By Leif Walcutt
Recent actions on the local and state level are pushing Newport forward to qualify as one of the selected areas in the state of Rhode Island to become an opportunity zone.
The Opportunity Zones program, which was part of Congress’s Tax Cuts and Jobs Act of 2017, is aimed at encouraging private investment in rural and low-income communities by using $1.5 trillion of federal tax incentives to attract and drive private long-term business growth.
“If an entity looks at investing in opportunities in a specific area and maintains their investments over a certain period of time,” said Paul Carroll, Newport’s director of civic engagement, “as they start to earn capital gains, a percentage of this total is not charged by the federal government. That’s an incredible incentive for the area.”
According to the resolution, an investor who retains a qualified opportunity zone investment for seven years will pay only 85 percent of the capital gains taxes due on the original investment.
Governor Gina Raimondo can select 25 of 78 eligible census tracts as qualified Opportunity Zones.
“I saw a different resolution for the Blackstone Valley community and my first question was, ‘Why isn’t Newport included?’” State Sen. Dawn Euer said. “We would want to invest in our community as well, so we're figuring out how Newport won’t get left behind when the state is making its investments.”
On April 12, Euer introduced a resolution requesting that Raimondo and the Rhode Island Commerce Corporation designate the city as eligible to become an Opportunity Zone. The state division of commerce submitted the application on April 27.
“There’s an ongoing effort for a number of years that the city manager and civic investment office look at projects that would create year-round jobs,” she said. “The Opportunity Zone will be helpful for civic investment projects. I do what I can on the state level to support those municipal efforts.”
One of the prospective projects for the Opportunity Zone and New- port’s North End is the Quantum Computing facility. “I think these types of jobs are the wave of the future,” Euer said.
Euer hopes it will attract investors that would partner with the community and provide opportunities for residents, as well as invest in local schools and job training programs.
“One of the things we need to do as state and municipal leaders is to promote education and job training in order to promote these types of job opportunities for residents. That to me is a huge priority,” she said.
Euer believes the Quantum Computing facility could create a significant number of jobs for the local community.
Carroll said that the emphasis of the Opportunity Zone application was for Census Tract 405, which composes the majority of Newport’s upcoming “Innovation Zones.”
“[The] majority of the innovation area is in the 405,” he said. “It’s for companies to drive economic investment into these zones for economic development.
“We see this as a really strong opportunity,” he added. “It’s a great example of the local and state working together… It’s not just about getting investment into the zones, but [in] maintaining that investment long-term.”
“Ultimately,” said Euer, “I think we need to work towards a more diversified economy that provides year-round opportunities for our residents. We need to focus on job training and education as well, to make sure Newporters are not left behind when these jobs become reality.”
The city will hear a decision on the application, 30 days from submission.