Area communities nominated for federal investment program

Texarkana, Hope, De Queen among cities in running for tax incentives

Arkansas Gov. Asa Hutchinson recently nominated 85 Opportunity Zones in Arkansas including seven Southwest Arkansas communities as part of a new federal economic development program.

The federal program encourages long-term investment in low-income areas, he said.

The U.S. Treasury Department will provide final approval. The program was established by Congress in the Tax Cuts and Jobs Act of 2017. Opportunity Zones provide tax incentives for private investment in low-income communities nationwide.

Seven of the zones exist in Southwest Arkansas.

Areas nominated for the opportunity in Southwest Arkansas include De Queen in Sevier County, Ogden in Little River County, Mena in Polk County, Nashville in Howard County, Hope in Hempstead County, Buckner in Lafayette County and Texarkana in Miller County.

A qualified Opportunity Fund is any investment vehicle organized as a corporation or partnership with the specific purpose of investing in Opportunity Zone assets. The fund must hold at least 90 percent of its assets in qualifying property. The U.S. Treasury must certify new Opportunity Funds and is responsible for prescribing regulations regarding certification, Hutchinson said.

“I’m excited about the potential investment that will be encouraged in low-economic areas of the state. One of my goals as governor from day one has been to increase economic opportunities for all Arkansans. By investing in these high-potential areas, Arkansas will be able to breathe new life into communities and ensure the state remains economically diverse and healthy,” Hutchinson said.

Eligible zones are based on U.S. Census tracts, and governors of each state may nominate up to 25 percent of eligible tracts for approval. Benefits for investors include a temporary tax deferral for capital gains, a step-up basis for capital gains invested and a permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund if the investment is held for at least 10 years.

Arkansas Economic Development Commissioner Jay Bunyard of De Queen reported Arkansas has 337 tracts that meet the eligibility requirements. He said for De Queen to be one of the 85 sites “nominated from around the state is a big deal.”

Bunyard said he learned about the Opportunity Zones during the March Arkansas Economic Development Commission meeting. He said Executive Director Mike Preston told the commissioners that they would have significant input in the selection process.

Bunyard informed Sevier County’s Economic Development Coordinator Lisa Taylor about the possibilities.

He said Taylor researched the program and prepared some talking points about De Queen that he then presented at the April AEDC meeting.

In the next few months, the Treasury Department will approve a total of about 8,700 Opportunity Zones nationwide. It is estimated that potential capital eligible for reinvestment in the zones will total $6.1 trillion dollars.

“Now the work really begins, as community leaders strive to attract investment dollars that’ll be available for various projects,” Bunyard said.