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Crow Wing County Board: County identifies 'opportunity zones'

The Crow Wing County Board of Commissioners went along with a proposal that prioritized and recommended downtown and south Brainerd among "opportunity zones" for improvement.

Brainerd Lakes Area Economic Development Corp. Executive Director Sheila Haverkamp gives the Crow Wing County Board of Commissioners an overview of "opportunity zones" at Tuesday's meeting that are created by a new provision in the federal tax bill. These new zones use tax incentives to attract long-term investment in low-income or high-poverty areas. Frank Lee / Brainerd Dispatch
Brainerd Lakes Area Economic Development Corp. Executive Director Sheila Haverkamp gives the Crow Wing County Board of Commissioners an overview of "opportunity zones" at Tuesday's meeting that are created by a new provision in the federal tax bill. These new zones use tax incentives to attract long-term investment in low-income or high-poverty areas. Frank Lee / Brainerd Dispatch

The Crow Wing County Board of Commissioners went along with a proposal that prioritized and recommended downtown and south Brainerd among "opportunity zones" for improvement.

Representatives from the Brainerd Lakes Area Economic Development Corp. and the Crow Wing County Housing and Redevelopment Authority said those areas in the county are the "most distressed" and may qualify for tax incentives to attract investment in low-income areas.

"The new federal tax bill included a provision on 'opportunity zones,' and this came up very quickly ... and that we needed to get all of our information to the governor by March 8," BLAEDC Executive Director Sheila Haverkamp told the board about the application process.

BLAEDC and the HRA made their recommendation at the board meeting Tuesday, resulting in the board's authorization of an application to Gov. Mark Dayton to designate the census-defined tracts for the opportunity zone incentives on BLAEDC's and the HRA's behalf.

The first step in creating the zones directs governors nationwide to designate them from a pool of "low-income, high-poverty census tracts" for recommendation to the treasury secretary.

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"In Minnesota, we understand there are 491 U.S. Census tracts that will be eligible for opportunity zones, of which 250 have been identified as most distressed, and that's based on poverty rates and family median income," Haverkamp said.

"In Crow Wing County, we have learned we have 16 U.S. Census tracts, of which nine would be eligible for these opportunity zones, and of the nine that are eligible, only two are what they consider 'most distressed.'"

Dayton is charged with designating the opportunity zones from among Minnesota's 491 qualifying census tracts, and it is believed that local communities have the "on-the-ground" experience to recommend which eligible tracts should be designated as opportunity zones.

"The governor can only propose 25 percent, or about 122 U.S. Census tracts, in the state of Minnesota to get this classification," Haverkamp said.

The second-most distressed tract was Brainerd Industrial Center/Highway 210 to Cypress/Baxter, and it was BLAEDC's and the county HRA's recommendation that it be recommended-along with downtown and south Brainerd-to the governor to consider.

"What we did was assemble a group, including BLAEDC, Brainerd HRA, Crow Wing County HRA, city of Baxter, city of Brainerd and CREDI (Cuyuna Range Economic Development Inc.) reps and the county to try to look at and understand these nine census tracts and where they were physically located," Haverkamp said.

Other eligible tracts include Crosby/Ironton/Deerwood in the Cuyuna Country State Recreation Area, Baxter/Brainerd and Northern Pacific Center/airport highway river-to-rails.

"This is a challenge for all of us because we are not 100 percent sure what the tax law is all going to include. We understand the U.S. Department of Treasury is working through all of the intricacies of exactly how this program will work and what it will mean for investors," she said.

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"Opportunity funds" are a new class of private sector investment vehicles authorized to "aggregate and deploy" private investment into opportunity zones, according to Haverkamp.

Those funds allow American investors holding "unrealized gains" in stocks and mutual funds to pool their resources in projects in the opportunity zones, which will be invested in rebuilding low-income communities.

"We think it will be a commercial, industrial and some housing components because they have indicated Minnesota Department of Employment and Economic Development, and Minnesota Housing ... will be accepting these applications and helping to guide the governor," Haverkamp said.

U.S. investors are eligible to receive a temporary tax deferral for capital gains invested in an opportunity fund, a step-up basis for capital gains reinvested in an opportunity fund, 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.

"It's trying to encourage investors that have money they have not realized they can invest in projects to encourage redevelopment of some of the lowest poverty places in the United States of America," Haverkamp told the board before it voted.

Commissioner Doug Houge made the motion to prioritize the five tracts in the county and authorized the application to the governor to designate them for the opportunity zone incentives. Commissioner Rosemary Franzen seconded the motion, and it passed unanimously.

I cover arts and entertainment, and write feature stories, for the Brainerd Dispatch newspaper. As a professional journalist with years of experience, I have won awards for my fact-based reporting. And my articles have also appeared in other publications, including USA Today. 📰
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