The federal opportunity zones are starting to gain some attention from investors looking at tracts in South Bethlehem that are included in the program, which offers generous tax incentives.
A report from the Lehigh Valley Economic Development Corp. emphasizes some of the benefits that investors can capture from those incentives.
The federal opportunity zone program was enacted in 2017 under the Tax Cuts and Jobs Act to encourage investment in distressed urban areas beyond city centers.
The program gives investors breaks on federal capital gains taxes in exchange for investment in funds that support small businesses and housing projects in low-income areas.
Investors can avoid federal taxable capital gains on investments in those areas if they retain ownership of a project for at least a decade.
In its report, LVEDC said the Lehigh Valley has more than 8,700 acres of opportunity zones and more than 2,900 opportunity zone tax parcels. They are in the cities of Allentown, Bethlehem and Easton.
The report also noted that the region’s zones have 58.8 million square feet of industrial and office space and 22,600 multi-family units.
To qualify for the tax incentives, investors must invest in a qualified opportunity fund, a private-sector investment vehicle that invests at least 90 percent of its capital in opportunity zones. The model will allow investors to pool their resources, increasing the scale of investments going to underserved areas.
Reading, West Reading, Stroudsburg, Pottstown, Tamaqua, and Phillipsburg, New Jersey also have opportunity zones.
“There’s clearly some unique opportunities for opportunity zones in the Lehigh Valley,” said Don Cunningham, president and CEO of Lehigh Valley Economic Development Corp.
In addition to the opportunity zone incentives, for example, investors can also capture other tax incentives, such as the City Revitalization and Improvement Zone incentive in Bethlehem and the Neighborhood Improvement Zone benefit in Allentown, Cunningham said.
Cunningham said he is starting to see some interest from investors looking to redevelop properties on former Bethlehem Steel land in South Bethlehem, which also falls within the CRIZ.
Furthermore, Da Vinci Science Center’s Science City project, once touted for the corner of South Third Street and Larry Holmes Drive in Easton, also is within an opportunity zone. With the project headed elsewhere, that tract offer potential for investors.
The organization hopes the zones will spur interest in economic development.
“We are involved in a push to get the information out to investors,” Cunningham said. “The project has to make sense for the developer. Having that possibility could be a jumpstart to a lot of things that have been waiting.”