Robbinsdale Declared “Opportunity Zone” for Redevelopment
The 2017 federal tax law created so-called “Opportunity Zones” to encourage redevelopment in low-income urban and rural areas by rewarding investors with incentives. A portion of Robbinsdale is considered an Opportunity Zone. Robbinsdale Mayor Regan Murphy says developers have shown interest.
Hennepin County has at least 25 designated Opportunity Zones. Others are in Crystal, Brooklyn Center and Brooklyn Park. Some are calling it the largest economic tool in United States history.
“I’ve had a number of developers who have already been interested. Now they’re even more interested in Robbinsdale,” said Robbinsdale Mayor Regan Murphy. “There’s millions and millions of dollars that’s waiting to be invested.”
The Opportunity Zone in Robbinsdale is a large one. It spans from 36th Avenue to 42nd Avenue and from West Broadway to County Road 81. Opportunity Zone funds allow investors to pool their resources into housing and commercial projects. They can also use funds to rehab historic buildings.
What It Means for Investors
U.S. investors are eligible to receive:
• A temporary tax deferral for capital gains invested in an Opportunity Zone fund.
• A step-up in basis for capital gains reinvested in an Opportunity Zone fund.
• A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified Opportunity Zone fund (if the investment is held for at least 10 years)
Jamie Stolpestad with Minnesota Opportunity Zone Advisors is training cities helping them to understand what this could mean for development.
“The potential scale for this is huge,” said Stopestad. “There are estimates that the investing and opportunity act will generate as much as $100 billion of capital flowing into these funds.”
Birdtown Flats Project Uses Incentives
The Birdtown Flats is the first property in Robbinsdale to take advantage of the Opportunity Zone benefits.
“This kind of happened by chance because the Opportunity Zone came out right in the middle of this time when developer already had land under contract and was already planning to build these apartments,” said Steve Person, a Robbinsdale realtor. “This incentive just made it better for them.”
The goal of the program is to encourage long-term investing in cities like Robbinsdale. There’s incentives for that too. If investors maintain their commitment in a project for at least 10 years, there is no capital gains tax should they sell their interest in it afterward.
Robbinsdale city leaders say it is a win-win for everyone.
“We can help drive the kind of development that takes place and just kind of have a part in the game,” said Murphy.