HUNTINGTON — Despite a booming national economy, one in six Americans live in economically distressed areas.
According to a report released last year by the Economic Innovation Group, job growth in economically distressed areas lags behind the national rate. These communities, often in rural areas, also have higher poverty rates and lower incomes, and additionally face more challenges in regards to returning private investments.
For U.S. Sen. Tim Scott, R-S.C., the lack of growth in rural areas concerns him.
“If you think about the fact that we are in the third-largest and longest economic recovery since 1854, the reality of it is there are pockets that have not recovered at all or not significantly,” Scott said.
One option to boost economic development in struggling communities is opportunity zones, a national investment plan that encourages long-term private investments through offering tax incentives.
Scott joined Sen. Shelley Moore Capito, R-W.Va., Friday to visit opportunity zones in Huntington. The tour included stops at software development firm Core10, the Market Downtown Huntington and the West Edge factory of Coalfield Development Corporation.
“We’re in a transitional economy. We’re transitioning from a more coal-based economy to a more diverse economy,” Capito said. “We have an opioid problem here in the state, and I think there’s a possibility for opportunity zones to be a private partner with some of the initiatives we have done in the public sector.”
The creation of opportunity zones came in the Tax Cuts and Jobs Act, which went into law in December. Scott helped spearhead the legislative effort to create such zones, which was met with bipartisan support prior to the measure being included as part of the tax legislation. The Senate passed the tax bill with only Republican support.
A governor can nominate up to 25 percent of a state’s low-income tracts for consideration. The Economic Innovation Group describes these areas as having poverty rates of at least 20 percent or an average family income that is no greater than 80 percent of the surrounding area.
The U.S. Treasury Department certifies the zone, which includes more than 8,700 existing areas.
Private investors, such as banks, create opportunity funds for the opportunity zones. If the investors continue their investment for at least a decade, the sale of the related fund will be excluded from capital gains taxes.
West Virginia has 55 opportunity zones, which includes 203,000 residents, 201,000 jobs and 13,000 businesses. Charleston has the most zones with five tracts while Huntington has three zones.
Capito said Huntington leaders have been active in working to revitalize the city, making it the ideal place for Friday’s stop.
“Huntington represents a new vision for itself. There’s a lot going on in terms of job development and redevelopment,” she said. “Huntington has the same phenomenon we have a lot in small towns and cities where the downtown has zones that need revitalization or repurposing. The real estate presents a great opportunity for development and investment.”
West Virginia received poor marks in the Economic Innovation Groups’ 2017 Distressed Communities Index released in September. The report stated 34.4 percent of West Virginians live in economically distressed communities, the third-highest percentage in the country behind Mississippi (43 percent) and Alabama (35.8 percent).
Scott’s native South Carolina has a rate of 30 percent.
“The goal of the economic opportunity zones is to make the economic opportunities more even throughout the country, specifically rural areas,” he said. “We have poverty in some pockets, we have opioid addictions and challenges in other pockets. The opportunity zones really do bring tools to the table to confront the opioid addiction as well as inner-city poverty.”
Scott said half of venture capital investments go to California, New York and Massachusetts.
“There are real challenges that can be confronted with more resources,” he added.
Capito agreed, saying investments in places like Huntington help create job programs, increase economic activity and better social conditions.
Huntington Mayor Steve Williams, Fire Department Chief Jan Rader and U.S. Rep. Evan Jenkins, R-W.Va., joined the senators during their Friday stops.