Economic development and job creation
Primior CEO Johnney Zhang was a featured expert panelist for a discussion of Opportunity Zones at the exclusive Pacific Club in Newport Beach, California. The timely panel addressed the recent clarification of several regulations, which many fund providers and potential investors had been awaiting before moving into this attractive investment arena.
The Opportunity Zones program was established by Congress in the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income urban and rural communities nationwide. According to Zhang, some 8,700 Qualified Opportunity Zones have been established to help economically challenged areas through favorable capital gains tax incentives for individual investors. Opportunity Zones have now been designated in all 50 U.S. states, the District of Columbia, and five U.S. possessions.
What does this mean for commercial general contractors? Zhang shares his thoughts below.
MCS: How could commercial general contractors benefit or be part of the program as it moves forward?
ZHANG: The Opportunity Zone program will be a boon for commercial general contractors across the country, particularly in distressed areas. Because the requirements for qualification in these programs necessitate such a significant investment, there will be many new construction and high-dollar redevelopment projects.
Right now, many of these projects are in their infancy. Most are either still negotiating the purchase of the Opportunity Zone property or they are beginning the entitlement process. As developers work past these initial steps, general contractors will be engaged to begin bidding and start work.
MCS: As investors develop these areas, how can commercial GCs be in the loop?
ZHANG: Seeking out firms that are raising funds for Opportunity Zones could be a start, though they may not have selected a property yet. It’s best to seek out developers or investment funds that have made announcements about their upcoming Opportunity Zone projects. Even if a contractor has already been selected for a specific development, a developer or fund may be working on other deals that have yet to be announced.
CLOSING THOUGHT
As 2019 comes to a close, look forward to opportunities wherever they present themselves.
About the author
For more about Opportunity Zones, visit www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions.
Modern Contractor Solutions, December 2019
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