ALBUQUERQUE, N.M. — A state addendum to a federal economic development program could help some of New Mexico’s poorest areas compete with big cities in New York and California.
New Mexico Economic Development Cabinet Secretary Alicia Keyes recently announced a new program that offers an $1 million bonus to certain investments made in New Mexico’s 63 opportunity zones.
Johanna Nelson, finance development specialist for the department, said the program, which the department is calling the opportunity zone jobs bonus, is designed to better sync up state and local incentives by deploying funding through the Local Economic Development Act in areas with limited resources. Nelson added that this program can help New Mexico catch up with opportunity zones in larger cities.
“We don’t have a Chicago, or a New York City or an LA,” Nelson said.
The federal Tax Cuts and Jobs Act, which was signed into law in 2017, gave state governors the opportunity to nominate certain census tracks as opportunity zones, which come with specific tax advantages provided they meet federal standards for economic distress. Nelson said the program is designed to bring new capital into struggling communities.
However, not all opportunity zones are created equal.
Deb Burns, managing partner at investUS Opportunity Fund, an Albuquerque-based fund that helps investors with investments in opportunity zones, said investors are more comfortable with the risk-reward profile of investment opportunities in distressed parts of large cities.
Consequently, Burns said most of the investment in opportunity zones across the country has occurred in zones located in the top 72 high-growth counties, mostly in cities with more than one million residents. None of New Mexico’s 63 opportunity zones qualify.
“We’re competing with 5,400 other zones that are under the radar,” Burns said.
Burns said the state program, which uses LEDA funding to augment the tax incentives for qualifying projects in opportunity zones, can help level the playing field by incentivizing investors to look in markets they might not have considered, particularly in rural parts of the state.
“It’s another tool in the tool box that helps fund managers,” she said.
Because the money comes from LEDA, Nelson said projects must meet program benchmarks to qualify for state funding. Projects must fit into one of the nine industry sectors outlined by Gov. Michelle Lujan Grisham – aerospace, biosciences, cybersecurity, film and television, global trade, intelligent manufacturing, outdoor recreation, sustainable and green energy, and sustainable value-added agriculture – while creating a minimum of $2.5 million in annual payroll.
Only expansions and out-of-state relocations qualify and they must have a capital investment of $15 million or more.
For a full list of conditions, visit www.nmopportunity.com.
New Mexico Economic Development Cabinet Secretary Alicia Keyes