City leaders are looking into how they can use a new tax incentive program in Charleston to attract businesses. The only problem is the federal government has yet to send out the final rules.
The program started in January, and Charleston announced it had four “opportunity zones.” The program will give investors a deferral on current capital-gains taxes and an exemption on gains realized on investments held for at least 10 years.
West Virginia was one of the 9,000 lower-income areas throughout the country selected for the program.
Larry Malone, director of the Mayor’s Office of Economic & Community Development, said the city, the Charleston Area Alliance and Sen. Shelley Moore Capito’s office have been discussing what would be “prime projects” for the areas.
He added it’s ultimately up to the business and property owners to take advantage of the program.
“It’s not really us,” Malone said. “It’s the owners of the property and the owners of the business that will be looking for an additional equity to the business.”
That can’t happen until the the U.S. Department of Treasury issues final rules for the program. Initially, the progress was stalled due to the government shutdown, according to The Wall Street Journal.
The last update was when the U.S. Treasurer’s office released proposed regulations in October.
“It’s a little bit of a ‘go slow’ right now until they issue the final rules,” Malone said. “Once that happens, then both businesses, property owners and the investment funds will have a greater assurance of what they can and can’t do.”
Although final details need to be worked out about the program, here’s what’s known:
- Charleston’s four locations will be on the West Side, downtown, the East End and Kanawha City.
- The zones have a mix of businesses and residences.
- There will be an exclusion of capital gains tax on the new investment as long as it is held for 10 years or more.
- Investments must be made by 2028 but can hold until 2047.
Malone said the program can benefit not only existing businesses but startup ventures as well. He said it could also help bring more national companies to the Charleston and Huntington area. He said he’s already been in talks with different businesses about investing in the opportunity zones in Charleston.
City Treasurer Vic Grigoraci said he’d like to see more education and information on the program so local businesses will know how to utilize it as well.
“I know the Charleston Area Alliance had a seminar on it, and I’d like to see more of those, so the public can learn about this,”Grigoraci said. “We need to find the heavy hitters in the area so they can recognize the benefit of [opportunity zones].”
Clarification: The original version of this story omitted information about how long the program lasts. It has been updated.