‘Opportunity’ awaits in Murfreesboro
MURFREESBORO – This year, North Carolina has a total of 252 “Opportunity Zones” spread across the state, with at least one in every county. Murfreesboro and its surrounding area fall into one of these zones. Lee Padrick from the NC Department of Commerce spoke to the Murfreesboro Town Council here last week about what that new designation means.
“Opportunity zones are a part of the federal tax cuts from last year,” Padrick explained, referencing the The Tax Cuts and Jobs Act which was signed into law in December 2017.
Padrick described the new program as being like a capital gains deferment. Investors can take the money they would pay in capital gains tax and instead invest that money into an “opportunity zone fund” which will be used to develop projects within that area. The opportunity zones—like the one Murfreesboro is included in—are made of low-income census tracks in an effort to encourage job creation, economic activity, and community investment in areas which need it.
“An opportunity fund is just an investment vehicle,” Padrick stated simply.
He estimated most investments in rural communities like Murfreesboro would be from local people, but there would be nothing stopping people from outside the zone investing in the town if they wanted.
The IRS will provide the guidelines for the investing program, but Padrick noted those guidelines haven’t been released, so he didn’t have a lot of information about that aspect yet.
“Everything is theoretical right now,” he emphasized.
Padrick said he was visiting different zones to give them more information about the project as well as asking the communities to think about a few “investment ready” projects which NC Commerce could add to their database. That database will later be used to let potential investors learn about different projects which are available throughout the state.
“The investments can be in real property, a stock in a domestic corporation, or the tangible assets and property of a particular business,” Padrick explained, noting the investments must be in new businesses.
“So I couldn’t invest in something that’s been here 35 years,” Mayor Hal Thomas asked as an example.
Based on the information provided by the government, Padrick said he believed the only opportunity fund investments allowed for existing businesses would be to help them expand.
“Who is going to approach the individuals you think might put something into their community,” asked Council member Sarah Wallace.
Padrick answered they would know more once the IRS guidelines were out, but he believed a lot of projects could be locally marketed.
“If it’s complicated, it won’t happen,” said Council member Billy Theodorakis about people choosing to invest in the fund.
Many of the other Council members agreed with that assessment, expressing concern they might not have any investors interested in Murfreesboro.
Padrick said he estimated the program would probably begin after the first of the year when they would have more information from the IRS and the database of potential projects online.
“We think it’s going to be a really cool opportunity for projects that normally wouldn’t get considered for funding,” he concluded.