Few Terrell residents know they live in a land of OZ, but you won’t see flying monkeys here or an Emerald City. The purpose of this OZ is to lure the green of investment dollars.
In financial world parlance, OZ is shorthand for Opportunity Zone. A large swath of Terrell is situated among three.
OZs spring from the Tax Cuts and Jobs Act of 2017, which restructured the federal tax code.
An OZ is an economically distressed or historically underserved area where new investments –
under certain conditions – may be eligible for preferential tax treatment. Local opportunity zones were designated by the state. OZs are an incentive to move capital across America in a more inclusive fashion to locales where it traditionally would not go.
The Economic Development Corporation (EDC) of Terrell has retained Manassas Capital to guide the process of attracting OZ investment to Terrell. As part of that process, a local steering committee has been formed to suggest projects that would benefit Terrell. The City of Terrell, EDC, Chamber of Commerce, PADIC board (Parks and Downtown Improvement Corp.) and Terrell ISD made appointments to the committee. The school board on Tuesday appointed Reginald Pegram, and he joins City Councilman Tim Royse, Robert Messer of American National Bank, realtor Matt Oakley, and Chamber chairwoman Kim Britton.
EDC President Ray Dunlap explained that OZs were established to give capital markets an incentive to invest in underserved areas. Investments are made through opportunity funds, which accept capital gains money. An investment must be made for a minimum of seven years, which reduces tax hits and prevents early cash outs. A 10-year investment can essentially wipe out any taxes on a money-making OZ investment, according to an article in Forbes.
Dunlap recently told the PADIC board that in the next month or so, invitations will go out to people who need to invest their capital gains, and then Manassas Capital “will make the pitch to them to invest their money.” Dunlap and Terrell City Manager Mike Sims will act as liaisons between Manassas and the steering committee. Dunlap and Sims hope to bring a plethora of potential projects on which to make recommendations, Dunlap said.
Nobody can force opportunity funds to make an investment because they comprise private money. “They’re looking to get a return on investment. They understand there are risks; however, they’re going to want to get the reward,” noted Dunlap.
For example, he painted a scenario in which the city or EDC purchased a downtown building to renovate and convert into office space. The city could then sell it to an opportunity fund, which would bring in private investors.
The hope is that momentum will build for investment in a Terrell OZ much as it did with the Crossroads development, said Dunlap.
PADIC board chairwoman Tori Lucas noted that investment money wouldn’t necessarily have to come from Terrell; it could come from anywhere. She also pointed to the advantage Terrell has over competing cities not in OZs.
The best OZ projects are ones that bring jobs and lasting value to a community.
Some communities, Lucas said, have sought OZ investments for communitywide endeavors such as grocery stores.