UNION COUNTY — US House of Representatives Fifth District Rep. Ralph Norman says that a program that will encourage business to invest in Union County’s “opportunity zone” can help the county to grow again if the county will make the effort to recruit and support that investment.
On Friday, March 23, Gov. Henry McMaster announced the nomination of 135 Opportunity Zones throughout South Carolina including one in Union County.
According to the South Carolina Opportunity Zone website (scopportunityzone.com), Opportunity Zones “are a new community development program established by Congress as a part of the Tax Cuts and Jobs Act of 2017, they are designed to encourage long-term private investments in low-income communities. This program provides a federal tax incentive for taxpayers who reinvest unrealized capital gains into ‘Opportunity Funds,’ which are specialized vehicles dedicated to investing in low-income areas called ‘Opportunity Zones.’”
The opportunity zone in Union County nominated by McMaster, its potential impact on the county, and what local officials can and must do to help maximize that impact was the subject of a visit by Norman to the Spartanburg Community College — Union Campus Tuesday afternoon.
“This is something to be excited about,” Norman said. “This is such an opportunity because business is what will make Union grow again.”
The Opportunity Zone website states that the program “offers investors the following incentives for putting their capital to work in low-income communities:
• Investors can roll existing capital gains into Opportunity Funds with no up-front tax bill.
• A 5 year holding increases the rolled-over capital gains basis by 10%
• A 7 year holding increases the rolled-over capital gain investment basis 5% for a total of 15%
• Investors can defer their original tax bill until December 31, 2026 at the latest, or until they sell their Opportunity Fund investments, if earlier.
• Opportunity fund investments held in the fund for at least 10 years are not taxed for capital gains.
“This is an opportunity for the private investor to invest dollars and get a tax break,” Norman said.
While the opportunity zone offers private business a powerful incentive for investing in the nominated area, Norman said the local community must get involved to ensure that investment occurs. Norman said local officials must do the preliminary work necessary to attract business, including ensuring the area has the needed infrastructure — water, power, sewage, gas, roads — adding that President Trump is planning to allocate up to $1.3 trillion over the next 10 years for infrastructure. He said those federal funds, however, will require matching funds from the state and local levels and he urged the local officials present to take this into consideration and plan accordingly.
Norman also urged the local government and economic development officials and business representatives present to also focus planning for the kind of development that will truly benefit the community.
“Encourage quality development, the kind of development that increases in value, and brings in more business, that breeds activity,” Norman said. “Start planning for development that will fit the community.”
Norman also said that once it is determined what kind of development is needed and wanted, the next is to go out and recruit it, recruit the businesses that produce that development. He said that recruitment must focus on showing the businesses being recruited how investing in the opportunity will benefit both them and the community.
“You’ve got to recruit them, you’ve got to go after them,” Norman said.
Norman concluded by again urging the officials present to take full advantage of the opportunity zone as a tool for the recruitment of new investment, new business, and new jobs for Union County.
“This is exciting, this is a real opportunity,” Norman said.
The site in Union County nominated by McMaster as an Opportunity Zone is “Tract #45087030100” which, according to a press release issued by Norman’s office, encompasses parts of Union.
It offers the following information about the tract:
• Population 2,186
• Population — White 1,248 (57.1%)
• Population — Black 847 (38.7%)
• Population — Other 91 (4.2%)
• Poverty Rate 23.4%
• Labor Force Participation Rate 47.7%
• Unemployment Rate 4.4%
• Median Household Income 30,806
It states that “the zones themselves are to be comprised of low-income community census tracts and designated by governors in every state. South Carolina designated 25 percent of qualifying census tracts as an Opportunity Zone. Qualifying Zones are based on the 2011-2015 American Community Survey.”
The website states that the Opportunity Zones nominated by McMaster are pending approval from the US Department of the Treasury.
Charles Warner can be reached at 864-762-4090.