Dr. Jim White still remembers December 22, 2017. Not because Christmas was only three days away, but because this was the day that the Tax Cuts and Jobs Act, or TCJA, was signed into law.
“The legislation set up two hugely important new platforms,” says Dr. White. “Qualified Opportunity Zones (QOZs) and Qualified Opportunity Funds (QOFs).” Both dovetailed perfectly with what he calls his “life’s purpose” of helping revitalize poor communities by giving turnaround investors like himself three major gifts:
1) The ability to benefit from the capital gains tax break;
2) A chance to make money in distressed areas, and;
3) The promise to positively impact low-income urban and rural communities, as well as the lives of potentially millions of Americans.
In fact, Dr. White liked QOZs and QOFs so much, he even wrote a book about them.
According to the Internal Revenue Service, a QOZ is “an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.” QOFs are described as “economic development tools that allow people to invest in distressed areas in the United States.” In other words, the QOZ is the place, and the QOF is the means to make that place better in terms of both living and working.
“In the best case scenario, these tax structures become self-fulfilling, self-perpetuating prophecies,” Dr. White explains. “The more successful the QOZ, the more people will want to relocate there, and the more investors will want to invest. As a result, their infrastructure will improve, crime will decrease, and eventually health care and other services will be available for all.”
These types of programs are essential to the nation flourishing in the decades to come. That’s why GIC Salinas Campus is planning to build the most technologically advanced pre-cooling and cold storage facility in the nation on its current campus in the heart of Salinas, California — the heart of the state’s agricultural industry. This 28-acre, 400,000-square-foot facility is scheduled to be completed over the next four years, and its construction alone is expected to have a major positive effect on the local community. Among other things, the new campus facility will have state-of-the-art solar renewable energy technology, office space for innovators, room for small grower-shippers and dedicated space for the handling of organic produce.
“All told,” Dr. White says, “the project will inject a quarter of a billion dollars into the Salinas economy while laying the foundation for a new generation of agricultural workers and entrepreneurs. Even though Forbes holds its Agricultural Technology Summit in Salinas every year, most of the cooling systems are more than four decades old.” And even though the GIC existing campus has been a major fixture in Salinas Valley since its founding in 1936 — the name ‘iceberg lettuce’ was originally coined there in the 1930s when train cars full of lettuce were shipped cross-country using its block ice — it was not spared the neglect that has afflicted the entire area. Therefore, the new GIC Salinas campus will provide not just opportunity, but continuity, something that is so important to the building of sustainable communities.
Having grown up in a sharecropper’s cabin in the rural South, Dr. White knows how much of a positive impact QOZs and QOFs will have on places like Salinas — communities that have the people and the resources but not the financial support to improve their lives. The good news is that the “reshoring” of factories is happening across the country, just as a major new infrastructure bill is kicking in. Last month alone, for example, 32,000 net manufacturing jobs were created in the United States. But we first need to update our logistics and supply chains in order to support the new economic activity, and do it fast. And that, of course, requires a huge amount of investment.
Is it worth it? “Absolutely,” Dr. White says. “There is no greater purpose than creating opportunities for hardworking men and women. As I talk to potential investors and tenants at the new GIC campus, I know that they share that sentiment.”
QOZs and QOFs are not quite half a decade old, but they are already giving a lot of us hope as well as the opportunity to create opportunities. In other words, even before the first new factory or processing facility is built, they have passed their proof of concept test with flying colors.