Georgia Department of Community Affairs

Opportunity Zones

State Job Tax Credit

Opportunity Zones

O.C.G.A. 48-7-40.1(c)(4)

 General Strategy • Encourage local governments to use existing redevelopment statutes in an innovative fashion to revitalize blighted commercial, industrial and adjoining residential areas • • • Reward local governments and businesses that undertake such revitalization with access to maximum State Job Tax Credits Operate state-wide, wherever eligible “pockets of poverty” and redevelopment needs occur (rural, urban and suburban). Support bottom up, locally driven initiatives through local collaborative partnerships

Promising Uses for Opportunity Zones

     Rural areas with sluggish economies and blighted industrial, commercial and adjoining residential areas Brownfields Declining commercial corridors Pockets of older commercial and industrial areas with outdated (blighted) facilities and buildings in otherwise affluent counties Deteriorating in-town neighborhoods adjoining older industrial areas (

state EZ allows tax abatement on rehabilitated housing

)

Opportunity Zone Requirements

O.C.G.A. 48-7-40.1(c)(4)

  Opportunity Zones are enabled pursuant to “less developed area” portion of BEST [O.C.G.A 48-7 40.1(c)(4)] Allows DCA to designate as an “

Opportunity Zone

”, an area within or adjacent to one or more contiguous census block groups with a

15%

or greater poverty rate, where the area is part of an

Enterprise Zone OR where a Redevelopment Plan

has been adopted by the local government, and the area displays pervasive poverty, underdevelopment, general distress and blight.

Opportunity Zones Applicable Statutes for Local “Tools”

• Georgia Urban Redevelopment Law –

O.C.G.A. 36-61; OR/AND

• Enterprise Zone Employment Act –

O.C.G.A. 36-88

Local Redevelopment Tools – Urban Redevelopment Law (O.C.G.A. 36-61)

 Provides cities and counties the power to rehabilitate, conserve or redevelop a blighted area  Local government must adopt a resolution finding the area is blighted and that redevelopment is necessary  Local government must adopt an urban redevelopment plan for the target area

Local Redevelopment Tools - Enterprise Zone Employment Act (O.C.G.A. 36-88)

 State Enterprise Zone Criteria • • • • •

Poverty Unemployment general distress underdevelopment Blight

 Local property tax breaks for Commercial and Residential Property  Other Local Incentives

Incentives

 State designation of an Opportunity Zone would allow: • • •

ANY businesses

(including retail) within the area to qualify, not bound by “Business Enterprise” definition Lower

job creation threshold to 2 jobs

to qualify for the state’s maximum job tax credit of

$3,500 per job

Allow credit against

100% of income tax liability, with excess credit available to claim against payroll withholding

Example of OZ Credit Usage

Year 1 Jobs Created 2 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12

TOTALS

3 3 4 4 5 5 6 6 6 7 7 Credit $ 0 $7,000 $10,500 $10,500 $14,000 $14,000 $10,500 $7,000 $7,000 Tax Liability Withholding $1,200 $1,000 $1,500 $1,700 $2,100 $2,050 $1,800 $1,750 $3,500 $3,500 $1,450 $1,600 $ 0 $ 0

$87,500 $16,150

$5,800 $9,500 $9,000 $12,300 $11,900 $8,450 $5,200 $5,250 $2,050 $1,900

$71,350

In the above example, a Job Tax Credit of $87,500 is generated, with the business able to utilize all of the credit

Redevelopment Area before/after

Opportunity Zones – Partnerships!

 Partnerships with other public and private entities targeting same areas: • Private •  Bank CRA Programs, Non-Profits, Philanthropic organizations Federal  HUD’s CDBG, HOME, HOPE and others  Treasury’s New Market Tax Credits and CDFI programs  SBA, USDA, FHLB, HHS and others

Application, regulation, maps and more available at:

 http://www.dca.state.ga.us/economic/Develop mentTools/programs/opportunityZones.asp

For questions, please contact: Dawn Sturbaum (404) 679-1585 [email protected]

Brian Williamson (404) 679-1587 [email protected]