Local community leaders hope to see low-income areas in Toledo receive infusions of capital in coming months because of a new federal program designed to drive long-term capital to needy communities.
Created by the Tax Cuts and Jobs Act of 2017, the Opportunity Zones Program incentivizes investment in census tracts defined by moderate to low income levels and high unemployment rates. Such zones here include large areas of East Toledo, central city, and North Toledo.
Local business leaders and stakeholders gathered Tuesday at ProMedica offices for a presentation by Kevin Boes, senior vice president of Local Initiatives Support Corp. The partnership with ProMedica aims to improve social determinants of health — a term for demographic factors such as income, education, housing, and food insecurity that affect a person’s well-being.
“What we know is that 40 to 60 percent of an individual’s health is determined by nonclinical things,” Kate Sommerfeld, ProMedica’s president of social determinants of health, said. Those include housing and job creation.
In March, LISC and ProMedica announced a $45 million joint venture to establish a loan pool and grant program for neighborhood-based economic development as part of their focus on targeting local areas to improve health and well-being city wide.
Soon, private investors will be able to join the effort. Toledo is still waiting on approval to move forward by federal agencies, ProMedica officials said. In the meantime, community partners and economic development agencies will begin work to build a coalition of investors.
Local development organizations have worked with stakeholders to identify Opportunity Zone candidates. All 17 census tracts they identified were approved by the state, with an average poverty rate of 45.7 percent and an average unemployment rate of 23 percent. Toledo is a particularly good candidate for the Opportunity Zones program, Mr. Boes said.
“Toledo is very well positioned, both having ProMedica here — which is an anchor institution that’s engaged in this — and having a good portion of the city being opportunity zones,” he said. “The base has sort of already been set here, and now this incentive can take it to the next level.”
As part of the program, investors are eligible to pay no taxes on capital gains profits made as the result of a 10-year investment.
Joe Napoli, president and CEO of the Mud Hens and Walleye and a member of the development boards of both LISC and ConnecToledo, said that tax incentive presented “nothing but opportunities and upsides.”
During the presentation, others voiced concerns about the possibility of not receiving any return on investment. In response, Mr. Boes said motivations for investing range from philanthropic to profit-minded. In order to make the most of the incentive, Mr. Boes said, investors should work together.
Likewise, Mr. Napoli stressed the importance of collaboration and the benefits of learning from other cities like Indianapolis, which has recruited a group of investors willing to coordinate their efforts through one fund.
“We’re not competing for limited funds here,” Mr. Napoli said, “so there will probably be a nice opportunity to share best practices across cities and find out just how we could formulate a plan to reinvigorate Toledo.”
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