MOUNT VERNON — The mayors of Anacortes, Mount Vernon and Sedro-Woolley gave sales pitches Tuesday on investment opportunities in their cities during a presentation on a new federal tax incentive program.
The program, established by the Tax Cuts and Jobs Act of 2017, offers tax breaks to companies that invest in economically underserved Census tracts called opportunity zones.
Last year, Skagit County designated three opportunity zones — two in Mount Vernon and one in Sedro-Woolley — and a fourth was designated by the Samish Indian Nation in Anacortes.
The presentation was hosted by the Economic Development Alliance of Skagit County.
EDASC CEO John Sternlicht said opportunity zones are one tool to attract investments in job creation and housing. The program is targeted at larger investments, with small projects ranging from $2 million to $5 million, he said.
Melissa Lafayette, assistant director of the National Development Council, said the program encourages investors to re-invest capital gains through temporary deferral of capital gains taxes through 2026, tax reductions on capital gains, and elimination of taxes on new gains after 10 years.
Investments could include new manufacturing and industry, health-care facilities, housing, research facilities, co-working spaces, business incubators and commercial real estate, she said.
Lafayette gave the example of Community Action of Skagit County, which is housed in buildings in a Mount Vernon opportunity zone. The buildings are for sale and a developer could get tax incentives, she said.
Mount Vernon Mayor Jill Boudreau said some of the city’s advantages for investors include recent improvements to transportation infrastructure and a fiber optic internet backbone.
Along East College Way, Boudreau said there is a need for new housing, especially for students. Higher density housing is needed in other areas, too, and larger pieces of land could be used for commercial development, she said.
In the downtown area, Boudreau said there is potential for development on city-owned waterfront now that the area is set to be removed from the 100-year floodplain in October.
In Anacortes, Mayor Laurie Gere said the city is looking to attract industry that fits into the maritime economy, and is building a fiber optic network for residents and businesses.
Anacortes’ opportunity zone is on South Commercial Avenue, an area Gere said looks as if it’s stuck in the 1960s.
“It’s the part of town we haven’t spent a lot of redevelopment energy on, but it’s prime for hotels, multifamily and multi-use,” she said.
Gere said Anacortes is close to passing new land use codes and zoning that will provide incentives. The changes include increased building height to develop workforce housing.
Sedro-Woolley Mayor Julia Johnson said jokingly she felt like the “little sister” next to the bigger cities, but that Sedro-Woolley has a lot to offer investors.
The city’s opportunity zone covers a large area, and includes land zoned for industrial, commercial and residential use, she said.
Johnson said with new residents in their 20s moving to town, Sedro-Woolley needs to provide good-paying jobs. The city would like to see the continued growth of industry and manufacturing, and is experimenting with new ideas, such as an urban village.
Certified public accountant Nicolo Pinoli said the opportunity zones program is the first new national community investment program in more than 15 years. Unlike previous tax incentive programs, this program has no investment limits, he said.
For investors interested in the program, there are deadlines, Pinoli said. While the investment window ends in 2027, there is a deadline at the end of 2019 for investors to reduce their capital gains by 15%, and by the end of 2021, by 10%.