New St. Louis Hotel, Midtown Entertainment Project Among Those Getting Boost From Opportunity Zone
Date Posted: January 14, 2020
Posted In: News, Projects,
From St. Louis Post-Dispatch: Many of the region’s biggest development projects are getting a lift from a new federal law that lets investors reduce their tax liability by putting capital gains into projects in areas leaders have targeted for years.
Throughout the region, developers with projects in eligible areas, known as Opportunity Zones, are using the new tax break provision to raise more money. At the same time, those developers say, the program is helping attract new investors to St. Louis.
“I think it’s bringing people into the St. Louis real estate investment community that either haven’t been here, or maybe have been here in a limited way,” said Brian Pratt, president of Green Street St. Louis, which is in discussions with outside investors about using Opportunity Zone funds to raise capital for both its 300-unit apartment building in the Grove and the Armory office project along Highway 40 (Interstate 64).
The Opportunity Zone program, which has had bipartisan support, was added to the 2017 tax law passed by the then Republican-controlled Congress. It allowed states to designate areas with higher-than-average poverty rates or lower-than-average incomes as Opportunity Zones.
City and county leaders nominated the areas nearly two years ago, reflecting some of their development priorities: downtown, the Cortex business district, the Grove, the Dutchtown neighborhood, the near north side and riverfront, the Martin Luther King Boulevard corridor, St. Louis-Lambert International Airport, Wellston and the plant science district in Creve Coeur.
The final regulations released last month appear to make the program as easy to use as possible for developers and investors, said Michael Donovan, head of Lewis Rice’s tax practice.
“There’s been a tremendous interest from the development community in using Opportunity Zone funds,” he said. “The final rules have been extremely favorable in clarifying a number of issues that people had worried about.”