Investors, advisers to discuss Opportunity Zones in Milford

MILFORD — Milford is standing by for more economic development opportunities thanks to help from the federal government.

A census tract within the city of Milford was chosen as a federally designated Opportunity Zone, along with 24 other census tracts throughout the state of Delaware, in an effort to spur more private investments with the help of tax credits and other benefits. The announcement came in April 2018 after Gov. John Carney sent his tract nominations to the U.S. Department of the Treasury.

The program, city leaders emphasized, is run by the United States government, but could greatly impact Delaware as long-term progress is realized.

To discuss possible private investments in the area and offer help with questions investors may have as they explore the process, the city of Milford will host a workshop Monday from 10 a.m. until noon at the Milford Public Library.

“Opportunity Zones are an economic development tool designed to spur economic development and job creation in distressed communities by providing tax benefits to investors,” according to the city of Milford’s website.

“Investors have the ability to defer the payment of capital gains until Dec. 31, 2026 by investing in a Qualified Opportunity Fund (QOF). If the investment remains in a QOF for at least five years, investors can reduce the taxes owed by 10 percent. If the investment remains in a QOF for at least seven years, investors can reduce the taxes owed by 15 percent. If the investment remains in a QOF for at least 10 years, investors can reduce the taxes owed by 15 percent and eliminate taxes on gains earned from the Opportunity Fund investment.”

After his announcement last year, Gov. Carney said in a press release, “Strengthening neighborhoods and communities across Delaware helps improve our economy, stabilize families, and make our state an even better place to live, work and visit. These Opportunity Zone designations will help build on our ongoing community development efforts and encourage additional private investment where it can have the most impact — in economically distressed communities. We look forward to working with private sector partners, and with local leaders across our state, on this important initiative.”

Qualifying factors such as income and unemployment levels were taken into consideration when Opportunity Zones were chosen to aid “distressed communities,” Milford City Manager Eric Norenberg said.

Milford City Planner Rob Pierce said that teaming the new tax credits with the Downtown Development Districts was important to help investors gain as many incentives as possible.

The area affected by the Opportunity Zone in Milford encompasses the northern half of the city, including half of the Downtown Development District designated by the state in 2016.

“It is an area that has other distressed areas or properties ripe for development,” Mr. Norenberg said, citing opportunities on Rehoboth Boulevard, near Routes 1 and 14.

“We saw a variety of opportunities within that census footprint,” he added. “And now, there’s stackable options. You can stack so many benefits in the Downtown Development District from the state benefits to the waivers in our requirements. And if you meet eligibility requirements, there could be incentives from Kent and Sussex counties, historic tax credits … there’s a lot of things available for a successful project. Then, on top of that, to be able to add the Opportunity Zone is a game changer.”

The meeting on Monday will highlight the benefits and the process that goes behind Opportunity Zone-related projects. Guest speakers will include Brad Molotsky, LEED, Partner at Duane Morris, LLP in Cherry Hill, N.J.; Director of Special Projects for the state of Delaware’s Department of State Patricia Cannon; and Myunghee Geerts, CPA and Principal at Cover & Rossiter in Wilmington.

“We’re bringing in outside experts for people to get that information and to find out if it’s right for them,” Mr. Norenberg said. “Ninety percent of the people we’ve talked to in the past nine months have said they have no idea about the Opportunity Zone. We’re looking for people to say, ‘I care about the future of Milford. I’d like to put money into a project that redevelops something downtown. . . We’re the communication tool at this point and making sure people are aware.”

Mr. Pierce said the city is looking forward to the benefits of the new Opportunity Zone and how the city of Milford will change in the years to come as a result of private investments.

“We do have a lot of land available for private development. The Opportunity Zone is a private transaction. There is no interaction with these transactions with the city of Milford,” he said. “Our job is to get the word out about the possibilities in investments. It’s a break in the capital gain tax.”

Potential investors looking to benefit from the Opportunity Zone should be prepared to be in their project for a lengthy time frame, they added.

“The idea is leaving your money in for a period of time. This is not a quick return for your investment. You have to say, ‘I’m not going to touch it for five to 10 years.’ I think that’s what can create a positive result in the community,” Mr. Norenberg said.

“They’re ultimately investment decisions. You still have to choose wisely and have good advisors. A lot of these will be real estate transactions,” Mr. Pierce also explained. “There’s a lot of unrealized capital gains out there that people are trying to move around and not have to pay taxes. They wanted those capital gains to be funneled back into the community. Any way we can try to get some of that action back in Milford can benefit Milford greatly.”

Potential investors can browse a list of undeveloped properties put together by the city of Milford. Other properties ready for redevelopment might also be available.

Investors may be able to take advantage of other incentives, as well, like the Downtown Development District Program, Strong Neighborhood Housing Fund, Low-Incomie Housing Tax Credits, Housing Development Fund, Brownfield Development Program, Angel Investor Tax Credit and R&D Tax Credits, according to Mr. Pierce and Mr. Norenberg.

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“The Downtown Development District has been good. If we have similar excitement as a result of the Opportunity Zone as well, then we’ll be ecstatic,” Mr. Norenberg said.

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