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Three county areas designated as Opportunity Zones; Zones in Chaves County intended to bring private investment, increase economy

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One of the three new Opportunity Zones is at the Roswell International Air Center. The zones could entice private-sector investment for hangars or other business ventures. (Submitted Photo)

Copyright © 2021 Roswell Daily Record

Local government and business leaders expect that three newly designated “opportunity zones” in the county will lure more private-sector money into the area.

“Opportunity zones draw private investment to businesses, not residential but businesses, that increase the economy, “ said John Mulcahy, president of the Roswell-Chaves County Economic Development Corp. “These tax incentives reduce the risk of investors to invest their money. I firmly believe that the path to our economic success is going to be involving private investment.”

Opportunity zones have been made possible by amendments to the 2017 Tax Cuts and Jobs Act and will give private investors up to three different types of tax incentives for investing in “distressed” areas of the United States, defined as census tracts with low incomes.

“Investors can take their money and they can either defer their taxes, reduce their taxes or eliminate their taxes,” said Mulcahy.

The local economic development group identified six potential zones in the county, with Gov. Susana Martinez announcing May 18 that three from Chaves County had been selected for the designation, which is effective for 10 years.

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Statewide, 63 zones in 22 counties have been established. A total of 249 tracts in the state met the U.S. Treasury Department criteria, and local economic leaders nominated 128 for Martinez’s consideration. She, in turn, selected the 63 tracts that were submitted to the Treasury Department.

The Chaves County zones include the Roswell International Air Center area, which is also a New Market Tax area, or an area where investors can receive federal tax credits; a South Main site consisting of two “shovel-ready” properties in south Roswell; and portions of Dexter.

Mulcahy said that he thinks the opportunity zones will make it easier to find investments to build hangars at the air center, industrial buildings at the South Main Street sites or agricultural-related facilities or railway-related businesses in Dexter.

“These are already directly linked to our economic development efforts,” Mulcahy said. “I want people to know that we are in a good spot. Even though we don’t have high median income, we have great opportunity for private investment.”

To take advantage of the zones and the tax incentives, private investors must create partnerships or businesses and utilize opportunity funds. Those funds are then used to invest in opportunity zones.

John Chavez, president of New Mexico Angels Inc. and a partner in two venture capital funds, said the Opportunity Zones are interesting possibilities for entities that have already earned capital gains through other investments.

“It is going to be a very interesting opportunity for both individual investors and funds that have done well to put capital to work and defer their taxes or not pay any taxes, depending on how long that investment profile is,” he said. “Once everything is said and done, you are going to see some interesting opportunities in rural areas. We were just working on one today up in Taos, so things are already starting to happen.”

Nationwide, individuals and groups hold $6.1 trillion in unrealized capital gains that could be reinvested in opportunity funds, according to congressional testimony by John Lettieri, one of the founders of the Economic Innovation Group of Washington, D.C.

He also said that the funds are attractive because they offer investors flexibility in the type of projects, investment vehicles and areas where they can invest and because there are no caps on the size or limits on the number of investments.

Officials with the city of Roswell and Dexter said that they are hopeful that the Opportunity Zones will be important tools for business and job growth.

Dexter Mayor Mitch Daubert said he has had an initial meeting with Roswell-Chaves County Economic Corp. leaders and is now in the process of identifying potential projects that could be funded.

“We are hoping with the rails here, the sitings, to bring in some new businesses that might be able to use the sitings,” Daubert said, adding that business projects also might be developed on farmland that has had its water rights sold.

Roswell City Manager Joe Neeb said that he views the two Opportunity Zones in the city as “strategically important” to the city’s growth plans and that the next step involves planning how to attract investors to the zones.

“Roswell will be side-by-side with the EDC in the planning of the zone,” he wrote in an email. “This team approach also will include Chaves County, our local legislators, the state EDC and our local business community. Roswell’s economic success comes from the strength of these partnerships, and it is anticipated that the Opportunity Zone designation for these areas will be beneficial for the entire region.”

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 310, or at reporter02@rdrnews.com.