A revamped federal program could lead to housing and commercial investment in Shawano, according to several people who spoke at a chamber of commerce program April 29.
Opportunity Zones, first created in 2017 and operated through the White House, are now a permanent part of the U.S. Department of Housing and Urban Development.
“It’s a federal capital gains incentive for an equity investment into a real estate transaction, a business transaction or anything like that in a low-income community or census tract,” Ethan Hollenberger, HUD senior adviser in the Great Lakes Region, told those attending the Shawano Country Chamber of Commerce Progress Summit.
“It’s a tax deferral on the front end. You have (capital) gains; you invest it in an opportunity zone. The cap gains that you owe the government is now deferred, but it’s also stepped down. Then, when you sell after 10 years, there’s no capital gains on that investment.”
Opportunity Zones are now permanent, with new designations (OZ 2.0) being finalized in 2026 to remain in effect through 2036. Qualifying projects include housing, commercial (office and retail) real estate, hospitals, hospitality, industrial and manufacturing, farming and operating businesses. Casinos and “sin” businesses are ineligible.
“You still want to invest in a good deal. The tax incentives shouldn’t wag the tail of the proverbial dog,” said Jake Caelwaerts, principal at CliftonLarsonAllen. “This is a terrific opportunity to make a good investment into a great investment. It’s not going to make a bad investment good. Always make sure you like the investment on its merits without the tax benefits.”
Tadych Investment Partners LLC has four luxury apartments under its belt, two in De Pere and one each in Neenah and Appleton. The Neenah and Appleton projects were constructed in Opportunity Zones.
“We looked at a property here in Shawano a couple years ago. Unfortunately, that didn’t get to the finish line,” said Jason Tadych, principal and owner at TIP. “We’re looking at another one again here over the last several months, and we’re hoping to be able to announce something a little more concrete in the coming months.”
Wisconsin currently has about 120 Opportunity Zones created under the 2017 startup program. The actual zones are named by the governor, and Tony Evers is expected to announce the locations of 100 or so designated areas in the fall.
Wisconsin also has tax credits and incentives tied to this program, one of a few states that does so.
Right now, not all of Shawano is in a designated zone, according to Peter Thillman, executive director of Shawano County Economic Progress Inc. Current boundaries are north of County Road B, the west side of Main Street, Green Bay Street and County Road BE to County Road B.
“Only a quarter of downtown is in the Opportunity Zone,” he said. “This side of the street is in it; that side of the street’s not in it. In the next round, both sides of the street are eligible. We have a lot of vacant property north of Green Bay Street that would be ripe for development.”
Hollenberger said it’s important for officials to be prepared to explain why all of Shawano should be selected. It’s important for investors to be ready when the time comes to take full advantage of the program.
Members of the Shawano Country Chamber of Commerce listen to a presentation about a federal tax incentive program geared toward spurring investment in designated census tracts. Tax deferrals and tax breaks are offered to investors for housing and commercial projects. (Kevin Passon | NEW Media)
Ethan Hollenberger, U.S. Department of Housing and Urban Development senior adviser in the Great Lakes Region, said that during the first round of Opportunity Zones from 2017-20, more than $89 billion was invested in projects across the country, with more than 400,000 housing units built. (Kevin Passon | NEW Media)
Jake Caelwaerts, principal at CliftonLarsonAllen wealth advisers, center, discusses the tax benefits of Rural Opportunity Zones. He said the federal program can make a good investment a great investment but cautioned potential investors from viewing projects only through the lens of tax incentives. (Kevin Passon | NEW Media)
Jason Tadych, principal and owner at Tadych Investment Partners LLC, said he hopes to announce plans for a housing project in Shawano in the near future. He has used federal Opportunity Zones to create housing projects in Appleton and Neenah. (Kevin Passon | NEW Media)
Ethan Hollenberger, U.S. Department of Housing and Urban Development senior adviser in the Great Lakes Region, said that during the first round of Opportunity Zones from 2017-20, more than $89 billion was invested in projects across the country, with more than 400,000 housing units built. (Kevin Passon | NEW Media)
