Five Burke County zones could unlock millions in new investment

Five sections of Burke County have been named as candidates for consideration of a federal program providing tax advantages to investors and developers who decide to bring business to the areas.

Burke County leaders have submitted all five census tracts eligible for consideration as Opportunity Zones, or economically distressed areas where new investments earn preferential tax treatment.

The zones are based on census tracts and are designated by the federal government after being nominated by the governor.

According to Morganton City Manager Sally Sandy, Murphy’s Farm Apartments, an apartment complex in Morganton that was built in an OZ, is a prominent example of the investment opportunities OZs bring to an area.

The North Carolina Department of Commerce extended the public comment period intended to help identify new OZs on June 4, pushing the deadline out from June 7 to June 21 and leaving the floor open for local North Carolinians to advocate why specific census tracts should be chosen for special tax advantages.

Brandon Ruppe, president of Burke Development Incorporated, said the county has submitted all five for the governor’s consideration and they’re “just waiting on the governor to approve it.”

OZs AT THE STATE LEVEL

The OZ program was created under the 2017 Tax Cuts and Jobs Act, meant to inspire long-term investment in economically distressed areas.

“North Carolina’s Opportunity Zone nomination process begins with local feedback,” said Emily Roach Pandich, the director of policy and strategic planning at the NC Department of Commerce (NCDoC). “Nominators were asked to consider which tracts will advance business development and job creation, strategic local revitalization, and housing development.”

Investors can defer capital gains taxes by reinvesting those gains in an Opportunity Zone project.

According to NC Commerce, they may also qualify for reduced taxes if the investment is held for at least five years and can avoid capital gains taxes on profits entirely if it is held for at least 10 years.

Pandich explained that the governor can nominate 25% of the state’s eligible tracts — 202 of the 807 in North Carolina.

Seven other counties have lost their “low income eligibility threshold,” and no longer contain qualifying tracts, possibly increasing the opportunity for Burke, which was classified as one of the most economically distressed counties in the state late last year.

Beyond economic development, state leaders are also looking to use Opportunity Zones to address North Carolina’s housing shortage. Gov. Josh Stein signed Executive Order No. 36 on May 19. The order “directed the NCDoC to give housing creation and support significant weight in nominating eligible census tracts,” according to Pandich.

THE HISTORY OF OZs IN BURKE

In 2018, when the tracts were first rolled out, three were selected in Burke.

One ranges from the westernmost edge of the county, just past Dysartsville Road off exit 94 on Interstate 40, to Jamestown Road off exit 100. The second meets the first near Jamestown Road and extends across Morganton to South Sterling Street. The third and final one is on the eastern side of the county, covering where Rhodhiss meets the Catawba River, spanning Hildebran and reaching out to a large portion of the Hickory Regional Airport.

The designation as OZs for those tracts expires on Dec. 31, 2028. The newly eligible tracts — one of which already holds designation as an OZ between Jamestown Road and South Sterling Street — will begin on Jan. 1, 2027, if chosen.

MORGANTON BREAKDOWN

Approximately four of the five currently eligible cover Morganton, with the fifth spreading across Salem and brushing the northern section of South Mountains State Park.

According to Sandy, The Industrial Commons got the ball rolling, contacting Morganton officials to ask the city to co-sponsor the nomination of eligible tracts.

“They have several development projects happening and those sites are in census tracts that could be considered for Opportunity Zones,” Sandy said. “Of course, we said, ‘Certainly,’ and signed on with their applications.”

“If these (tracts) are approved, then I think we would definitely try to make developers and people aware,” Sandy continued. “I’ll tell you, they’re usually aware of that, though.”

Sandy said that the city isn’t being picky about what kind

of investors may capitalize

on the OZs, hoping to cast a wide net for potential businesses.

“With our comprehensive land-use plan that we redid two years ago that looked at all of the properties and gave a roadmap for how we’re looking for those properties to be used, whether it’s residential, commercial, industrial, mixed use — all of those kinds of things,” Sandy said. “Really, for us, it’s all of the above.”

The Industrial Commons were not available for comment in time for this article.