CURRENT
APPROACHES
Federal Tax Incentives
Opportunity Zones
As part of the 2017 Tax Cuts and Jobs Act, Opportunity Zones were created to spur economic development and job creation in distressed communities by encouraging private capital investment. By making timely investments in Qualified Opportunity Funds which invest in Opportunity Zone Property, taxpayers can defer and potentially reduce taxation on capital gains. The tax incentives include deferral of taxes due on rolled-over capital gain, reduction of tax owed on the rolled-over capital gain investment after five and seven years, and tax-free gains on the appreciation if sold after ten years. There are 126 designated Opportunity Zones in Colorado, and rural areas account for 40% of the designated Opportunity Zones across the country.
Source: Novogradac
New Markets Tax Credit
1. oz
2. other tax credit
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3. EU
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4. Tulsa Remote
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5. Eb-5
NMTC is a 39% federal tax credit for investment in low-income census tracts, and designated projects must have a high level of community benefit including job creation, community services, and a positive impact on the environment. Between 2003 and 2018, a total of $933.6 million in project investments created a total of 97 businesses and economic revitalization projects in Colorado.
NMTC Investment by County
Source: New Markets Tax Credit Coalition
Tax Increment Financing Districts
TIFs are designated by municipalities, and they incentivize economic development and public improvement projects in struggling areas by providing some or all of the new tax revenue generated by the project to the developer either as up front capital, or capital over time.
Low-Income Housing Tax Credit
Low Income Housing Tax Credit (LIHTC) program was created in 1986 and is the largest source of new affordable housing in the United States. LIHTC is critical to support the preservation and development of adequate affordable housing. Between 1987 (when the program was created) and 2015 (the most recent year that National Housing Preservation Database data are available), LIHTC has built or preserved around 236,000 units in almost 1,600 rural counties. For 51 rural counties, LIHTC investments have financed 12 percent or more of all county rental units.
Other Federal USDA Programs
Rural Business Development Grants
This program is designed by the United States Department of Agriculture (UDSA) to provide technical assistance and training for small rural businesses. Small means that the business has fewer than 50 workers and less than $1 million in gross revenue. Rural Business Development Grant money must be used for projects that benefit rural areas or towns outside the urbanized periphery of any city with a population of 50,000 or more.
Rural Broadband Program
According to a recent report by the Federal Communications Commission, 80 percent of the 24 million American households that do not have reliable, affordable high-speed internet are in rural areas. Rural broadband e-connectivity is the driver of more than one-third of that potential value, equal to $18 billion of annual economic improvements for our nation. In order to revitalize rural broadband access, the Rural Utilities Service (RUS), a Rural Development Agency of the United States Department of Agriculture (USDA), furnishes loans and loan guarantees to provide funds for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide service at the broadband lending speed in eligible rural areas. The current programs through the USDA offer more than $700 million per year for modern broadband e-Connectivity in rural communities with plans to add another $600 million of funding by the end of 2019. The parties who can apply for the programs include: state and local governments, federally-recognized tribes, non-profits, and for-profit corporations.
Rural Economic Development Loan and Grant Program
Provides funding for rural projects through local utility organizations. USDA provides zero-interest loans to local utilities which they, in turn, pass through to local businesses (ultimate recipients) for projects that will create and retain employment in rural areas. The ultimate recipients repay the lending utility directly. The utility then is responsible for repayment to USDA.
Rural Micro-Entrepreneur Assistance Program
Provides loans and grants to Microenterprise Development Organizations (MDOs) to help microenterprises startup and grow as well as provide training and technical assistance to micro entrepreneurs in eligible rural areas with a population of less than 50,000 people. Grants are available to provide technical assistance of up to $205,000 annually. Loans of $50,000 to $500,000 may be used for establishing a Rural Microloan Revolving Fund managed by the Microenterprise Development Organization. Total aggregate debt is capped at $2.5 million.
Select State Efforts
Colorado's Rural Startup Fund
In September 2017, Colorado’s Office of Economic Development and International Trade created a Rural Startup Fund of $9 million, with an option for an additional $3 million, to fund early-stage investment in startups in rural Colorado. The fund intends to invest in entrepreneurs who have an innovative business in agriculture, advanced manufacturing, education, health and wellness, tourism and outdoor recreation, energy natural resources, clean tech and technology, or information.
Tulsa Remote Program
Tulsa-based George Kaiser Family Foundation launched a campaign in November 2018 that offered $10,000 in cash to individuals with full-time employment and the flexibility to work from anywhere to relocate to Tulsa. The program also offered a monthly stipend of $1,000 for housing, discounted access to fully-furnished apartments and access to a coworking space. Over 10,000 professionals applied and just under 100 were accepted, all of whom moved to Tulsa in 2019. The program was so successful that they are about to open applications for 2020.