Here are the 4 Tri-Cities’ $48.6 million Opportunity Zone Projects, so far

Another information meeting on Opportunity Zones is scheduled at Meadowview Resort and Convention Center on Dec. 11.

According to the Mastered in Tennessee website, there are currently four Opportunity Zone projects in the Tri-Cities area. The projects, business type, and value are:

Town Park Lofts – Kingsport – $39.4 million. This reflects the developer’s sale of The Lofts to Maxus Realty Trust. The Lofts is a luxury apartment complex on the edge of downtown Kingsport.

Appalachian Highlands Resort – Erwin – $8.8 million. This project is identified as a 20-acre, 871,200 sq. ft.  real estate operating business in the hospitality sector.

Connect Outdoors, Inc. – Johnson City – $1 million. This operating business is in the outdoor recreation, technology, and analytics sector. The firm’s website announces itself and an online platform connection user to the outdoors by using data, technology and unique experiences.

Agatha – Johnson City – $200,000. The firm’s Twitter tag describes it as a who-done-it game where you walk (run, etc.) in real life to make progress in the game.

A recent GlobeSt.com report says investors are getting realistic about Opportunity Zones. It said Opportunity Zone funds have raised less than 15% of their goals. “The 103 funds set up to invest in Opportunity Zones, have raided a combined $3 billion of the $22.7 billion they seek.” The report’s bottom line is individual developers have realized that while Opportunity Zones can sweeten some deals, they don’t work for all.

Individuals interested in the event can make a reservation at https://www.eventbrite.com/e/appalachian-highlands-opportunity-zone-road-show-tickets-81391559345

There area 20 designated Opportunity Zones in the Tri-Cities area counties of Carter, Greene, Hawkins, Johnson, Sullivan, Unicoi, Washington TN and VA, and Bristol, VA.

Opportunity Zones are a construction of the Tax Cuts and Jobs Act of 2017. They are meant to spur investment in undercapitalized communities. Any corporation or individual with capital gains can qualify. The program offers three tax benefits for investing unrealized capital gains:

  1. Temporary deferral of taxes on previously earned capital gains. Investors can place existing assets with accumulated capital gains into Opportunity Funds. Those existing capital gains are not taxed until the end of 2026 or when the asset is disposed of.
  2. Basis step-up of previously earned capital gains invested. For capital gains placed in Opportunity Funds for at least 5 years, investors’ basis on the original investment increases by 10 percent. If invested for at least 7 years, investors’ basis on the original investment increases by 15 percent.
  3. Permanent exclusion of taxable income on new gains. For investments held for at least 10 years, investors pay no taxes on any capital gains produced through their investment in Opportunity Funds (the investment vehicle that invests in Opportunity Zones).

Other than a few “sins” businesses, the Opportunity Funds can finance a wide variety of activities and projects included real estate, housing, infrastructure and existing or start-up businesses.

A more detailed explanation of the fund and projects can be found at https://www.taxpolicycenter.org/briefing-book/what-are-opportunity-zones-and-how-do-they-work


Categories: REAL ESTATE

2 replies

  1. The tax aspects of opportunity Zone investments are without dispute. The underlying aspect of the investment is still a fundamental underwriting of the cash flow and viability of the project. If those investments cannot stand on their own, OZ benefits won’t make up the ultimate loss. Find a good project, find the investors that will support it without the OZ and then locate it in the OZ. The OZ is gravy.