Portions of the Humboldt Industrial Park and Valmont Industrial Park received Federal Qualified Opportunity Zone (QOZ) designation from the Pennsylvania Department of Community and Economic Development. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains.
The passage of the Tax Cuts and Jobs Act in December of 2017 enabled Pennsylvania Governor Tom Wolf to designate certain tracts of land as Opportunity Zones based on economic data, recommendations from local partners and the likelihood of private-sector investment in those tracts.
Consideration was given to population centers throughout Pennsylvania that have the potential for investment. Selection criteria also looked at whether future development in the tract would build on previous and ongoing public investments in infrastructure.
CAN DO President and CEO Kevin O’Donnell said, “We were delighted to learn that Governor Wolf selected sections of our Humboldt and Valmont industrial parks for inclusion on the Qualified Opportunity Zone list. Our staff spent considerable time advocating to the Governor’s office why we felt Greater Hazleton was a prime location for this program. With the continued rise in our speculative building development as well as the land development approval process we are working through on several pieces of property, the addition of this QOZ designation makes our parks an ideal location for companies that are looking to establish another facility.”
Governor Wolf selected nearly all of Humboldt Industrial Park and portions of Valmont Industrial Park, as well as parts of downtown Hazleton, to be included in the Qualified Opportunity Zone and the designation received federal approval.
Private investment in Opportunity Zones can flow through Opportunity Funds. The program will allow U.S. investors to receive a temporary tax deferral and other tax benefits when they reinvest unrealized capital gains into Opportunity Funds for a minimum of five years.
According to information from the IRS, Opportunity Zones were designed to spur economic development by providing tax benefits to investors. First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026. If the QOF investment is held for longer than five years, there is a 10% exclusion of the deferred gain. If held for more than seven years, the 10% becomes 15%. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in the basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.