Why Polis picked 91 more Opportunity Zones for investor tax break
Gov. Jared Polis has nominated 91 areas in Colorado for a new round of federal Opportunity Zone tax incentives, a program that is designed to encourage wealthy investors and corporations to invest in low-income areas in exchange for large tax breaks.
Proponents of the program say it can help revive regions by financing housing, healthcare, jobs and new businesses. But critics say it benefits wealthy investors and development projects that might have moved forward anyway. While some question the success the program has had across the nation in lifting residents up, state officials say $3.2 billion in private investment capital has flown into the 126 previously designated census tracts or “zones” since 2019 and that number is increasing as we near the end of the Opportunity Zone 1.0 investment period in December.
The U.S. Treasury Department must now clarify Colorado’s new list of Opportunity Zones. A spokesperson from Polis’ office says the state anticipates this will happen by the end of November.
The Colorado Sun sat down with Polis over Zoom earlier this week to talk about the federal program and the new areas he has nominated for it. Here’s the conversation, edited for length and clarity.
The Colorado Sun: How do you describe the program?
Gov. Jared Polis: It’s a very compelling incentive to invest in underserved areas, urban and rural, and it’s an idea that’s traditionally been supported by Democrats and Republicans to help drive capital and infrastructure and jobs to areas that have high unemployment and low income.
Sun: How is it a tax incentive?
Polis: Let’s say there’s an investing entity that’s sitting on a major gain, say, a $10 million gain. They can sell that and pay capital gains taxes now, or they can invest in one of these zones, defer their capital gains tax for five years, and the original cost basis from the previous investment will be stepped up by 10% from the original cost of the investment, or 30%. If it’s in a rural opportunity zone, it shrinks, but does not eliminate, the amount of the capital gains.
And if an investor holds onto an Opportunity Zone project for 10 years, they actually have no additional capital gains tax on the additional appreciation that occurs. So it’s a very compelling mechanism to attract capital to low-income rural and urban areas. On the ground we had over 100 stakeholder meetings for regional in-person convenings and I attended three.
Sun: What were you hoping to learn?
Polis: We really wanted to hear where prospective investment was, because the last thing we wanted to do was establish one of these zones and nobody was investing there anyway. So we looked at folks who were looking at putting warehouses and factories here or commercial developments there but were on the fence. They need capital, and that’s where we felt we could have the most impact through these 91 nominated census tracts that really span the entire state. I’m excited about the opportunity to attract capital from across the country to Colorado to create jobs and help build out areas that have long suffered from lower than average income.
Sun: What do these investments look like for communities?
Polis: The ones we’ve designated all have several prospective investment concepts that they’re looking at. So, in one area, it could be a healthcare complex. In another area, it’s warehouses. In another, it’s houses and homes. And they’re all somewhat far along because this can help close the gap to make sure that those full plans are realized.
Sun: What’s the state’s outlay?
Polis: We ran the process of choosing them. We use existing resources, and have funded stakeholder meetings across the state. The federal incentives are far larger than any state incentives. But 89 overlap with state incentivized enterprise zones and 33 with rural jumpstart zones.
Sun: You know the term “a rising tide lifts all boats.” How does this help all of Colorado?
Polis: For our state to be prosperous, we have to have good jobs no matter where you live, and in too many rural areas, and in too many impoverished urban areas in the Denver metro area, it’s hard to find a job. There’s blight, and this is a way to drive investment to get better housing and more jobs in both rural and urban areas of our state that need that investment.
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Other working bits
➔ Offroad gear maker leaves Utah for Grand Junction. There were some financial incentives involved in helping Avatar Offroad relocate its headquarters and manufacturing to Grand Junction from Sandy, Utah. But it was also the community, which included support from the Grand Junction Economic Partnership and Colorado Mesa University, where the company can find interns and apprentices, Avatar Offroad owner Wes Swearingen said in a news release.
The state’s Office of Economic Development and International Trade picked Avatar for its Rural Jump-Start program, which provides $15,000 in grant funding to help companies grow in rural areas and create jobs. Eligible employees also qualify for a state personal income tax credit, while other tax benefits include exemption from county and municipal personal property tax for new businesses, according to Curtis Englehart, GJEP’s executive director.
The company, which moved to town in August, said it now employs about 10 people. It plans to add up to 40 net new employees in Grand Junction, Englehart said.
➔ Colorado AG settles with staffing agency over alleged fraud. Hundreds of travel invoices charging the state Department of Corrections a higher rate than allowed has turned into a $2.86 million settlement paid by Staffing Network Holdings to the state, according to the state attorney general in a settlement announced Friday.
The AG’s office alleged that QPA, now known as Staffing Network Holdings, claimed higher travel rates for nursing shifts if care providers traveled more than 400 miles round trip. Those who lived within 200 miles of the work assignment were paid a lower local rate. The rates varied by year and position, but the difference for the cases in question involved registered nurses being paid local rates of $72 an hour compared to non-local rates of $156 an hour, according to the AG’s office.
But when investigators looked into claims, they found at least one where a recruiter told the care provider “to have his name added to a utility bill at his father-in-law’s out-of-state residence,” according to the AG’s office. QPA then used that Texas address for at least 18 invoices, overbilling the state by more than $63,000. That violates the Colorado False Claims Act. Other cases are mentioned in the filing.
Staffing Network Holdings will pay the state $2.86 million, plus interest, in installments through 2030. >> Read the settlement
➔ Cripple Creek & Victor Gold Mine’s $830.1 million impact. Take the gold mine’s 428 employees and count up their earnings from an average wage of $94,314 a year. Add in the money workers spend to live, eat and play in and around the town of Victor, which is west of Colorado Springs. And don’t forget another 377 local jobs to support the workforce. And the 153,000 ounces of gold produced there, at $3,634 per ounce, comes to around $556 million.
Add it all up for a financial impact of $830.1 million million statewide last year, according to a new report from Metro Denver Economic Development Corporation. Most of it aids the three-county Pikes Peak region, where the gold mine’s economic impact was $704.2 million last year, according to the report, published as gold mine owner SSR Mining has proposed capital improvements and a state permit amendment to extend the life of the mine. With the extension, there could be an additional $200 million in economic impact for Teller County. >> Read story
➔ Oct. 13 job fair features openings in two states. The WyCo Regional Job Fair, hosted by area workforce centers in Colorado and Wyoming, will take place in seven locations up and down the Front Range, plus one in Cheyenne, Wyoming. Organizers are expecting more than 150 employers with job openings. But if you can’t make it in person, a virtual event starts at 12:30 p.m. You can register for the virtual event here.
The in-person job fairs start at 10 a.m., with the first 30 minutes reserved for veterans, active duty military and their families. Colorado events are at the following locations:
>> More info
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Happy October! Thanks for sticking with us! ~ tracy & tamara
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