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The Opportunity Zones program was enacted as part of the 2017 federal Tax Cuts and Jobs Act and is designed to drive long-term capital investments into low-income rural and urban communities. This federal program provides opportunities for private investors to support investments in distressed communities through participation in Qualified Opportunity Funds. Investors can defer paying federal taxes on capital gains reinvested in Qualified Opportunity Funds that invest in low-income communities, under rules released by the U.S. Department of the Treasury. Reinvested capital gains are deferred from taxation until exit from a Qualified Opportunity Fund or December 31, 2026, whichever comes first. However the original gains reinvested in Qualified Opportunity Fund investments held for the long term are taxed at reduced rates, with taxable gains discounted by 10% at the 5-year mark and by an additional 5% discount at the 7-year mark. Any new gains from Qualified Opportunity Fund investments held for at least 10 years will be permanently excluded from the capital gains tax.
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Successfully doing so could mean revitalization of the city’s most impoverished areas and improved quality of life for young families and senior citizens.
Officials are looking to secure investors for the city’s economic opportunity zone amidst an “extremely competitive” market.
Officials say they have homed in on seven sites that could be attractive to real estate investors and note the city must proceed “aggressively” to take advantage of the economic-development program.
Successfully doing so could mean revitalization of the city’s most impoverished areas and improved quality of life for young families and senior citizens, according to Mayor Barry Conaway.
Opportunity zones were established by the federal government’s 2017 Tax Cuts and Jobs Act as a way to promote long-term economic growth and job opportunities in lower-income communities.
Burlington City was one of five municipalities in the county, and 75 in New Jersey, to be approved for the program last year. Portions of Palmyra, Pemberton Township, Riverside and Willingboro also were approved for the designation.
Riverside already has approved two opportunity zone projects and has a third in the works. Should Pemberton proceed with redevelopment of the Browns Mills Shopping Center, it would be the township’s first opportunity zone project.
Burlington City’s opportunity zone is primarily within the New Yorkshire neighborhood. It is bounded by the Delaware River to the north, Assiscunk Creek to the east, northbound U.S. Route 130 to the south and High Street to the west. Only towns or census tracts with poverty rates over 20% or where the median family income is less than 80% of the area’s median family income were eligible.
In April, the city hired consultant Triad Associates to help profile the opportunity zone and develop a range of projects that would be viable for investors and appealing to residents.
Overall, according to Triad’s report, it’s crucial that Burlington City clearly define what it has to offer and how the city will work with developers and investors.
The report also noted that the relatively low proportion of city-owned land could present a development challenge. Of the 1,074 lots in the opportunity zone, about 16% are city-owned.
Potential projects and locations identified in the report include:
A 2.3-acre parcel currently used for public parking, at the corner of East Union and Stacy streets. Potential projects: Ground-level parking with residential units on second floor.
A total of 2.6 acres, including a public parking lot and adjacent privately owned property, near the corner of East Pearl and Taham streets. Potential projects: Mixed-use possible, but residential more appropriate; any project would need to match the existing character of the surrounding Historic Yorkshire neighborhood.
Former New Jersey Armory site, 1.2-acre lot on High Street between Belmont and Wall streets. Potential projects: Could be incorporated into the municipal complex, or swapped with another municipal site making that site available; alternatively, city could purchase the property and put it up for sale.
Nine municipally owned lots, totaling 0.7 acres, near the southwest corner of Clarkson Street and Linden Avenue. Potential projects: The city anticipates the property will be developed with 50 affordable senior apartments as proposed in the New Yorkshire Redevelopment Plan.
Three properties — the city public works garage, public works parking and former PSE&G site — totaling 1.5 acres near the intersection of Federal and Wall streets. Potential projects: If public works was relocated, the properties could be combined and would likely be large enough to accommodate a mixed-use development with professional office space, retail and residential.
Dozens of small, municipally owned lots scattered through the New Yorkshire neighborhood. Potential projects: Affordable housing.
Interior corridor between Route 130 north and Route 130 south, totaling about 15.6 acres of mostly privately owned land. Potential projects: Commercial development including restaurants, convenience stores, car dealerships, service businesses and retail stores.
Conaway said he’s excited about the projects explored in the report and said with “the right push” all are viable. The mayor said he’s particularly interested in development of the municipal lots at Clarkson Street and Linden Avenue, which previously were suggested as a location for age 55 and older housing.
“I know that our seniors need decent housing,” Conaway said.
City officials’ push for development in the opportunity zone follows a recent wave of projects near the city’s riverfront.
Work is underway on the mixed-use Pearl Pointe project at High Street and Pearl Boulevard, while the 1 million-square-foot Amazon fulfillment center at the former U.S. Pipe and Foundry property began operations last month. Two additional projects are in preliminary planning: The proposed Burlington Dream project would bring mixed-use development to the McNeal Mansion Redevelopment Area, and the proposed Riverwalk Station would redevelop the Commerce Square Redevelopment Area with up to 1,100 apartments.
Conaway on Wednesday said that as the city moves forward, it will be important to find investors with social conscience.
“Opportunity zones should enhance not just the investor, but the community and stakeholders,” Conaway said.
″(Investors) should want to improve the lives of people living here” in addition to receiving tax benefits, he said.
The opportunity zone program allows investors to defer taxes for investing unrealized capital gains into “opportunity funds” that can be tapped for development or business expansion in the designated zones. Investors also are eligible for substantial tax breaks on those projects, under the program.
Officials will discuss the opportunity zone report at a public meeting later this month.
Conaway said he hopes the meeting will raise awareness about a program which “will have a potentially big impact in all areas of the city of Burlington.”
The meeting is scheduled for Sept. 24, 7-10 p.m., in City Council Chambers, 525 High St., Burlington City.
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