Large swaths of property in Mobile and Baldwin counties have been declared Opportunity Zones under a new tax incentive program created as part of the 2017 Tax Cuts and Jobs Act, developed to stimulate economic growth in distressed areas.
“Every governor was allowed to pick up to 25 percent of eligible, low-income places as opportunity zones,” Alex Flachsbart of Opportunity Alabama said. “It was a set formula based on unemployment, median income, poverty rates and that kind of thing. Obviously, Alabama is a very poor state and 60 percent of Alabama could have been designated, but you could only pick 25 percent of those places. [Gov. Kay Ivey] put one in every county.”
Flachsbart is the founder of Opportunity Alabama, a nonprofit organization developed to help investors understand and take advantage of tax breaks offered for investment in “tracts are statutorily-defined ‘low-income areas’ — and many of those are places where the economic recovery never reached,” its website states.
“It is designed to incentivize private investors to take capital gains and reinvest those capital gains to certain designated low-income places across the U.S.,” Flachsbart said. “Obviously, Mobile and Baldwin County have some of those designated places. It is designed to attract a new class of investor that is willing to invest in underrepresented markets and is patient with their capital.”
Investment with funds subject to the capital gains tax would allow the investor to avoid paying that tax until 2026 if it is used in an Opportunity Zone. Additionally, the investor would get a 10 percent reduction in what that capital gains tax would be.
If an investor cashes out after a few years, whatever money made on initial investments in the Opportunity Zone will be exempt from capital gains tax.
“If I put $1 million into the next Facebook and 10 years down the road it’s worth $50 million or whatever, I’m not paying capital gains taxes on how much I made,” Flachsbart said. “That’s the really powerful incentive behind this.”
In Baldwin County, there is one huge area included in the program that encompases all of the county east of State Route 59 and north of Interstate 10 all the way to Interstate 65, including the entire city of Bay Minette. The Opportunity Alabama website says there are more than 16,000 residents in the area.
Another large area in South Baldwin County is rimmed on the west by County Road 65 and on the south by County Road 12 and stretches to just east of the Foley Beach Express. It includes the city of Foley and significant road frontage along the Beach Express and has more than 17,000 residents, the website says.
In Mobile County, among 14 tracts included are downtown, the entire waterfront from Brookley Field north, the Michigan Avenue Corridor, Oakleigh/Washington Square, Toulminville/St. Stephen’s Road, northwest Mobile near I-65 and the Mobile Regional Airport.
There are a total of 158 tracts in Alabama and they are eligible for the tax incentives for 10 years, according to the federal law passed to create the plan.
This page is available to subscribers. Click here to sign in or get access.
It looks like you are opening this page from the Facebook App. This article needs to be opened in the browser.
iOS: Tap the three dots in the top right, then tap on "Open in Safari".
Android: Tap the Settings icon (it looks like three horizontal lines), then tap App Settings, then toggle the "Open links externally" setting to On (it should turn from gray to blue).