Opportunity Zone Targets Investors, Jobs

VILLAS – Lower Township could be on the verge of significant economic growth if a program offered by the state takes off. 
Lower Township and Cape May County agreed to split the $25,000 cost of a matching grant to pay for a study of industries that would economically benefit from the proposed “Tech Village” at the Cape May County Airport through a resolution that was passed at the Dec. 17 Lower Township Council meeting.
As previously reported, the “Tech Village” plan calls for a 20,000-square-foot building to be erected that overlays the existing commercially-zoned 14-acre former Everlon site.
The buildings that would initially house four tech companies and employ 130 people are designed to retain an aviation aesthetic that resembles aircraft hangars. The building is projected to cost $6.5 million.
The long-term plan calls for additional buildings to be constructed as the local aerial systems (drones) business environment develops over the next few years.
The Department of Treasury has designated the airport and surrounding area as an Opportunity Zone that would provide federal tax benefits for entrepreneurs who invest in the zone.
An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the U.S. Treasury secretary.
The nomination is based on the median income of residents in the municipality.
According to the New Jersey state website regarding the zones, 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. Zones in Wildwood and West Wildwood are also part of the program.
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 Dec. 31, 2026, whichever comes first. However, gains from Qualified Opportunity Fund investments held for the long term are taxed at reduced rates, with the rate reductions increasing at the five, seven, and 10-year marks.
Gains from Qualified Opportunity Fund investments held for at least 10 years are permanently excluded from the capital gains tax.
The legislation that would boost the economic development of the area was conditionally vetoed by Gov. Philip Murphy, who has asked for a detailed report of specific industries that would benefit from the legislation before signing off.
The township has secured a matching grant of $25,000 from the New Jersey Department of Agriculture to develop the required plan for the site.
The resolution would split the $25,000 grant match with each entity (county and township) paying $12,500.
Lower Township Deputy Mayor Frank Sippel said the plan would be developed with input from the township, county and several other entities including the New Jersey Economic Development Authority, Delaware River and Bay Authority, South Jersey Economic Development District, Cape May County Chamber of Commerce, Cape May County Vocational-Technical High School, Atlantic Cape Community College and local business leaders.
Lower Township Manager James Ridgway updated council at the Dec. 17 meeting about a Dec. 12 meeting he attended of more than 100 South Jersey business leaders and government officials in Camden for an Economic Development seminar on the new program, hosted by the Southern New Jersey Development Council (SNJDC).
The panel discussed the latest regulations, mechanics of opportunity zone investing, tax implications and how to better prepare communities for investments.
“The Opportunity Zone program is looking for shovel-ready projects that need funding now,” said Ridgway. “This will foster job growth and economic growth in the township.”
Ridgway said the zone would include the airport complex and extend to Bayshore Road.
The township had hired James Rutala of Rutala Associates to assist in the development of the program.
To contact Carl Price, email cprice@cmcherald.com.