As states begin to compete to create the most attractive Land of OZ to lure investors and create new businesses and jobs, the state of Washington and the Port of Seattle have taken key steps in the past few weeks that could put them at the front of the pack employing the benefits of new federal tax law.
OZ refers to what is officially called Qualified Opportunity Zones that come about under the Tax Cuts and Jobs Act of 2017. The QOZ provision in the legislation approved by Congress will permit those owing capital gains tax to delay, reduce or even totally avoid those taxes by investing in special funds designed to start businesses and provide other steps to help economically distressed communities.
Virtually every major accounting or law firm or wealth management company in the country has been inviting clients and prospects to learn all about the details of what have become known simply as Opportunity Zones, or OZ.
And while the message in many of those explanatory sessions by professional firms has been the prospect to create funds for investment in real estate projects, funds could be particularly appropriate for energizing the prosperity of small and diverse firms that have not had access to equity capital to grow and expand.
And that's where the recent separate initiatives by the State Department of Commerce and the Port of Seattle come into play in a manner that gives this region a leg up in that competition among states for attracting new investment to job creation.
The development for the state was Spain's first-ever Memorandum of Understanding with a state to promote economic cooperation to benefit trade relations and boost business opportunities for small and medium-sized businesses in both Spain and Washington State.
The agreement was signed in Madrid March 1 between Lisa Brown, the new director of the state Department of Commerce, and Maria Pena Matcos, chief executive officer of the public agency attached to Spain's Ministry of Industry.
The Port of Seattle's initiative was issuing a "Request for Qualifications" for a $200 million renovation of 29 acres near Pioneer Square in Seattle to provide for the port's fourth cruise ship berth that would accommodate super-size cruise ships.
That parcel, for which the Port is seeking a partner, is located within an Opportunity Zone that extends across the property on which T-Mobile Stadium and CenturyLink Field are located and extends into the International District.
The Port's Request for Qualifications intriguingly contains the sentence: "It should be noted that Terminal 46 is located within a Qualified Opportunity Zone," suggesting it intends to use the tax-break incentive in seeking to attract a wide array of businesses to develop on the site, or nearby.
So what kind of developments are being created in other regions with Opportunity Zone funds? A potentially appropriate example was the announcement by a Scottsdale, AZ, based wealth development company called Caliber of plans for a new hotel development at Tucson Convention Center, which is in a designated OZ.
For Ralph Ibarra, president of DiverseAmerica Network, the agreement with Spain and the Port's announcement represent important steps to dramatically benefit small and diverse businesses.