DCA official outlines rural zone tax credits, state and federal opportunity zones and small‑business lending

Department of Community Affairs (DCA) representative Rusty Heywood told the State Planning & Community Affairs committee that several existing state and federal programs are available to help small towns revive downtowns, attract investment and expand small‑business lending.

Heywood opened by describing the rural zone program enacted in 2017, saying the law "created rural zones across the state" intended to "provide a leg up to communities, specifically the downtowns that have seen better days." He told members eligible communities must be under 15,000 residents, show a concentration of buildings at least 50 years old in a defined downtown, submit a master plan and market analysis, and document local distress such as blight or high vacancy rates.

The program offers layered tax incentives that require job creation in the designated downtown. Heywood explained that qualifying businesses can claim a $2,000 tax credit per net new job for up to five years, a 25% acquisition credit capped at $125,000 (spread over five years), and a 30% rehabilitation credit capped at $150,000 (spread over three years). "Those put together we've got 18 communities across the state that are designated as rural zones beginning in 2018," he said, and DCA will run workshops and trainings to help future applicants.

Committee members asked how small towns assemble applications. Heywood said there is no single approach: "they are Main Street communities so they've got a Main Street director," or the Chamber, regional commissions or a local team can lead the effort. He said DCA provides orientation and ongoing training and urged communities to form teams so progress does not depend on a single champion.

Heywood reviewed the state's Opportunity Zone tax‑credit program, which awards credits tied to full‑time jobs (35+ hours) with health insurance offered and wages above the county floor. "On the state side we've got these $3,500 a year tax credits per job," he said. Designation requires a census block group with at least 15% poverty and either an enterprise zone or an urban redevelopment plan; state designations last ten years and are evaluated by DCA and the Department of Economic Development.

He contrasted that with the federal Opportunity Zones created by Congress in December 2017. Under the federal program, investors with unrealized capital gains can channel funds into opportunity funds that must invest at least 90% of assets in designated tracts. "There are no tax credits associated with this," Heywood said of the federal program; instead investors receive tax benefits based on holding periods, and typical uses nationally include affordable housing and real‑estate development.

DCA also maintains an interactive federal Opportunity Zones map and plans workshops to help communities prepare prospectuses to attract investment. Heywood said DCA hopes the state can "nudge" outcomes by helping communities package clear investment prospects.

On small‑business finance, Heywood described the State Small Business Credit Initiative legacy programs: a loan guarantee (DCA guarantees up to 50% of a loan, up to $400,000) and a loan participation program (DCA takes up to 25% of a loan, up to $250,000). He said the programs have leveraged roughly $350 million in lending and that defaults have remained low; banks perform underwriting and DCA conducts a back‑end credit review.

Lawmakers asked whether program dollars were being used primarily outside rural areas and whether farmers qualify. Heywood said the programs have been available statewide and that agricultural borrowers have participated; he emphasized DCA outreach to local banks and the department's staff assistance to promote rural participation.

Finally, Heywood reviewed Enterprise Zones as a local ordinance tool to encourage reinvestment. He said benefits are determined locally and can include local property tax abatements, fee waivers or modified local regulations, but do not include state or federal tax exemptions. Communities must meet at least three of five statutory criteria (poverty, unemployment, distress, development issues, blight) and submit ordinances to DCA as the repository.

The committee adopted its rules at the start of the meeting and adjourned after the presentation and Q&A. Members asked DCA to circulate materials and maps; Heywood said he would provide handouts and links to the interactive maps and upcoming workshop information.