Idaho Opportunity Zones get new interest, challenges

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As an important deadline approaches, Idaho’s Opportunity Zones are getting more attention from inside and outside the state. At the same time, the state could lose two of its 28 Opportunity Zones.

Opportunity Zones, a community development program established by Congress in the 2017 Tax Cuts and Jobs Act, are intended to encourage long-term investment in low-income urban and rural communities through tax breaks. Thus far, two have been announced in Idaho: One in Twin Falls and one in Meridian.

Other potential Opportunity Zone projects include two workforce housing projects, one in Twin Falls and one in the McCall area. The latter region – short on workforce housing, particularly with the popularity of short-term rentals – has one Opportunity Zone covering a large swathe of Valley County, including Donnelly and McCall, and another with a chunk of Adams County, including New Meadows.

Andrew Mentzer, executive director of the West Central Mountains Economic Development Council, said he couldn’t comment on potential Opportunity Zone development there.

Funding Opportunity Zone projects

Idaho has three Opportunity Zone funds, which help produce the projects. One is Boise-based Galena Opportunity Fund, the only one based in Idaho, which is behind both Idaho Opportunity Zone projects.

Two other Opportunity Zone funds have been formed that intend to operate in Idaho, among other states, according to a directory produced by the National Council of State Housing Agencies (NCSHA), a nonprofit, nonpartisan organization. Neither fund has announced Idaho projects yet, and neither responded to press inquiries.

New Opportunity Zone investment

A Portland legal firm is planning to expand into Idaho, said Coni Rathbone, partner at Dunn Carney LLP, who leads its Opportunity Zone practice.

“We’re building a vacation home in Eagle, and I work wherever I am,” she said.

Raised in Weiser, Rathbone recently visited Idaho, leading two classes on Opportunity Zones, visiting Greater Boise sites and meeting with Galena Opportunity Fund.

“My guess is I’ll work my way to working with them,” she said, though she expected her company would be creating Opportunity Zone funds as well.

An area of particular interest to the company is workforce housing, Rathbone said. “We’re putting together a program to pair workforce housing in Opportunity Zones,” she said.

The problem is it doesn’t pencil out well, but the 3% return investors can make on Opportunity Zones helps with the 3% to 5% return workforce housing can make, she said. “If they have a mission toward workforce housing, and get an additional 3%, that can make it work,” she said.

Dunn Carney also has an agricultural practice, which Rathbone said she expected to be able to leverage in Idaho.

“Rural areas are starting to be curious about this program,” she said.

Opportunity Zones are running up against a Dec. 31 deadline, but Rathbone said investment was still worthwhile after that.

“If you invest by the end of the year, then in 2026 you get a 15% step up,” she said. “After this year, you get a 10% step up. That’s the only benefit you lose.”

Could Idaho lose Opportunity Zones?

However, the Opportunity Zone program has come under some criticism that it isn’t helping the poor areas it was intended to support and is instead helping areas that are already gentrifying. Sen. Ron Wyden, D-Oregon, introduced legislation on Nov. 6 to tighten the requirements for Opportunity Zones, which would also disqualify a number of Opportunity Zones already designated.

Wyden’s office wasn’t sure whether any Idaho tracts would be disqualified, but two organizations said Idaho had two zones considered contiguous to disadvantaged census tracts rather than being disadvantaged themselves. That would be the New Meadows tract and a tract near Orofino, in Clearwater County, sponsored by the Nez Perce Tribe, said Brady Meixell, research assistant at the Metropolitan Housing and Communities Policy Center. Economic Innovation Group, a Washington, D.C. –based bipartisan public policy organization, also indicated that those two Idaho Opportunity Zones would be candidates for disqualification.