The areas surrounding the former General Motors plant in Janesville, most of Janesville’s downtown and a south-side industrial park could get a boost from an economic development tool created under the American Tax Cuts and Jobs Act of 2017.
This week, Gov. Scott Walker’s office announced the U.S. Department of the Treasury approved three federal census tracts in Janesville the state had recommended for designation as economic opportunity zones.
Investments in the zones would be exempt from capital gains taxes, the governor’s office has said.
The Treasury approved the recommendations for more than 100 areas in the state to be designated as economic opportunity zones, according to a release Monday from Walker’s office.
Among the sites the Treasury approved in Janesville are a census tract that covers most of downtown; a tract that encompasses the former GM plant and a swath that runs east of the plant, between Kellogg Avenue and Racine Street; and another large tract that includes the city of Janesville’s south-side industrial park and other areas along Highway 51 in parts of the town of Rock.
Economic opportunity zones in Beloit include downtown and a heavily industrial tract northwest of Beloit’s downtown, according to Walker’s office.
Details of the benefits of economic opportunity zones aren’t clear yet, and local economic development officials said some rules still must be written by the IRS to determine how such zones operate. The zones are intended to entice new private development and redevelopment by investors and developers by offering tax breaks for projects within the zones.
“The devil’s in the details, but heck yes. It’s a good deal,” Forward Janesville Vice President Dan Cunningham said Tuesday about the new zones.
“I’ve talked to people in the real estate and investment community who absolutely have stars in their eyes,” Cunningham said.
Commercial Development Company, the St. Louis firm that owns the former GM plant and plans to clear and ready the massive property for redevelopment, considers the tract’s designation now as an economic opportunity zone as good news.
In a statement Tuesday, Commercial Development’s Executive Vice President Colleen Kokas said the GM site’s inclusion as an economic opportunity zone could mean faster investment into the plant site, which she said could “allow for the build out of the former GM Assembly plant in a much shorter timeframe, bringing new jobs and taxes to the city of Janesville more quickly.”
Janesville firm SHINE Medical Technologies plans to build a commercial medical molybdenum-99 manufacturing plant in the industrial park on the south side located in one of the city’s three economic opportunity zones.
SHINE CEO Greg Piefer said in a statement Monday that the new zones are “meaningful for SHINE, and will be meaningful for others looking to invest significant amounts of capital into the zones.”
Gov. Walker’s office said four state agencies compiled a working list of tracts to be considered as economic opportunity zones. These included:
- the Wisconsin Economic Development Corporation
- the Wisconsin Housing and Economic Development Authority
- the Department of Children and Families and
- the Department of Administration.
Assistant City Manager Ryan McCue told The Gazette that in February, SHINE informed the city that the state planned to open its recommendations for the zones up to public comment.
SHINE Vice President Katrina Pitas said SHINE, the city of Janesville and Forward Janesville worked together to recommend the three census tracts.
The state agreed to include three of the city’s recommended zones in its request and submitted them to the Treasury Department last month.
McCue said the new zones are potentially “a huge shot in the arm for economic prospects and economic development in the city of Janesville.”
Rock County Economic Development Manager James Otterstein said the designations create a “new economic tool” that “potentially can be leveraged or packaged” to facilitate a startup, an expansion or retention of a business, or spur new investments or projects that might not have otherwise occurred in Janesville or Beloit.
Like Cunningham, Otterstein said it’s too early to know how exactly how the zones would operate for individual investors.
He said the zones would likely be similar to other economic development tools in that some individual prospects for development might be suited for use of tax breaks through the zones, while others might not.