Opportunity Zones (OZs) were created as part of the 2017 Tax Cuts and Jobs Act to encourage investment in low-income and rural areas.
There are two Opportunity Zones in Kingsport — the downtown area and a tract next to the Holston Army Ammunition Plant.
In Tennessee, there are 176 Opportunity Zones across 75 counties, according to TNInvestco Director Lamont Price. A web portal on those projects is available at https://oz.tnecd.com/.
Investors benefit three ways by investing their capital gains into a Qualified Opportunity Fund (QOF). The first benefit is a deferral of capital gains invested in a QOF. The second benefit is known as a “Step Up in Basis” which effectively reduces capital gains by 10 percent to 15 percent depending on how long the funds are in the QOF. The third benefit is a permanent exclusion from capital gains derived by investing in a QOF.
“The big thing around Opportunity Zones, in our estimation, is education and information,” Price noted. “One of the things we’re trying to push is ‘Please tell someone. Your attorneys. Your bankers’ ... we have capital, we just need projects.”
Since December of last year, there have been three meetings to inform the public about Opportunity Zones. About 130 potential investors showed up at the last one held at the MeadowView Marriott, which means interest is high.
The last estimate suggested as much as $46 million could be invested in Kingsport’s Opportunity Zones.
The Tax Foundation, an independent tax policy nonprofit, asserts measurement is crucial for evaluating the impact of Opportunity Zones.
We believe that in Kingsport’s case, Opportunity Zones have the potential for positive economic impact.