The County of San Bernardino is looking to opportunity zones to help the market recover from the pandemic and economic fallout. There are 57 opportunity zones in the County, and two ongoing opportunity zone projects. These sites could have the potential to attract developers and investors back to the market and catalyze new development.
"Opportunity Zones are designed to spur economic development by providing tax benefits to investors," Soua Vang, interim economic development director of San Bernardino County, tells GlobeSt.com. "The Opportunity Zones tax incentive provides a strong add-on benefit for incremental returns, lowering required risk-adjusted yields expected by investors. San Bernardino County further benefits as California's second highest concentration of Opportunity Zones."
San Bernardino is an ideal location to take advantage of these tax benefits, and in turn, that could give the market momentum for growth—which was occurring prior to the pandemic. "San Bernardino County is the largest county in the contiguous United States and one of the nation's most populous. The Opportunity Zones incentive is just one mechanism developers can utilize to achieve targeted returns," says Vang. "The strength of the OZ incentive is in its malleability to contribute to the capital stack, with almost no restriction on the type of investment or utilization of public incentives/grants. San Bernardino County has 57 of the 879 OZ in California or a 6% ratio. The high concentration of census tracts coupled with the County's proximity to the coastal communities and comparatively low cost of acquisition position its OZs to deliver one of the State's highest long-term investment and community impact returns."
The Federal Government continues to align various agency efforts to enhance its OZ focus. There are now over 200 grants and programs from federal agencies that give priority points to efforts that enhance OZ specific metrics. While California does not conform to the federal incentive, there are state level efforts that can be coupled with Opportunity Zones to enhance economic development- this includes California business attraction tools like CalCompetes, but also Tax Increment Financing structures such as Enhanced Infrastructure Financing Districts (EIFDs), and Community Revitalization & Investment Authority (CRIA).
The market is well positioned for growth. It has a diverse jobs market and labor pool, and rising costs in the costal California markets have driven population growth in recent years. "Investors looking to leverage regional strengths such as logistics, aerospace and manufacturing will find potential to expand business investment and create jobs," says Vang. "The County is also focused on creative financing of high priorities including three major airports, industrial, residential, supported programs and market, office and lots of infrastructure—mainly roads, sewage, power and 5G."
The County of San Bernardino is also partnering with developers to support these developments. "In terms of realizing these benefits, it should come as no surprise that leaders from the public and private sector, across San Bernardino County, are embracing proactive approaches toward developing strategies that focus on enhancing local community development opportunities," adds Vang.
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Kelsi Maree Borland
