‘Opportunity’ seen for Vergennes

VERGENNES — A new federal program could help the economy in Vergennes, and 16 other communities in Vermont and thousands around the nation, but details are still being worked out and its impact is not yet known.
What is known is that this spring the Vergennes City Council successfully applied through the Vermont Agency of Commerce and Community Development to become a federally recognized “Opportunity Zone.”
In turn, that means that qualified investors who create “Qualified Opportunity Funds” can get tax breaks if they invest in economic development projects in an Opportunity Zone.
Other Vermont Opportunity Zones include all or parts of Barre City, Bennington, Brattleboro, Burlington, Johnson, Lyndon, Newport, Randolph, Rockingham, Royalton, Rutland City, St. Albans City, St. Johnsbury, South Burlington, Springfield and Winooski.
According to the Vermont Agency of Commerce, December’s Congressional Tax Cuts and Jobs Act established the ability to create Opportunity Zones and funds.
Those zones and funds are, according to the agency website, “aimed at increasing private investment in low-income census tracts … Investors in these zones will receive preferential tax treatment when they invest in a newly created ‘Opportunity Fund.’”
The rules are still being written, according to state officials, and no projects in Vermont have been backed with an Opportunity Fund that would allow them to see how well the program might work.
“It’s really new, so it’s going to be hard to have that kind of measurement yet,” said Gary Holloway, the agency’s Downtown Program Coordinator.
The agency website includes a link to IRS Frequently Asked Questions about the Opportunity zones and funds. The process sounds simple on one end:
“To become a Qualified Opportunity Fund, an eligible taxpayer self certifies. (Thus, no approval or action by the IRS is required.) To self-certify, a taxpayer merely completes a form (which will be released this summer) and attaches that form to the taxpayer’s federal income tax return for the taxable year.”
Vergennes Mayor Renny Perry, also the president of the Vergennes Partnership, a public-private group that works to boost the city’s economic health, believes the program can be helpful to his city, and he introduced it to the city council this spring.
But he doubts it will be quite that easy as that FAQ answer makes it sound once the feds finish writing the laws.
“They haven’t fully developed all the regs how do it,” Perry said. “I’m sure there will be a lot of regulation to come.”
And there are limitations, said Perry, who attended a June Agency of Commerce seminar on the topic. One is there will be legal and application costs that will mean only larger projects will work under program guidelines — he could only think of one in the pipeline for which the Opportunity Zone designation might be helpful.
 “There is potentially one project it may work for, but we haven’t pursued it in detail at this point,” Perry said. “You have to have a relatively significant project to use because there is a fair amount of legal work that has to be done, and it can be expensive.”
On the positive side, Perry said many types of businesses would fit under the Opportunity Zone umbrella.
“Say there was some company that wanted to come in and manufacture something. Or there is an existing company that already manufactures something or produces something and wants to expand significantly in order to do better business, bigger business, those kinds of things, and there is a wide range of them,” he said. “It’s not overly restrictive from that aspect.”
For example, the recent Shacksbury Cider expansion on Main Street from Kennedy Brothers into the former Denecker Chevrolet property is a theoretical example of the kind of project an Opportunity Fund investor could back, he said.
“It would seem something like that could work,” Perry said. “Something along those lines, in my estimation, could probably fit. The question would be how much money is involved, to make it worth making the investors invest.”
Exactly how much is only speculation until the guidelines are made final. 
“As I recall at the seminar, the examples they gave were, ‘If there were $1 million in investment,’” Perry said. “Now I don’t know if that’s the cutoff or if they just used that as the example. But it has to be probably at least in the hundreds of thousands, maybe into the $1 million or more, before it looks like something that would work with all the financial and legal work that has to be done.”
Overall, Perry is optimistic the Opportunity Zone designation can be useful for Vergennes.
“It is another tool that can be offered. When something comes along, the more things we have potentially available to interest a company to come into Vergennes and for us to do something for them the better off we are. And this is just one of them,” he said. “The fact that we can offer it helps us, I think.”
Andy Kirkaldy may be reached at [email protected].

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