Opportunity for Kalispell
Flathead Beacon | 12/2018 | Kim Morisaki |
The headline in the Beacon read “Brookings Institution names Kalispell as one of three cities in the country that have the potential to be strong centers for jobs and opportunities.” At the top of the Brookings article was a photo of our main street and the Kalispell Grand Hotel. Pretty good publicity for us. The Brookings Institution is a nonprofit public policy organization doing in-depth research for new ideas to solve problems. They see cities like Kalispell as a solution to the problem of shrinking population and fewer jobs in rural America. My experience in 2018 tells me that they are probably right.
The use of the words “potential” and “opportunities” caught my eye. Potential because it indicates that success is not a given. It implies that work and strategy are required. Opportunity because it has repeatedly come up in reference to Kalispell and the Flathead Valley this year.
Last week the community and members of Montana West were invited to our annual meeting to hear about Opportunity Zones from the keynote speaker Molly McCabe, CEO and Founder of HaydenTanner. Molly has years of experience in real estate finance, capital markets and development, but founded HaydenTanner to find practical solutions and strategies “to accelerate the emergence of resilient buildings and vibrant sustainable cities.” She calls Bigfork home and has wanted to do a project in the Flathead Valley for quite some time. Perhaps the time has come.
Molly explained the Opportunity Zone designation – the newest program from the Treasury Department created in the most recent tax reform bill. Certain census tracts in Kalispell were designated as Opportunity Zones in April making the areas on either side of Main Street eligible for investment tax credits. The program is designed to incentivize private investment in areas where investment is historically low and poverty is higher than the national average. Individuals are able to place their unrealized capital gains into Opportunity Funds that will then invest in new real estate projects or businesses.
The benefits of investing in Opportunity Fund projects are considerable. All taxes due on the capital gains are deferred until the investment is withdrawn from the Opportunity Fund. If the investment in the new project is for five years, the taxes due are reduced by 10%. If they are withdrawn after seven year, the taxes are reduced by 15%. If the investment is left in the fund for 10 years, all taxable income on the new investment have a permanent exclusion.
These tax benefits combined with the opportunity to invest in the Kalispell Core Area around the new trail are likely to spur property sales and new construction in 2019 in the area surrounding the train tracks. The tracks are scheduled for removal in 2019 and the trail will be built in 2020. The population growth and expanding businesses here indicate that there truly is opportunity for investment in high density housing, commercial buildings and mixed use – much of it facing the new trail. 2019 promises to be another year of building and exciting change bringing jobs, prosperity and increasing investment in the Kalispell Core – laying the foundation for the decades to follow. Montana West Economic Development with all of our partners is well-positioned to assist with the acceleration in investment and development. We are looking forward to 2019 and all it promises to be. If you would like to learn more about Opportunity Zones or economic development in the Flathead Valley, call Montana West at 406-257-7711.