Tim Sullivan, the CEO of the state Economic Development Authority — Photo by Edwin Torres/Governor’s Office
By Joshua Burd
The state Economic Development Authority is offering $500,000 in grant funding to help municipalities and counties draw investors to federally designated Opportunity Zones.
The EDA announced last week that it has launched what it calls the Opportunity Zone Challenge Program, a competitive offering aimed at supporting the communities that have the designated census tracts within their borders. The program will award five grants of up to $100,000 each for municipal or county governments seeking to fund financial and technical planning around the Opportunity Zone program, which offers favorable tax treatment to investments in those areas.
New Jersey is home to 169 Opportunity Zones, which span 75 municipalities across all 21 counties. The authority said it will also consider partnerships of two to five municipalities whose applications demonstrate a clear strategic plan to build investment capacity in their Opportunity Zones.
“New Jersey’s Opportunity Zones have the potential to transform struggling communities that investors have overlooked for years into thriving centers of employment, economic growth and development,” said Lt. Gov. Sheila Oliver, who also serves as commissioner of the state Department of Community Affairs. “The Opportunity Zone Challenge Program is a key component of Governor Murphy’s plan to empower municipal and county governments with the resources and tools they need to attract the right investors to their communities.”
Created under the 2017 Tax Cuts and Jobs Act, the Opportunity Zone program is a federal incentive for investors to reinvest unrealized capital gains into dedicated Opportunity Funds. Capital in the funds must be invested in Opportunity Zone businesses or real estate projects for between seven and 10 years in order to unlock the full tax benefit.
EDA officials noted that the program is meant to draw capital to distressed or underserved communities, but many local governments are challenged when it comes to executing on those projects. The Opportunity Zone Challenge Program is designed to address that problem by encouraging communities to develop specific plans to guide their pursuit of Opportunity Zone-based investments.
“The Federal Opportunity Zone program is a unique tool that communities can use to drive long-term, transformative investment in the most underserved areas of our state, and the NJEDA is committed to helping municipalities and counties benefit from the opportunities it provides,” said Tim Sullivan, the authority’s CEO. “The Opportunity Zone Challenge Program will jumpstart community-led revitalization in these areas by providing the resources communities need to catalyze investment in their Opportunity Zones.”
As part of the grant application, applicants must prepare a proposal that includes steps they will take to attract Opportunity Zone investments, according to a news release. Examples include preparing a financial or marketing prospectus to showcase an Opportunity Zone’s benefits to investors, engaging in feasibility planning for Opportunity Zone-focused development or considering zoning, code and regulatory reforms to streamline the approvals process in Opportunity Zones.
Proposals must include specific deliverables that can be fully completed within six calendar months of the date the EDA and the recipient execute a grant agreement, the news release said. As part of the application, applicants must also designate at least one strategic partner whose external expertise they will use to best achieve the challenge’s goals.
The final plans that are developed using the Opportunity Zone Challenge grant funding are expected to be detailed strategic plans that will guide a community’s approach for attracting investments, the EDA said. With the benefit of these plans being completed, local government entities will be better positioned to implement their strategies based on the community’s unique needs and vision for long-term, socially responsible growth.
“The federal Opportunity Zone program is a chance for communities that have been overlooked to finally attract the types of investments they need to unlock their full potentials,” said Leslie A. Anderson, CEO and president of the New Jersey Redevelopment Authority. “The Opportunity Zone Challenge Program is important because it will not only incentivize these communities to take a proactive approach to attracting investments through the Opportunity Zone program, but it will also provide the resources they need to execute their plans.”
