Six census tracts in Harrisburg have been nominated as potential investment sites under a new federal program aimed at spurring development in low-income communities.
Gov. Tom Wolf announced this week that he nominated 300 low-income census tracts across the state as Qualified Opportunity Zones, a status created under the 2017 federal tax reform bill. The U.S. Department of Treasury is expected to approve all QOZ designations by May, according to a statement from the governor’s office.
Six of Harrisburg’s 14 census tracts were included in Wolf’s submission. The potential investment zones encompass the city’s downtown area south of Forster Street, South Harrisburg, South and Central Allison Hill and the neighborhoods along the city’s Cameron Street industrial corridor.
The QOZ program aims to stimulate investment in low-income communities by providing tax breaks to private investors.
The program, which is still under development by the U.S. Department of the Treasury and the Internal Revenue Service, will defer or reduce capital gains taxes to anyone who invests in funds supporting businesses, real estate and other ventures in Opportunity Zones.
Mayor Eric Papenfuse was cautiously optimistic about the incentive program on Tuesday, when he announced to City Council that Harrisburg tracts had been included in the governor’s submission.
“It’s an interesting concept,” Papenfuse said. “We don’t quite know what it will mean yet. The [federal government] needs to determine benefits, but it’s exciting.”
Papenfuse said that the recommended zones aligned with the city’s current development efforts, including the MulDer Square revitalization project and the Paxton Creek reclamation in the industrial corridor.
To qualify for QOZ status, a census tract must either have at least a 20-percent poverty rate or a median family income less than 80 percent of the statewide or regional median income. Papenfuse said that all of Harrisburg’s eligible tracts made Wolf’s list.
In total, almost 1,200 tracts across the state qualified for the program.
“We are hopeful this new incentive will bring much-needed investment to many distressed areas across the commonwealth,” Wolf said in a statement.