Brigade Street Apartments.JPG (copy) (copy)

Bikers pass a new apartment complex being built in January along Brigade Street on Charleston's upper peninsula. 

The redevelopment of Charleston’s Neck Area and the south end of North Charleston is inevitable, but investment has been slow in industrial areas and poor neighborhoods. So, with Sen. Tim Scott’s signature Opportunity Zones legislation getting ready to take off, the timing couldn’t be better.

The market-based, incentive-driven program, part of the 2017 Tax Cuts and Jobs Act, has the potential to turbocharge the makeover of the area by adding a significant amount of centrally located housing, cleaning up some long-neglected waterfront properties and bringing in new businesses.

Billions of dollars in capital have been pooled to be directed into economically depressed areas across the country. In exchange, Opportunity Fund investors can defer capital gains taxes or avoid them altogether if investments are held at least 10 years.

That should accelerate the redevelopment of the North Charleston Naval Complex as well as the long-suffering, county-owned Naval Hospital site. And with construction underway on the six-story, Charleston Tech Center at 999 N. Morrison Drive, the area’s most regionally important Opportunity Zone is off and running.

The $54 million public-private Charleston Digital Corridor project was in the works long before the legislation crafted by Sens. Scott, R-S.C., and Cory Booker, D-New Jersey, was signed into law, but it could be among the first to enjoy the program’s benefits.

Investors can defer, reduce or avoid capital gains taxes by reinvesting in Opportunity Funds, which in turn invest in projects in Opportunity Zones, one of which covers the Neck Area and North Charleston south of Park Circle.

Federal agencies have issued two rounds of guidance that cover leased properties, how Opportunity Funds can manage multiple assets within a single zone, grace periods for reinvestment and other details better left to tax attorneys and accountants. A final round of guidance is expected in a few months.

So far about 200 funds have been created nationwide, and they are expected to start unleashing some $43 billion in capital by next summer. A major conference for investors and capital seekers is scheduled for Oct. 10 in Greenville.

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It is true that real-estate prices in some Opportunity Zones across the country have risen up to 20 percent, suggesting that the tax benefits are being factored into land costs. While these projects could greatly benefit investors, Sen. Scott also has touted the program’s potential to bring jobs, encourage local entrepreneurship and provide other opportunities to residents in these low-income areas. It will be important for policymakers to ensure that residents are not forgotten in this equation.

A nationwide study by Cushman & Wakefield found that fund managers are poised to put most of their money into multifamily housing, much of it affordable housing, something sorely needed in the Neck Area. One such fund, Pollack Shores, is specifically focused on developing multifamily housing in the North Morrison corridor. Many others will operate nationwide, but about a dozen are focused on South Carolina.

Using Opportunity Fund capital, Habitat for Humanity, for example, plans to redevelop a 120-acre mobile home park in Charlottesville, Virginia. Similar efforts here could expand workforce, student or assisted-living housing. Some funds are bankrolling renewable energy projects, sustainable agriculture and job-training programs.

Opportunity Zone tax incentives can provide a much-needed spark for revitalizing the Neck Area and southern North Charleston. If the program is truly successful, that will mean both investors and residents benefit from it.