The December 2017 tax reform created a new tax incentive called “opportunity zones.” The new program will provide tax benefits to investors who spur economic development in a designated eligible area. Under the law, Governors are given authority to designate opportunity zones in their state. Those designated areas will then raise private capital investments. The question, did Burgum’s personal ties at all sway what applications he designated to move forward and benefit from the tax incentives?
According to a press release from the Governor’s office in April of 2018, the Governor designated 25 areas in North Dakota as Opportunity Zones. At the time, there were 88 eligible zones in the state. 59 applications were submitted by leaders within those various zones. You can view the 25 areas broken down by county Governor Burgum selected here.
An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury –According to the IRS,
Five of those areas designated by Burgum are in the Fargo area, including downtown Fargo where Burgum has been incredibly involved in revitalizing the area. His large personal investments and work within the Kilbourne Group have left a big footprint and given quite the face-lift to the area. The transformation has really been something to see over the years. Quite frankly, they’ve done good work.
With that said, it was interesting to read the Fargo Forum article on May 8th talk about the Kilbourne Group looking to raise $40 million for projects. “Now, with a new slate of downtown development projects in the pipeline, Kilbourne has launched a third investment fund, the Great Plains Opportunity Zone Fund.” wrote Patrick Springer. “As the name implies, the Great Plains Opportunity Zone Fund seeks to take advantage of the tax benefits for opportunity zones — all of downtown Fargo falls within an opportunity zone — established by the 2017 tax law.” It was great PR.
It seems important to the story the fact that Burgum – as Governor – had a hand in selecting which areas would move forward and which would be left on the cutting room floor. Why were the other applicants turned down? Perhaps for entirely legitimate and understandable reasons. After all, the work in downtown Fargo including the investment infrastructure has been in place for years. The denied applicants were not found during an online search. With an open record request submitted, hopefully, we will get a better understanding.