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Chicago developers are making use of Opportunity Zone investment – Marketplace APM

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5 years ago

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In Pullman, a Chicago residential neighborhood with high unemployment, a $35 million, 400,000-square-foot building is under construction. The industrial space, scheduled to open in April, could be a warehouse or logistical center.

The nonprofit behind the building, Chicago Neighborhood Initiatives, initially had trouble financing its development. Eventually Allstate, the insurance company, offered to fund it in exchange for tax breaks offered in what’s called an “Opportunity Zone.”

“When we started it a couple of years ago, we were looking at different financing tools and different ways to structure this,” said David Doig, president of CNI. In Pullman, an economically distressed community on Chicago’s South Side, CNI has ushered in developments from big-box retail to artist housing.

Opportunity Zones stem from President Donald Trump’s major tax overhaul in 2017. The federal program encourages investors to fund development in low-income communities through tax incentives. Opportunity Zones allow investors or for-profit companies to defer or reduce taxes on their capital gains.

If an investor has $2 million in capital gains, for example, it can put the money into an Opportunity Zone investment. One option for investors under the program is to delay paying taxes on that money for several years. Another option, if the investor holds the investment for five years, is to get a tax break of 10% on the amount invested, or to hold it for seven years, to get a tax cut of 15%.

The money goes to areas like Pullman. The state of Illinois determined the 133 Opportunity Zones in Chicago — the census tracts where investors can now qualify for those tax breaks.

But the economic impact of Opportunity Zones is hard to track because there is no oversight, at the local, state or federal level. Critics say that there isn’t enough oversight. As it stands, the IRS sets tax guidelines for investors. But the government does not track things like job creation or how much economic development results from those investments.

“It is pretty agnostic about what type of investment it’s incentivizing,” said Brett Theodos, a researcher who studies Opportunity Zones for the Urban Institute in Washington, D.C. Theodos testified before Congress last fall about changing the program to build in more accountability.

“I’m encouraging localities, states, philanthropies, impact investors and others to co-invest in projects that are more clearly going to produce a community benefit,” Theodos said. Earlier this month Theodos and other Urban Institute researchers released an assessment tool for investors, community groups, policymakers and others to use if they want to measure the impact of an Opportunity Zone project.

Without a system of oversight, it’s hard to pinpoint which projects have received Opportunity Zone investment money in Illinois or elsewhere.

The Chicago Housing Authority is an example of a co-investor. It’s using Opportunity Zone money from co-investor PNC Bank to add a commercial building to a mixed-income housing site in the city’s West Side. The commercial space will include restaurants and a health office.

“Quite likely this would not have been done without the incentive provided by the Opportunity Zone because of the large influx of capital needed in these depressed areas. The Opportunity Zones was a ‘but for’ instrument — but for the Opportunity Zone, we would not see $12.5 million invested,” said Michael Gurgone, chief investment officer for CHA.

David Doig in Pullman said Opportunity Zone investment money can only do so much for nonprofit developers.

“They’re a tool. Are they the end-all, be-all, are they going to solve all of our problems? No,” Doig said.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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5 days ago

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November 6, 2024

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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4 weeks ago

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October 16, 2024

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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1 month ago

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October 11, 2024

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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