Local Communities Could Benefit from Tax Incentive Program for Investors

By Jason Togyer
The Tube City Almanac
June 20, 2018
Posted in: Announcements

Shown in blue are "qualified opportunity zones" in the Mon-Yough area approved last week by the U.S. Treasury Department. The zones provide tax benefits for investors who have earned profits from stocks, bonds or real estate. (Map courtesy Pennsylvania Department of Community and Economic Development.)

McKeesport, Duquesne, Glassport and North Versailles Twp. may benefit from a new federal program designed to encourage investors to spend some of their profits on business development in impoverished communities.

Last week, the U.S. Treasury Department accepted a recommendation from Pennsylvania Gov. Tom Wolf to designate 300 different census tracts across the state as "qualified opportunity zones."

The opportunity zone program, created in 2017 under Congress' sweeping year-end tax reform legislation, allows investors who have profited from "capital gains" --- the sale of stocks, bonds, real estate or other investments --- to postpone or eliminate some of their taxes on those profits if they invest in an "opportunity zone."

“I’m excited to see us move forward with this program,” state Rep. Austin Davis said. Nine census tracts in Davis' 35th Legislative District are included in the program.

“Infusions of capital into these distressed areas could make a huge difference to residents in terms of jobs and housing opportunities,” he said in a prepared statement. “Our hardworking Pennsylvania families deserve the hope and promise that revitalization can bring.”

In April, the state submitted a list of census tracts including those where median income was lower than average; poverty rates were higher than average; or unemployment rates were higher than 10 percent.

Wolf said that he and staff from the state Department of Community and Economic Development made the nominations after gathering input from individuals and organizations across the state, and examining where areas of need intersected with potential investment opportunities.

In the Mon-Yough area, the census tracts submitted included Downtown McKeesport, Highland Grove, the Third Ward and lower 10th Ward; Duquesne, Glassport, Clairton, North Versailles Twp., Braddock, North Braddock and Turtle Creek.

The designation of the RIDC Industrial Center of McKeesport --- the former U.S. Steel National Works site --- as a "qualified opportunity zone" is welcome news to local businessman Juan Lacey, who is trying to develop an aquaponic farming operation on the property.

"We're moving in the right direction, but we still have to wait for the other shoe to drop," said Lacey, who is calling his proposal "Mon Valley Aquaponics." That "shoe" will consist of the specific rules and forms from the Internal Revenue Service that will explain exactly how investors can get the tax breaks.

In the meantime, Lacey is working with a non-profit economic development corporation based in Pittsburgh that saw a news article about his plans, and is interested in providing some start-up capital.

"The IRS is supposed to give us some sort of language that we can give to investors before the end of the calendar year," Lacey said. "In the interim, what this means is that the light is getting greener, but it's not completely green yet."

Originally published June 20, 2018.

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