State Planning & Community Affairs committee hears DCA briefing on rural zones, opportunity zones and small-business loan programs

The State Planning & Community Affairs committee adopted its rules for the next two years by voice vote and then heard a Department of Community Affairs (DCA) briefing on several economic-development tools, the committee was told.

Rusty Haywood, a DCA representative, told the committee the rural zone program (created by 2017 legislation) targets smaller downtowns — communities with fewer than 15,000 residents and a concentration of buildings at least 50 years old — and requires applicants to submit a master plan and market analysis. "These credits are $2,000 a job per year for up to 5 years," Haywood said, adding that the program requires two net new jobs created in the designated downtown area to qualify.

Haywood outlined investor incentives for rural zones as well: an acquisition credit equal to 25% of purchase price, capped at $125,000 and spread over five years, and a rehabilitation credit equal to 30% of rehab costs, capped at $150,000 and spread over three years. He said credits can be layered provided all statutory criteria are met.

Haywood listed nine communities designated in 2018 (Bainbridge, Commerce, Cornelia, Fitzgerald, Jonesborough, Nashville, Perry, Springfield and Tekoa) and nine in 2019 (Avondale Estates, Greensboro, Hartwell, Hogansville, Jessup, Locust Grove, Monticello, Sylvester and Waycross), and described workshops and an application cycle that opens in late summer with review panels and final joint determinations by the commissioners of Community Affairs and Economic Development.

On state opportunity zones, Haywood said the program requires a census block group with at least 15% poverty and either inclusion in an enterprise zone or an urban-redevelopment plan; he described a per-job state credit (Haywood cited $3,500 per year) for qualifying full-time jobs that meet statutory wage and health-insurance-availability floors and noted state designations last 10 years.

Haywood distinguished the federal Opportunity Zone program from the state program, saying "there were 1,137 eligible census tracts in the state" and that Treasury allowed the state to nominate about 25% (roughly 260) for federal designation. He described the federal mechanism — investors place unrealized capital gains into Opportunity Funds that must invest at least 90% of those dollars in designated tracts — and said tax benefits to investors grow with longer holding periods (5, 7 and 10 years). "There are no tax credits associated with this," he added to clarify a common point of confusion.

DCA will make maps and resources available: Haywood said an interactive federal Opportunity Zone map is on DCA’s website and that the department will include that material in follow-up distribution. He also said DCA and the Department of Economic Development have convened workshops (a prior Atlanta event) and planned a March 1 session in Albany to help communities prepare prospectuses and attract investment.

On small-business lending, Haywood reviewed the State Small Business Credit Initiative (SSBCI) legacy programs: a loan guarantee program that guarantees up to 50% of a loan (up to $400,000) and a loan participation program in which the state may participate up to 25% and up to $250,000. "We've loaned out or guaranteed somewhere north of $60,000,000" and have leveraged roughly $350,000,000 in lending as funds recycled, Haywood said. He said repayments free capital for new loans and that DCA retains a low default rate, with initial underwriting performed by participating banks and DCA’s in-house credit team performing secondary reviews.

Committee members pressed on specifics. Representative McClain asked whether qualifying jobs must be local hires; Haywood replied that jobs generally must be within the designated community and state but could include a range of business types (restaurants, retailers, studios) and that both local hires and other staffing arrangements are possible depending on the district’s conditions. Representative Rogers asked whether a proposed small-grant program ($2,500–$5,000) under consideration by the House Rural Development Council would be administered by DCA; Haywood said DCA would likely administer such a program if enacted and would develop program rules and outreach materials.

Haywood also described enterprise zones as locally driven designations implemented by city or county ordinance that can offer local tools such as property-tax exemptions, abatements of local occupational or regulatory fees, and adjustments to development regulations. Designation requires meeting at least three of five statutory criteria (poverty, unemployment, distress/underdevelopment, general blight and similar measures), and DCA serves as the repository for adopted ordinances even though it does not administer enterprise-zone ordinances.

The committee concluded with the chair noting that DCA operates roughly 63 programs and that the committee will schedule additional briefings (including on low-income housing). The meeting adjourned following a motion and second.

Next steps: DCA said it will distribute maps and materials from today’s briefing and hold additional workshops; the committee will continue DCA program briefings in future meetings.