A new federal program that came from President Trump's tax cuts could help spur investment in development in Northern and Southern Nevada, Lance Gilman, the broker/partner of the Tahoe-Reno Industrial Complex said Tuesday on Nevada Newsmakers.
"You are going to see a tremendous change with capital flowing into our (Nevada) markets," Gilman said.
The program, created under the recently passed federal legislation known as The Tax Cuts and Jobs Act, allows tax breaks for qualified investors who wish to re-invest unrealized capital gains in low-income areas, called "Opportunity Zones."
The "Opportunity Zones" will be areas where local governments decide where the money is needed the most, according to Bisnow business news. The idea comes from a white-paper study by the Economic Innovation Group, a Washington D.C. think tank.
"It's goal is to bring investments to areas that need redevelopment," Gilman said. "Trump wants to repatriate all the capital that is coming offshore. They want to do the same thing here and there is a lot of stranded capitol, so these opportunity zones, when you talk about Southern Nevada, you are going to see a tremendous change with capitol flowing into our markets."
EIG estimates there is about $6 trillion in unrealized capital gains that could be used in the program, according to the Bisnow reporting. Gilman touted the benefits for investors.
"In simple form, $1 billion invested this year in an O zone, if it is allowed to incubate for seven years, all the profits can come out tax free," he said. "It is a very, very critical program that if addressed responsibly, its goal is to bring areas that need redevelopment for example.
The law gives tax benefits to investors that place unrealized capital gains into Opportunity Funds, which then invest in Opportunity Zones, land tracts that local governments decide have the most need and can best support the investment.
Gilman sees major benefits in Northern Nevada.
"The Opportunity Zones are going to bring in a lot of capital from the sidelines," he said. "It is an area in which you invest and it has a tremendous return on it. But that being said, growth normally follows growth corridors. And we have a growth corridors out on I-80, and we have a corridor out of (Highway) 50 ad we definitely have a growth corridor that heads south on 95A (to Yerington) and those kind of areas. And you can turn back west and go back toward Carson and Dayton and it brings all of those areas in."
Gilman see the Opportunity Zones are areas that will pressure local governments, specifically in Lyon County, to get a good handle on the issues that will come with the growth, such as water and housing.
"There is no question that there will be significant pressure, opportunity and financial reward," he said. "It is pretty hard to quantify today because it is coming, it is here. It is not speculative. so there will be a lot of challenges in Lyon County, the communities in Lyon County and opportunity that is unprecedented."
Watch this episode of Nevada Newsmakers here.
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