The White House is now well-aware of how opportunity zones can succeed here locally, after the City of Montrose’s executive director of business innovation Chelsea Rosty met with the executive director of its Opportunity and Revitalization Council.
Rosty was a part of a Sept. 12 meeting in Denver, at which she and others from Colorado met with Scott Turner, the council’s executive director.
“The City of Montrose should have a sense of pride about how far we’ve come and what we’re doing and how we can accomplish great things even though we’re in a rural area,” Rosty said.
Turner, who was hosting several roundtable discussions in Colorado, and a group of cabinet members and White House officials have been charged with seeking the impact of opportunity zones investments.
Turner is a former NFL cornerback who played eight seasons in the league, including one with the Denver Broncos. Following that, he became a motivational speaker before being elected to the Texas Legislature. He moved into his current position in the White House in 2017.
The recent meeting discussions centered on opportunity zone success stories — and challenges in Colorado.
Rosty told Turner of the two opportunity zone successes Montrose has achieved since the initiative’s inception in late 2017. Proximity Space Inc. was one of the first businesses in Colorado to take on funding backed by opportunity zone investment.
Additionally, a sizeable piece of property within Montrose city limits is under contract with opportunity zone dollars that could result in the construction of a large number of homes in the city.
Last month, the Colorado Office of Economic Development and International Trade (OEDIT) announced that Proximity Space Inc. successfully placed an opportunity zone investment.
Funding acquired by Proximity will be used to grow the company’s network of independent coworking spaces, CEO Josh Freed previously said. Proximity’s software and hardware solutions help coworking spaces manage operations such as membership billing, conference room booking and remote door access.
The coworking business is working on expanding its network to companies all over the world.
Proximity’s headquarters in Montrose and the business’s other site, FACTORY, in Grand Junction, both fell within designated opportunity zones under the 2017 Federal Tax Cut and Jobs Act. Additionally, the investment in Proximity is believed to be one of the first opportunity zone investments made directly into a business, according to OEDIT.
The initial wave of investments in opportunity zones, both in Colorado and nationwide, have mostly targeted real estate developments. However, guidelines issued in April 2019 provided information on how businesses can qualify for opportunity zone investment as well.
The opportunity zones program was established under the federal tax reform legislation of 2017. It allows for temporary deferral of capital gains in the gross income for capital gains that are reinvested into opportunity funds, according to the state of Colorado.
The legislation also established a step-up in basis for capital gains reinvested into an opportunity fund. This basis increases by 10 percent if the investment is held for at least five years, and by an additional 5 percent if held for at least seven years, according to a fact sheet prepared by Economic Innovation Group, which supported the federal legislation.
In certain situations, an investment held for at least 10 years may be eligible for a permanent exclusion from taxable capital gains income.
An investor also could get a 15-percent reduction on capital gains tax and any equity that has been gained from the opportunity zone.
Turner told Rosty and others this kind of funding is paramount, as it brings in money to areas that wouldn’t otherwise get investment dollars.
“It lifts people out of poverty,” Rosty said.
Turner also told attendees there’s “a wall of money” through this program, and he believes it can change people’s lives. Opportunity zones can create jobs in areas around the U.S. where they can be hard to come by, he also said.
“It would be where economic recovery would never happen,” Rosty said. “This initiative is designed to create economic recovery and spur that into areas of our country, state and community that wouldn’t (otherwise) see it.”
Opportunity zones aren’t permanent, but they have the potential to become a lasting program through the federal government if growth continues, Turner told the attendees.
“He just implored us to keep going out there and have success for this (because) that’s the best way for this to stay,” Rosty said.
Andrew Kiser is the Montrose Daily Press’ sports/business writer. Follow him on Twitter @andrew_kpress.