By Brice Wallace
Utah communities looking to tap into a new federal economic development program soon will get some help.
The Governor’s Office of Economic Development (GOED) has issued a request for proposals for a consultant or consulting service to perform planning associated with an Opportunity Zone program aimed at boosting economies in economically distressed areas. At a recent meeting, the GOED board approved an economic opportunity grant of up to $200,000 from the Industrial Assistance Fund for a consultant to work with communities where zones exist to help them with outreach, communication and promotion of their zones.{mprestriction ids="1,3"}
The request for proposals was issued in November and GOED hopes to have a vendor selected by the end of December.
Forty-six zones have been designated in Utah, including 19 in rural Utah.
“As we’ve been talking with our rural stakeholders, what has become quite obvious is they don’t really know how to even approach these zones at all,” Ginger Chinn, GOED’s managing director of business services, told the board at a recent meeting. “They don’t even know where to begin, and they don’t have the manpower to even start to dig in to what these zones mean and how they can present the zones.”
The Opportunity Zones program was established by Congress in the 2017 Tax Cut and Jobs Act last December as a way to spur economic development and job creation in distressed communities. It is designed to encourage long-term, private-sector investments in low-income and urban communities by providing tax benefits to investors. For example, investors can defer capital gains, but not ordinary gains, on investments in a “qualified opportunity fund” until 2026.
In early November, the U.S. Treasury released proposed guidelines for the program. The Treasury and the IRS will have a public hearing on the zones program Jan. 10.
Utah’s zones will be competing for investments with nearly 9,000 zones nationwide. Treasury Secretary Steven Mnuchin has said the zones could attract $100 billion in investment.
The hired consultant in Utah will work with local community officials to help them “put the best foot forward and help them come up with a marketing plan,” Chinn said. Those plans could then be presented to urban areas “so that they can fall in alignment with the resources,” she said.
“Quite frankly, a lot of people are looking to the state to lead out on the initiative, and to GOED in particular,” Chinn said.
“I think it’s important to understand that these are very technical proposals,” said Jerry Oldroyd, the board chairman. “The Opportunity Zones themselves have been designated by the federal government with input from the states, but the compliance provisions are significant, and consequently there’s some type of expertise that’s needed.”
Oldroyd said a cottage industry has been formed nationwide as specialists have been created to help communities with their applications.
“We don’t have that expertise in-house, it’s that simple,” he said. “And frankly, we don’t have the time to do it because each individual Opportunity Zone is going to be different. It’s going to require different considerations based upon just the nature of the zone itself and the community where the zone exists. It is, I think, important to have some unified approach to how we handle the Opportunity Zones. Otherwise, we will lose out to other states. It’s just that simple.”
“There does need to be some leadership,” said Theresa Foxley, president and CEO of the Economic Development Corporation of Utah. “I think a lot of communities that we work with are looking to GOED to help them understand how to take advantage of this.”
Among the consultant’s duties will be reviewing other states’ Opportunity Zone methodologies and incorporating best practices into Utah’s outreach program. The consultant will be charged with delivering a cohesive message and branding campaign, brochures or one-page marketing materials to be distributed to investors, an outline of key economic development projects in Utah’s Opportunity Zones, an investor contact information sheet for communities, and performance metrics specific to each community.
In March, the Kem C. Garnder Policy Institute at the University of Utah issued a policy brief that described the zone program as “a rare opportunity to incentivize investment in communities throughout Utah with great economic need. It’s critical that this investment also be directed toward areas with the greatest potential to realize a return on investment.”
Utah faces a public policy imperative to address economic needs in rural Utah, the brief said.
“While not all areas in rural Utah offer suitable market conditions, our analysis suggests several targeted rural communities where attractive investment opportunities may exist,” it said. “We follow an approach that prioritizes rural low-income communities with high labor market engagement, includes rural regional centers, and focuses on the poorest of the Wasatch Front’s low-income tracts.”{/mprestriction}
