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Knocking on the Door of Opportunity: Federal opportunity zones added to Springfield

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John Stroup might not have known it, but his efforts to renovate the former Holiday Lanes into a church on Springfield’s north side are now well-positioned for needed funding – courtesy of federal tax reform.

Stroup and his Freeway Ministries Inc. crew have been working to raise $1 million to renovate the old bowling alley, built in the 1960s at 1027 W. Kearney Ave., in hopes of moving their church headquarters there by July.

Now just halfway to its financial goal, Stroup said the group won’t hit the planned summertime opening. And to make a newly planned September move-in, Freeway Ministries is digging hard for investors.

“I’ve gone down a lot of different avenues,” said Linda Kram, who’s heading up fundraising efforts for the nonprofit. “I can use all the help I can possibly get.”

Succor could soon be sliding her way.

A new tool
The U.S. Department of the Treasury recently certified 10 so-called opportunity zones in Springfield. Established in select low-income census tracts nationwide, the new zones are set to become beneficiaries of unrealized capital gains to the tune of trillions.

American investors currently sit on an estimated $2 trillion that’s locked up, for example, in stocks to avoid federal taxes of up to nearly 25 percent, according to Springfield’s director of economic development, Sarah Kerner.

If sold, the resulting gains can now be funneled into new “opportunity funds,” from which investors are able to garner full tax deferment in trade for a long-term investment into the funds.

The resulting pool of money is then shifted to various opportunity zones, such as one in north Springfield, where Freeway Ministries is busy building capital on Kearney Street.

National impact
Queen City projects such as Stroup’s could amass investors on a national scale, though little is known about the new program in terms of how exactly the money will be divvied, as well as from where it might come and go.

“How the funds will be set up and how they’ll operate – the fund as an investment mechanism – still nothing has been issued on it,” Kerner said.

“Really, the question is: Could we get a fund in New York to invest here?” she added. “Or are we going to be focused on creating funds in Missouri and then attracting investors from everywhere?”

For what is known, Kerner said the 10 opportunity zones federally certified in Springfield cover low-income census tracts – those having a poverty rate of at least 20 percent – that span three broader areas of the city.

Each zone will carry the new federal designation for the next decade. In broad terms, the zones encompass downtown, an area surrounding Bass Pro Shops and the new Wonders of Wildlife National Museum and Aquarium, and a swath of north Springfield.

Kerner said the city prioritized each zone for development, with local incentives already in place or that could be installed.

Downtown
Taking first priority is downtown Springfield, which is considered the most development-ready part of town.

“The way that the program was requesting nominations, it really wanted to see where incentives already have been used and where other incentives are also available,” Kerner said. “There’s just a lot of things already available there.”

Center city, for example, offers developers incentives through the downtown community improvement district, which imposes an additional half-cent sales tax on businesses within its boundaries to fund area improvements.

Reapproved in 2016, the CID is set to expire in 2031, Kerner said.

Downtown development also is oiled by the Jordan Valley redevelopment plan, which allows developers differing levels of property-tax deferments to foster redevelopment, depending on project magnitude.

Kerner said the opportunity-zone statuses really are just an added redevelopment incentive.

She said the new tool could help advance downtown projects, such as Missouri State University’s collaborative work in IDEA Commons, an 88-acre area centered on innovation, design, entrepreneurship and the arts.

That’s also where Downtown Springfield Association Executive Director Rusty Worley said he sees things heading for the city’s central core, though questions remain regarding the newborn status of the incentive.

“With it being a new program, I think there’s still a lot of information for our developers and investors to digest,” Worley said. “But to be included in that list is something that will help spur additional investment here in this area.

“One of the main opportunities is IDEA Commons,” he added. “There have been plans for office expansion that would be a hub to connect Brick City, Jordan Valley Innovation Center and The eFactory. This could provide funding toward that large-scale project.”

For the area surrounding Bass Pro, the opportunity zone status could be used to enhance the existing American Fish and Wildlife Museum District, which essentially converts tax dollars from within the district to capital improvements.

The museum district encompasses the Bass Pro “universe” along Sunshine Street and Campbell Avenue, Kerner said.

“I don’t think Mr. Morris is done,” she said of Bass Pro Shops founder Johnny Morris.

Kerner said the census tract west of Campbell has a poverty rate of 24 percent. The tract east of Campbell has a 17 percent poverty rate, representing one of the few medium-income areas allowed in the program.

As for north Springfield, the Kearney Street redevelopment plan – spanning the corridor from Kansas Expressway to Glenstone Avenue – offers similar property tax abatement incentives to that of Jordan Valley.

With the added opportunity zone certification, one major prospect for the city’s north side remains with the 400-acre Partnership Industrial Center West, which sits off of Interstate 44.

It’s one of two industrial parks developed by the Springfield Partnership for Economic Development to offer development-ready, master-planned sites with permits, utilities and infrastructure already in place, as well as existing buildings for new industrial ventures.

“If people are looking to put their money in manufacturing, which is one of Springfield’s biggest industries, then that’s how they’re going to do it,” Kerner said of PIC West.

“The thing that’s really unique about this – well, there’s a lot of unique things – but the investments that can be made and get the benefit of opportunity zones are really wide open,” Kerner added. “We could see housing, office, retail, industrial – almost anything.”

In neighboring communities, opportunity zones also were approved in Bolivar, Branson, Dallas County, Lebanon and Monett.

In Branson, city Communications Manager Melody Pettit said the neighborhoods of Thousand Hills, Fall Creek and the Majestic were certified for the incentive. Pettit said project developers plan to meet soon to discuss how the new federal status could affect those areas.

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