Distressed parts of the country could get a boost from a little-noticed part of the new federal tax law aimed at encouraging private investment in areas that often get overlooked in favor of more prosperous locales.
The initiative, called "Qualified Opportunity Zones," allows investors to get a tax break on unrealized capital gains in return for investing in poorer areas.
Using the federal tax code to try to steer investment isn't new. There were similar efforts to help distressed parts of the country during the Clinton administration in the 1990s. But nine years after the country officially emerged from the last recession, there still are parts of the country suffering.
"The investment in neighborhoods will help to kick start local economies, grow jobs, and most importantly, will create a better quality of life for tens of thousands of our American families," U.S. Sen. Tim Scott, R-South Carolina, said earlier this month. Scott is credited for getting the provision getting into the tax law.
The investment is relatively small. Of the $1.5 trillion tax plan, which was signed by President Trump in December, the cost to the federal treasury for the new program is estimated at $1.6 billion over 10 years, according to the non-partisan Joint Committee on Taxation.
Local governments need to act fairly quickly, though. The program is set up so that governors forward recommended areas for inclusion in the program to the Treasury Department. And the deadline in Iowa to send in applications to the state Department of Economic Development is March 19.
On Friday, Gov. Kim Reynolds urged communities to apply.
"We need to take advantage of all the tools and resources we have at our disposal to spur economic growth,” she said.
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There are 239 parts of Iowa that are potentially eligible, according to the governor's office. Called "low income census tracts," the areas have a poverty rate of 20 percent or more or the family income there is less than 80 percent of the median income for the community.
Eventually, the governor's office can forward up to 60 of these areas to the federal government for the program.
In the Quad-Cities, much of Davenport would be eligible for consideration. A map posted by the Treasury Department showed eligible areas to be generally south of Central Park Avenue and between Eastern and Linwood avenues.
Large parts of Rock Island, Milan and Silvis could be considered, too.
The city has contacted the state to find out how the program will work and plans to apply no that applications are available, Bruce Berger, director of community and economic planning at the city of Davenport, said Friday.
Tax credits have played a significant part in the redevelopment of downtown Davenport, as well as other parts of the city. At one point in the drafting of the new tax law, some of the credits used here were on the chopping block, though they survived.
Iowa's economic development department said that its review of local application will include criteria such as a community's vision and how an opportunity zone might fit in, past success in attracting investment and a description of "economic hardships" the area has faced over the past five years.