City Advancement Officer Joe Mitchell. (WNG File Photo)
WESTFIELD – The new federal tax law, passed in December of 2017, which did away with certain tax exemptions, also created a chance for tax breaks on capital gains from investment in “opportunity zones,” designated census tracts of low to moderate income, according to City Advancement Officer Joseph Mitchell at a meeting with The Westfield News on Wednesday. Mitchell said Westfield picked two opportunity zones which were submitted in March for consideration; the downtown area, and the Turnpike Industrial Park.
In describing the tax benefit, Mitchell gave the example of an owner in Longmeadow who is renting out a building. On the net income, the owner could pay taxes, or invest in another neighborhood not doing as well, and get a tax break on capital gains in 5, 7 and 10 years.
“It’s an investment opportunity that encourages people to invest in census tracts in low to moderate income neighborhoods, like Elm Street downtown,” Mitchell said.
The Commonwealth’s only formal role in the Opportunity Zone Program is to designate census tracts as opportunity zones. Governors may designate a number of census tracts equal to 25% of the low income community tracts in their state. Massachusetts has 547, and may therefore designate up to 137 census tracts as opportunity zones.
Mitchell said he is working with Secretary Jay Ash of the Executive Office of Housing and Economic Development (EOHED), who submitted his list to the governor. Ash was looking for census tracts that have had city investment, such as the Gas Light district and the Urban Renewal Plan. Mitchell said the downtown is a strong candidate to win the designation as an opportunity zone, giving people more financial incentive to invest for investment credits, new market credits, and workforce housing credits.
Mitchell explained that because rents are lower in Westfield than in other parts of Massachusetts, these credits will help to pay the costs of building. “This is another tool that will help investors to bridge the gap to make their investment and construction fiscally sound,” Mitchell said. He also believes this will help in moving businesses to the downtown
“All the activity that’s coming in is attracting a lot of outside interests,” said Mayor Brian P. Sullivan, adding, “Based on the successes, which are making the newspaper; the grants that we’re applying for and winning are bringing heightened interest in downtown.”
Mitchell said the city should hear in a couple of weeks as to whether they’ve been chosen for the Opportunity Zone Program.
“If it gets approved, it will open up interest for a whole new market of people,” said Community Outreach Coordinator Amber Danahey.
The timing is also good, as Thomas Woodson of the Westfield Redevelopment Authority prepares the requests for proposal (RFP) for a downtown mixed-used building, part of the Elm Street Renewal plan. Mitchell said the city received a technical assistant grant of $50,000 for help in writing the RFP, and will contract with a firm out of Boston that does architecture and urban planning. He said they should hear whether they were chosen as an opportunity zone in time for this project.
At the meeting on Wednesday, Mitchell also spoke about the site readiness grant of $750,000 for the Turnpike Industrial Park which was awarded in February. The grant will be used to purchase two more tracts of land, increasing the area for the project from 66 acres to 74 acres. He said the city has secured agreements with the property owners.
Mitchell said he has submitted an Environmental Notification Form (ENF) to the Secretary of the Executive Office of Energy and Environmental Affairs (EOEEA) for the Turnpike Industrial Park, which is subject to the Massachusetts Environmental Policy Act (MEPA). The EOEEA will receive public comments on the ENF through April 25.
The ENF is available for review in the MEPA Environmental Monitor, which may be found online at: http://web1.env.state.ma.us/EEA/emepa/emonitor.aspx#newprojects or obtained from Kyle Greaves at 617 607-2988 or by email at [email protected]. All persons wishing to comment may do so until April 25 by writing to Secretary of the EOEEA at 100 Cambridge Street, Suite 800, Boston, MA 02114, Att: MEPA Office, and referencing the project.
After the public comment period, state agencies will have questions and comments, Mitchell said. The city will then file its draft environmental impact report, and there will be additional opportunity to comment at public hearings for that step of the process, Mitchell said. He said he hopes to have MEPA certification in hand by November of 2018.
“Of note, the Turnpike Industrial Park is not on the Barnes Aquifer or on the recharge area of Barnes Aquifer,” Mitchell said. He said there is an unnamed aquifer underground, which is separated from the Barnes Aquifer by a small mountain, and leeches the other way, toward the Westfield River. He also said because it is adjacent to Twiss Street, a formerly city-owned 40-acre unlined dump site, and to industrial park land, the area is not an option for a public water supply.
“It travels a long way before it hits the river,” Danahey said.
Mitchell said the potential tax revenue for the proposed Turnpike Industrial Park is $1.3 million a year, with the potential for 1,100 jobs, and $120 million in private investment. He said it will take eight to ten years to build the whole project.
“For state permitting, we’re exploring all options: manufacturing, flex tech, logistics, office space,” Mitchell said.
Following the state process, Mitchell said the Turnpike Industrial Park will also be subject to a local process through the Planning Board.
