Page 32 - Innovation Delaware 2019

DELAWARE
IS RIPE FOR
INVESTMENT
Opportunity Zones have the potential to transform Wcommunities, reward investors BY MICHAEL BRADLEY
hen Tracy Shickel The Port of Wilmington is a prime starts talking about example, as it is strategically located the attractive qualities close to the Atlantic Ocean and has the of the University of largest dockside cold-storage facility
Delaware’s STAR Campus, she can keep in the country. GT USA, the Port’s
going for a while.
There is the transportation
component. And the built-in talent source at UD. And the synergy created by having so many strong science and tech minds in one place.
There’s one more thing.
“It’s also in an Opportunity Zone,” says Shickel, UD’s director of economic development.
There are 25 such zones throughout the state of Delaware, all of which were created by the 2017 Tax Cuts and Jobs Act to allow investors to shelter from taxes some of the money they invest, the better to help under-resourced communities and give fledgling companies some working capital.
In addition to STAR Campus, Opportunity Zones include the Port
of Wilmington, the northern portion
of Milford and several Downtown Development Districts in all three counties. More than 90,000 Delawareans live in the zones.
“Opportunity Zones offer diverse and interesting possibilities to investors,” Shickel says.
30 DelawareBusinessTimes.com
operator, committed in 2018 to investing $580 million in upgrading the port, which will include more than doubling its existing container capacity.
SAVINGS FOR INVESTORS
Patty Cannon, the director of special projects for the Delaware Department of State, Division of Small Business, explains that the zones are perfect
for people who have had capital gains on sales of investments and want to mitigate their future tax burdens. If the proceeds from a stock sale fund
a project in a zone, the investor can shelter 10% of the total, should he or she stick around for five years. After seven, the amount swells to 15%. After 10 years, any proceeds from a cash-out of the investment are not subject to capital gains tax. That can lead to some sizable savings.
An example cited in Forbes showed that someone who invested $1 million in an Opportunity Zone in 2018 could by 2026 — assuming an appreciation in value of 8% a year — have between $500,000 and $700,000 more than
TRACY SHICKEL
the person making a conventional investment, depending upon state tax rates. That’s a pretty good deal, and in Delaware there are ample opportunities to take advantage. Jeff Flynn, director of economic development at the City of Wilmington, can cite plenty of parcels that qualify in his city.
“There are a couple of office
buildings that are ripe for conversion
to residential,” Flynn says. “There are former industrial sites on the outskirts of the city that can be developed into homes
JIM COARSE/MOONLOOP PHOTOGRAPHY