Opportunity is knocking in Ohio.
Now it’s up to lawmakers in Columbus to act on a bill that will help the state make the fullest use of a relatively new federal law.
Based on the fact the legislation is among the Ohio Senate’s priorities for this session, we are encouraged at its prospects for quick action and passage.
First, a little history:
About 15 months ago, the federal government created Opportunity Zones across the country as part of the $1.5 trillion tax cut President Donald Trump signed into law.
These Opportunity Zones are defined geographic areas, based on U.S. census tracts, that met specific criteria as areas of poverty in need of revitalization. Investments into those areas would avoid federal capital gains taxes, if they are held for at least 10 years.
In short, the federal government will reward long-term investment into economically depressed areas of the country, 320 of which are designated in Ohio.
Eight of the Opportunity Zones exist in Stark County: five in Canton, two in Massillon and one in Alliance. The census tracts that include the downtowns of each of those cities are among the targeted areas.
A critical shortcoming exists in the federal law, however: If an Ohioan invests in an Opportunity Zone Fund, it’s not guaranteed that money would stay in-state and work to improve conditions here.
Ohio Senate Bill 8, the brainchild of Sen. Kirk Schuring, would rectify that situation.
“This piggybacks on the federal bill,” Schuring said. “These are good incentives, (but) federal law had no requirements that the dollars stay in Ohio.”
There are four “high-poverty” census tracts in Stark County, and two have been designated Opportunity Zones: downtown Canton and an area that includes Mercy Medical Center, which could help spur investment in the near-northwest neighborhoods of Canton. (Coincidentally, both of these Opportunity Zones match areas designated for attention under the city of Canton’s comprehensive plan. This could provide another boost toward that effort.)
“These areas are crying out for help,” Schuring said of Opportunity Zones locally and across Ohio. “No one is investing in them.”
Citing two examples, Schuring said he envisions the Opportunity Zone designation prompting an investor to look more closely at the Renkert building in downtown Canton and the industrial area south of downtown Massillon for redevelopment.
“This will spur development in areas that have not seen it in decades,” he said.
We applaud Schuring for his vision in identifying a gap in the federal law that needed attention. We also applaud Senate President Larry Obhof and other leaders in the chamber for making Schuring’s proposal one of the top 10 bills of this session.
“I’m pleased Senate leadership is making this a priority,” Schuring said.
Enthusiasm for investing in Opportunity Zones appears very high.
Economic Innovation Group, an entity that defines itself as one that “brings together leading entrepreneurs, investors, economists and policymakers from across the political spectrum to address America’s economic challenges,” has followed the new law extensively.
In an update published Saturday, it wrote: ”(Friday), the Internal Revenue Service hosted a public hearing on the notice of proposed rulemaking for Investing in Opportunity Funds released last October. The hearing itself was a testament to the enthusiastic interest in the incentive: The line to get into the building was 90 minutes long at times, the auditorium was filled to capacity ... and the testimony lasted nearly five hours with 23 scheduled speakers.”
Investors are just waiting for a few more wrinkles to be ironed out, like passage of Senate Bill 8 in Ohio.
That sound? It’s opportunity knocking.