'Opportunity Zone' presentation appears to create confusion, calls for link to economic development director

A representative from the state's commerce department made a pitch to the county to create an Opportunity Zone to the south and north of the La Cygne Generating Station and Linn County Park. It essentially would be where developers proposed to install commercial solar power fields, plans that were shut down by the commission a couple of years ago. (Journal file photo)

By Charlene Sims, Journal staff

LCJeditor@icloud.com

MOUND CITY – The Kansas Department of Commerce representative laid out a plan to the Linn County Commission on Monday, March 16, that would likely have a county  economic development director salivating. The “Opportunity Zone 2.0” program would target an area that might be ripe for developing by offering tax incentives for investors.

There was one hitch, however. Commissioners have decided not to hire an economic development director after Chasity Ware resigned the post last year. And members of the county’s economic development committee recently told the commission their role was pointless without a director.

The presentation to the commission by Department of Commerce representative Paul Hughes seemed to create some confusion, partially because Hughes erroneously assumed that Commissioners Alison Hamilton and Jim Johnson already knew at least some background on the program. (Commissioner Jason Hightower was not at the meeting.)

In addition, the county already is enrolled in the commerce department’s Rural Opportunity Zones (ROZ) program, which provides incentives for people to move to the area for employment.

The Opportunity Zone 2.0 program presented to the commissioners by Hughes is an investor program that was initiated in 2017. The rules were in place to begin working the program in 2018. The goal was to giving investors incentives to place their investments in specific qualifying census tracts. The census tracts qualified under some income qualifications and being adjacent to those that qualified for income reasons.

Hughes told the commissioners that this program was made permanent under the Big Beautiful Bill Act passed by the U.S. Congress last year.

The goal was to stimulate investment in those qualifying opportunity zone areas. In some communities they were trying to address things like making an old abandoned building into housing or businesses. Others were trying to address housing shortages in certain communities.

In all there were about 250 qualifying census tracts in Kansas and similar to the initial program. The state gets to nominate 25% of those census tracts.

The selling point to these investors is that is that the funds have to pass through a qualified opportunity fund. Those are identified through the U.S. Treasury IRS tax forms. They’re required to have their funds invested 90% at any given time.

So what tends to happen is when they have a project identified, that’s when they accept their individual contributor investments and then place that almost immediately into a community investment that they they’ve identified. if they stay in those investments for 10 years or more, the capital gains on that investment is permanently exempt from federal taxation.

“So, under the 2.0 whole program,” Hughes said, “what we’re seeing here is that the total number of nominations (of opportunity zones) that the governor can make to the U.S. Treasury has been reduced from 74 to 52.  And again, that’s because of the change in the requirements for the program.  And so what we understand now based on these new rules about half of the opportunity zones in the state of Kansas won’t re-qualify under this new program.”

As a result of the number of zones being cut back, counties that want to participate in this program will need to sell their county and the county’s need to support their nomination being accepted.

“But in terms of what happens in the opportunity zones,” Hughes said, “I think that’s one of the things that we’re trying to press on here is just having the designation alone isn’t sufficient to attract the investor interest. And so, we’re trying to develop, for lack of a better term, a marketing plan around each of these opportunity zones as part of the promotion for those types of investments.”

“Just the fact that a community is eligible already explains the need. So we’re asking that they (counties) not spend a lot of time on need statements, but rather how are they going to support their opportunity zone should they be granted one,” said Hughes. “And so, it’s kind of a blend between how do we make this attractive to investors and how do we promote this with a bit of a marketing plan.

“So, as we are moving forward here, we’ll be hosting another workshop on the nomination process on April 3. We’ll be sending that invitation out to economic development directors across the state. I think that goes out to about 1,100 people across the state.

Hamilton answered, “We do not have an economic development director. We do not have that department working at this time.

Hughes asked, “Is there an alternate contact you’d like for us to send that information to?”

“I guess to all three commissioners at this point,” answered Hamilton.

“I think you’ll want to have somebody designated, either within the commission or on staff to field what would effectively be an investors relations, sort of, conversation, to understand what sort of investments that they are interested in making,” said Hughes. “We see some that have an interest in infrastructure, some that have an interest in housing, but to understand what sort of relationship they’re looking for and then bringing that to the commission for direction. But we’ll need somebody who’s staffed and within Linn County to receive those types of calls.”

“So, we’ll work on getting a contact for investor relations. And then also on the opportunity zone,” said Hamilton.

Hughes said he would send the link to Hamilton for the census tracts that would qualify.

“Does the county play a financial role in this if it was to come to the county?” asked Johnson.                                                                                                                                                               

Hughes said it depended on the type of investment that they were talking about.

“When investors are looking at an opportunity zone and they are thinking about making an investment there, they may be interested, let’s just say for the sake of discussion, it’s multifamily housing that they are interest in. They may be asking for either roadway improvements. They may be asking for water improvements or even improved power delivery,” said Hughes. “It just depends on the size of the project and the nature of the project.”

As the commissioners looked at the maps given to them by Hughes online, Hamilton pointed out that the only area that looked like it qualified for an opportunity zone was from north of Trading Post to the power plant including Linn Valley.

Hamilton and Johnson expressed confusion that this would be the area of the county that was a qualifying  opportunity zone since there was more population and new development there than anywhere in the county.

Hughes did not make it clear to the commissioners that this program was different than the ROZ program which is the only opportunity zone program that had been presented to the commissioners in the past.

The ROZ program is specifically designed to attract residents and businesses to rural areas by offering state income tax waivers and student loan repayment assistance. Counties can participate by signing a contract that supports the program or they can contribute an amount of money that is used to assist an employee of the county with student loan repayment assistance.

By just signing the contract to support the program, it allows other entities in the county, for example school districts, to use this program to attract and retain employees. The ROZ program has nothing to do with real estate development.                             

In September 2022, the Linn County Commissioners opted into the ROZ program for $1,500 per year for five years, and that commitment would remain in effect through 2026. For several years, Linn County did work with a county employee paying toward their student loans.

But according to the county’s official minutes on Jan. 26, 2026, Linn County Counselor Jacklyn Paletta recommended that the commissioners approve the ROZ contract for support while telling them that the county is not paying anything towards the student loans. The commissioners approved the contract.