City of Paducah officials are anxious to zone in on new opportunities to stimulate investment, entrepreneurship, job growth and economic development.
At a recent seminar sponsored by the city, Paducah Area Chamber of Commerce, and Greater Paducah Economic Development, Jason Rainey, a senior policy advisor with the Kentucky Cabinet for Economic Development, outlined the benefits of the new economic tool known as Opportunity Zones.
According to Rainey, Opportunity Zones are low-income, distressed and contiguous districts where investors can receive significant federal tax breaks and deferrals for investing in a variety of economic development projects.
The federal Tax Cuts and Jobs Act of 2017 allowed each state's governor to nominate certain census tracts as Opportunity Zones. Kentucky, which has 144 throughout the commonwealth, was one of the first states to have tracts approved.
"I am excited about what this program can mean for Kentucky as we continue to educate investors on projects and opportunities, like you have here in Paducah," he said.
"One of the things I really admire about Paducah, is the areas where you' you've designated Opportunity Zones."
Two census tracks in Paducah have been approved.
One tract, which includes a large predominantly single-family residential neighborhood, is projected to see growth as the market for single-family homes moves west and expands from Lower Town. It also includes some commercial and industrial development.
The other tract includes Paducah's downtown, central business district, and a variety of cultural assets. Development opportunities in this zone are predominantly commercial, multi-family residential or mixed-use projects.
The city has prepared a prospectus for investors that intended to showcase the opportunities.
"The fun part is looking for potential ideas for these projects," Rainey said.
"And, kudos to your community for creating this prospectus. This is one of the best I've seen. It's what every community in Kentucky needs. What it does is it equips you to be able to send this out to qualified investment funds and say 'here's a potential project.' "
Investments in Opportunity Zones must be made through Qualified Opportunity Funds, investment vehicles set up as either a partnership or corporation for investing in eligible properties in the zones.
"You've got a real opportunity to embrace this program," Rainey said.
"I think there area certainly advantages for the small business entrepreneur. The key there is having a good business plan, financial projections, where you can say whether you're raising $50,000, $250,000 or $2 million, you're showing how the investment is going to work and that there's going to be a rate of return there.
"And, that's the key in getting these folk to invest it it," he said.
In addressing those in attendance, including potential investors, Paducah Mayor Brandi Harless said one of her initial concerns about Opportunity Zones was something she referred to as the "Wild West" syndrome.
"The fear was that this would become the 'Wild West' and investors from the East Coast and the West Coast would come into a community like Paducah and just start throwing money around on projects that didn't have any impact on our community," she said.
"And, so I wanted to share the reason why the city really leaned in on this. We've been working for about a year-and-a-half now to create this prospectus and give some guidance to investors.
"The vision, from my perspective, is that we have capital in Paducah and I would really love to see us on a local level be able to start those (qualified investment) funds and have the private sector lean into those opportunities," she said.
"The role of the city government is really just as a facilitator and convener. We will not be starting funds. We will not be managing projects, we will not be utilizing this mechanism in that way.
"So, if you decide to start a fund would you please let us know so that we can connect you with possible projects?"
The city does have investors calling, the mayor said.
"They are calling from all over asking for potential projects. You'll see in this prospectus a couple of opportunities, like the Columbia (Theatre). You'll see some detail on what is referred to as the Rivertown District.
"You'll also see some opportunities like the Kresge Building that we just put out an RFP (request for proposals) not too long ago, and a few other housing developments. If you decide to start a local fund and take advantage of some of these projects, please let us know.
"We want to facilitate those relationships as much as we can."