and 60 of them were nominated for consideration. Bullock’s office then whittled the list to 25. The goal was to pick places that would not see investment without the tax incentives, in order to maximize the positive impact on those tracts.

The current iteration of this program was spearheaded by Sean Parker, an investment mogul who made his fortune as the first president of Facebook in the early days of the social network.

Some critics have said the program could turn into a way for developers already investing in gentrifying areas to avoid capital gains taxes.

The Congressional Budget Office predicted the program would lead to about $1.6 billion in decreased tax revenue for the federal government over the next 10 years.

An analysis by the Brookings Institution, a think tank based in Washington, D.C., shows that of states who sent in their list of chosen zones early, nearly 80 percent were in severely economically depressed areas, while the other 20 percent were in areas with a poverty rate only slightly above the national average.

An interactive map that shows both the eligible and nominated census tracts can be found at http://comdev.mt.gov/Programs/OpportunityZones/FindYourCensusTract.

Reporter Peregrine Frissell can be reached at 758-4438 or pfrissell@dailyinterlake.com.