When they met at Denison City Hall on June 19, Jason Mohr and Steve Eggleston made sure that members of Denison’s housing agency and city officials knew about the numerous funding sources available to them, or at least knew where to find them.
Mohr, the regional administrator for Housing and Urban Development (HUD), and Eggleston, field office director with HUD in Des Moines, encouraged the use of Rural Housing 360 and the new Opportunity Zones incentive to address the city’s housing shortage.
All of Denison plus the contiguous surrounding property is in an opportunity zone, which are areas identified as low-income census tracts.
Mohr explained the Opportunity Zone incentive is a tax break for investors. With any type of unrealized capital gain, the potential investors have 90 days to create an opportunity fund and to put at least 90 percent of that unrealized gain into the fund and find a community to put it to good use.
The investment can be for five, seven or 10 years. After five years, the investor receives a 10 percent tax break. After seven years, it will be another five percent.
“If you leave it in for 10 years, which is the smart thing to do, and if you sell that investment, any new gain from that is taken off the books, so you don’t have to pay any tax at all,” Mohr explained.
He said the Opportunity Zone incentive is different from other programs because a longer-term investment is offered.
The main purpose of an opportunity zone is to help the people who live in that zone with better jobs, better education and better housing, Mohr added.
Eggleston hopes a meeting will be set for no later than September at which representatives of opportunity zones in western Iowa can learn how to attract investors.
He added the city needs to have a firm idea of what it wants to do to reach out to the right investor.
“One thing that is important to know is that you are not in a vacuum,” Eggleston told those at the meeting. “There are multitudes of cities doing this already. There are consultants helping with the opportunity zones.”
Roger Preul, a member of the housing agency, asked if a list or website exists of people who want to invest money into opportunity zone projects.
“At this point, no, not that I’m aware of,” Eggleston responded, “but I think your concept is exactly right.”
He said this idea should be brought to the Iowa Department of Economic Authority so those state authorities can find a way to keep capital gains investments in Iowa.
Rural Housing 360 is a program in which an individual will work with an employer or employers that want to keep their employees staffed by promoting local housing.
Mohr said the only thing that is asked of the city is lots – no tax abatements or incentives.
“It’s an opportunity to look at getting some home built,” Eggleston added. “There’s a price range, and it’s a little higher than you would think for the workforce, but that would be a conversation between you and the people running the program.”
Eggleston continued that he and Mohr want to make sure that when city officials have a plan for a project they contact them.
“We can help you find that program, whether its rural development, HUD or otherwise,” Eggleston said.