In mid-April, R.I. Commerce Corp. identified 25 low-income census tracts across 15 cities and towns in Rhode Island as opportunity zones, including Bristol’s tract 307.
The area highlighted, said Chris Vitale, community-development coordinator for Bristol, “encompasses a majority of the downtown, [including] Hope and Thames streets up to the Wood Street neighborhood with the town common and Bristol Industrial Park.”
In addition to the town common and the industrial park, which is in the process of renovations to further outfit additional corporations with operating spaces, Vitale said the tract is home to multiple small businesses.
Vitale is optimistic about the opportunity zone’s expected local impact.
“We’re hoping the town has something competitive to offer” compared to other opportunity zones in 18 states nationwide, he said.
Part of the 2017 federal tax overhaul and implemented by the Treasury Department, the opportunity-zones program welcomes the nomination of low-income census tracts, or those tracts neighboring low-income zones, for business development or expansion and real estate investment by private entities. Investments will be placed in investor-friendly opportunity funds associated with each of the tracts.
Commerce RI whittled down 100 eligible tracts to the 25 chosen with the help of each involved city and town, said Matt Sheaff, director of communications and stakeholder outreach for Commerce RI, as well as stakeholders that include the R.I. Housing and Mortgage Finance Corp., R.I. Department of Labor and Training and Grow Smart Rhode Island.
Those identified by Gov. Gina M. Raimondo were in Bristol (one), Central Falls (one), Cranston (one), Cumberland (one), East Providence (one), Narragansett (one), Newport (one), North Providence (one), Pawtucket (four), Providence (six), South Kingstown (one), Warren (one), West Warwick (one), Westerly (one) and Woonsocket (three).
The state feels private investment in these tracts in particular, per its announcement of the program, “would produce the greatest community benefit.”
On May 21, Rhode Island was notified all 25 nominated tracts were approved for entry into the program.
To date, Providence, in which the most tracts were identified, has yet to identify an individual who will implement the opportunity-zone program in the capital. While Emily Crowell, a spokeswoman for the city, and another representative declined to say whether they shared Vitale’s optimism, Crowell added in a statement: “The city looks forward to working closely with the state to maximize the benefit of this new initiative.”
While Bristol has been “active” in identifying “the needs of [current] business owners or prospective businesses coming into the community,” said Vitale, he hopes the opportunity-zone program will go beyond previous state efforts and be “another tool in the toolbox.”
He is enthused by the federal government’s reach and ability to “attract a larger audience that maybe wasn’t considering Bristol” or other small cities and towns like it.
Sheaff agreed the initiative goes beyond prior state proposals. In a statement, he said: “This program leverages federal tax benefits, which have not been available in the past,” adding that it will work in tandem with “existing” state and local investments.
Vitale’s optimism lies in two major benefits for investors. They are, per the Treasury Department: deferral on prior tax gains until Dec. 31, 2026, as long as the gain is reinvested in the opportunity fund; and an increase in basis equal to fair market value if the investment remains in an opportunity fund for one decade.
‘Economic development … takes a comprehensive plan and collaborative effort.’
CHRIS VITALE, Bristol community-development coordinator
These benefits, added Vitale, “encourage [investors] to hold onto these investments for a long time, so they’re not just putting the money in and immediately cashing out.”
As of mid-May, the Internal Revenue Service was developing a set of regulations to implement the program and determining which zones will qualify. Sheaff said Commerce RI expects to receive an outline from the IRS in the summer.
Even though the program is in its infancy, and Vitale admits he has seen little investor interest in Bristol to date, he is “confident, in the next months, we’ll get more details” and hopefully more action.
Vitale looks forward to further details from the IRS regarding the opportunity-zone program but knows this, by itself, will not be a silver bullet for Bristol’s financial recovery.
“Ultimately, I don’t think there is one thing you can point to that is going to drive economic development. It takes a comprehensive plan and collaborative effort from local, state, federal governments and partners in the community,” he said.
Wanting to “make the most” of the program, Vitale plans to market Bristol’s quality of life, including views of and activities available on Narragansett Bay, as well as its proximity to Providence and Boston, to private investors and prospective firms interested in relocating to the region.