U.S. Sen. Rob Portman (R-OH) met with business and government leaders Friday to discuss ways to best use opportunity zones, as well as improve federal rules about them. Ohio — and Columbus in particular — has already positioned itself well to market its 320 zones compared to other states, he said, praising the Ohio Development Services Agency (DSA) portal unveiled in April. (Hannah Report, 4/24/19.)
Portman noted the zones’ pass-through provisions are scheduled to expire in 2026 and will have to be renewed. That should give investors a sense of urgency to invest now and receive benefits as long as possible, though he hoped they would be renewed in a “rare moment of bipartisanship.”
Portman told reporters afterward that the zones incentivize investment in the zones based on “certain kinds of projects” including multi-family housing units or creating companies, and while the discussion showed there can be tweaks to increase effectiveness, many are willing to invest when they wouldn’t have otherwise, and that can create jobs in disadvantaged neighborhoods and assist existing businesses.
The economy is doing well nationally, and very well in Central Ohio, but many areas have been left behind, Portman said. He also told Hannah News he believed the discussion Friday can inspire meetings around the state to both provide information for areas that haven’t done as much with them and can market Ohio to outside investors. He’s already had meetings in Cleveland, Youngstown and Cincinnati.
Portman was joined by former U.S. Rep. Pat Tiberi, now president of the Ohio Business Roundtable, who discussed how the zones were created as part of the 2017 federal tax bill. Tiberi noted the proposal received criticism from both the far left and far right, but said there were areas that haven’t received any investment beyond public dollars in decades and so it’s important to get private investors to buy into them and stay there. The zones are meant to inspire investors and mutual funds to choose places they wouldn’t have otherwise gone, he added.
Columbus Mayor Andrew Ginther said he was proud of what’s been done so far in Columbus, which has 39 opportunity zones out of 44 in Franklin County. The meeting was held at Gravity, a multi-use development in an opportunity zone in the Franklinton neighborhood, and developer Brett Kaufman discussed how it was created — though that started before the tax bill was passed.
CoverMyMeds CEO Matt Scantland also discussed his company’s plans to create a $240 million campus in West Franklinton as part of an effort to help the community, saying it has received support from the state and city government and would benefit from being in an opportunity zone.
DSA Director Lydia Mihalik said that Columbus has led the way on opportunity zones, though levels of knowledge in other parts of the state has been more varied and so they are developing ways to provide more information on how to take advantage of opportunity zones. She also noted the state had created a 10 percent nonrefundable tax credit through the operating budget, HB166 (Oelslager), and there’s a lot more that local communities can do with the state’s support.
Ginther discussed how specific neighborhoods, including Franklinton, can benefit from being designated as zones, and he and Portman discussed the importance of providing affordable housing. Ginther said Columbus may be the only part of Ohio with a looming affordable housing crisis given its projected growth, and noted efforts to work with other local governments in central Ohio in developing strategies to address it, including using opportunity zones.
Darci Congrove, managing partner at accounting firm GBQ, and Columbus Chamber of Commerce Government Relations Vice President Holly Gross discussed how they’ve provided guidance to businesses, particularly small businesses. VentureOhio CEO Falon Donohue moderated a discussion with them and other business leaders on ways to benefit from and improve opportunity zones, which are subject to Treasury Department rules, including a slate released in March that provided confidence to investors.
Donohue also noted that opportunity zones were part of Gov. Mike DeWine and Lt. Gov. Jon Husted’s campaign platform. (The Hannah Report, 8/13/18.) At VentureOhio, she works to attract venture capital investment in the state.
One area of potential improvement to opportunity zones was for them to better support operating businesses, which have not received as much investment as real estate projects. Michael Copella, managing director at real estate and investment firm CBRE, said that an unintended consequence of the zones has been existing businesses moving out of opportunity zones due to the increase in their property value.
Mihalik and Columbus Partnership CEO Alex Fischer said it may be possible for the state and local governments to find ways to aid such businesses beyond the federal law. Portman also said he hoped there would be ways to provide more credit to operating businesses in the zones, and Tiberi added they are designed to attract startups.
Portman also told reporters afterward that he hoped GM would either begin production of at least one, hopefully multiple, vehicle models at the shuttered Lordstown plant or facilitate sale to a company that would resume manufacturing there, and praised the national employment data released Friday.
Story originally published in The Hannah Report on August 2, 2019. Copyright 2019 Hannah News Service, Inc.