By Tracy McNew
In late April, Governor Bullock submitted 25 Montana census tracts to the U.S. Treasury for designation as Opportunity Zones.
The opportunity for Opportunity Zone designations came from the Tax Cuts and Jobs Act of 2017. Opportunity Zones, according to the Governor’s press release are “designated to encourage long-term private investment in low-income communities.”
The census tract making up the greater part of the City of Libby was one of 106 areas of Montana eligible for the designation based on census tract information. Sixty of the areas were proposed as Opportunity Zones, and 25 were selected.
“We feel really good about being one of the Opportunity Zones,” said Tina Oliphant, Executive Director of the Lincoln County Port Authority and Kootenai River Development Council.
Oliphant wrote and submitted the City of Libby’s application.
Jennifer Olson, Division Administrator for the Community Development Division at the Montana Department of Commerce said, “An Opportunity Zone nomination provides Libby with another way to incentivize and encourage long-term investment to promote development of a community’s economy, housing, infrastructure and downtowns—all important feature to help our charming small towns be places where people want to live, work and play.”
Oliphant explained that Opportunity Zones are a national program and that each state was instructed to select 25 eligible zones.
It is clear that this designation represents an opportunity for Libby, Oliphant explained, but exact details about how the program will work are unclear.
“I would think they’ll have it organized within a year,” Oliphant said. “There are good models of other programs out there to follow.”
Federal programs such as this, she continued, if done well, can be excellent.
“These programs when deployed well are a source of funding in distressed areas or areas in great need of revitalization that are challenged to find more traditional sources of funding,” Oliphant told The Montanian on Friday, May 12.
In essence, the designation will create funds (pools of money) that are attractive for investment by private companies or individuals. This program will incentivize investors to reinvest assets, now sitting dormant on their balance sheets, with the reward of avoiding capital gains tax. That portion of the investment that represents the capital gain must be placed into an Opportunity Fund, and private investment into Libby (as an approved Opportunity Zone) is now approved to be the recipient of Opportunity funds.
While the details are still in the planning stage, Oliphant anticipates that these funds may offer more attractive credit terms, such as lower interest loans with more lenient credit requirements to support the perceived risk of investing in projects that revitalize the downtown area, build affordable housing or start or expand businesses.
These improvements, in the long run, will lead to more and better housing and employment options, and better amenities that will encourage residents to stay and encourage others to relocate to the Libby area.
One example, Oliphant said, would be the abandoned school building on Lincoln Blvd. and California Ave. This may support an attractive financing alternative for the investment into this building..
It remains to be seen exactly how Opportunity Zone funds will be managed, but Oliphant plans to keep a close eye on the program’s development so that as soon as possible this new program can be put to work to help the City of Libby.
The old school building in downtown Libby is a good example of how the Opportunity Zone designation could help revitalize Libby’s downtown. With more financing options available for buyers, the building could be transformed into modern housing units contributing to the area economy instead of standing vacant. Photo by Tracy McNew, The Montanian