Opportunity zones set in Trumbull County

Five low-income areas to be helped for development

WARREN -- Five tracts of land in Trumbull County have been designated as "opportunity zones." Development investments are eligible for considerable federal tax incentives made available with the 2017 federal tax bill.

Investors can create opportunity funds and move capital gains to the funds to invest in property and businesses inside the opportunity zones.

In addition to a tax deferral lasting up to 10 years, 10 to 15 percent of the tax that would have been owed will be reduced if certain conditions are met, according to analysis of the program by Ohio Policy Matters.

In Trumbull County, four of the designated tracts abut in Warren, including the downtown area. In the northern tracts, parts of the Golden Triangle area are included; in the southern tracts, the industrial area stretching around Pine Avenue SE is included.

The fifth tract in Trumbull County begins south of Robbins Avenue in Niles and extends south, west of U.S. Route 422, covering much of central Girard and ending at the border with Mahoning County, where a separate Mahoning County tract begins.

The tracts were selected after locals offered suggestions to the governor, who sent them on the federal government for the final designations.

The Youngstown Warren Regional Chamber, the Eastgate Regional Council of Governments and others, such as Trumbull County grants manager Julie Green, identified the tracts most likely to be accepted and to benefit from the designation. The tracts had to qualify as low-income areas, or be adjacent to low income areas.

A quarter of the eligible tracts were selected for the program.

The rules for the program have not been finalized, but the tax breaks are expected to cost the federal government $7.7 billion, which could decrease to $1.6 billion as some of the deferred taxes are paid back, according to Ohio Policy Matters.

While there are fears the program could lead to gentrification in parts of the state where revitalization and development has already taken off -- like in certain parts of Cuyahoga and Franklin counties -- Wendy Patton, one of the authors of the Ohio Policy Matters report on the program, said the program could be a great thing in Trumbull County, which is still hurting for investment but taking steps in the right direction.

Instead of just waiting for investors to come around or allowing franchise-driven outside investors seeking profits to send to other parts of the country, the community should take ownership of the potential of the program, Patton said.

"The community should start working on setting up a fund for themselves to draw earnings into it. A citizen-controlled opportunity fund to drive locally controlled development can lead to the types of locally owned things that make people feel hopeful about their community and add to some of the other healthy development that is already in the works," Patton said.

The fund could help build on recent developments in the Courthouse Square area in downtown Warren, Patton said, like the recent additions of Nova Coffee Co. and Modern Methods Brewing Co.

"The development so far in downtown Warren sounds local. It sounds like the type of development that is serving people and sustainable, that is driving traffic to the area again. This type of local stuff is the type of thing that can rebuild downtown without fear of gentrification," Patton said.

By creating local funds, profits can be maximized to improve existing neighborhoods by creating home rehabilitation programs, Patton said.

But in order to really benefit the residents living in low-income areas, larger scale development that can offer many jobs to replace recent and older job losses should also be a goal, Patton said.

"People living in low-income communities typically need stable jobs and stable income, so businesses that actually create local jobs and community oversight to make sure jobs are going to local people would be highly appropriate as business and real estate development occurs," Patton said.

There is property in 15 tracts the Youngstown Warren Regional Chamber is marketing, said Lauren Johnson, manager of the 422 project and business development for the Youngstown Warren Regional Chamber

"As opportunity funds are established, we will market our zones and support eligible investments much like any other attraction project -- by providing quality information in regard to the market, available sites and buildings and connecting the company or investor with appropriate state and local resources, including available incentives," Johnson said.

"As with any project we work on, the use of state or local incentives would be tailored to the project and offered on a case-by-case basis based on factors such as job creation, new payroll and capital investment," she said.

But, Patton warns, the federal tax incentives for the program are already "very deep."

"It is our position that any new revenue that comes from the program should be retained to provide services to uplift the community, not go to financing and abatements, but it should improve and develop services like a reliable public transit system that can get people to jobs and improve schools. New revenue should be put to work solving problems, not sweetening this already sweet pot, especially if it goes to out-of-town companies and franchises," Patton said. "The revenue should be harnessed to make the community better."

Johnson said the local tax incentives the community can offer are too valuable in attracting development to leave out.

"The merits of the policy and the tax structure can always be debated, but it would be dangerous to ignore any tool bringing additional investment to the Mahoning Valley. We don't want to miss out on what could be a catalytic infusion of new capital in our community, capital that could be put to work revitalizing our neighborhoods and creating jobs for residents in the Mahoning Valley," Johnson said.

Patton said the program has the possibility of working well in the Mahoning Valley, as long as people collaborating on economic development in the area collaborate, build momentum and "keep their eyes on the prize, boosting income in low-income areas."

Johnson said the chamber believes "a rising tide lifts all ships."

"We cannot build a thriving community by merely redistributing the wealth that exists here today; we have to grow what's here and attract new investment in order to move the region forward and provide our citizens with new opportunities," Johnson said.

rfox@tribtoday.com