Site Availability & Incentives
The MCITD is comprised of a range of opportunities for occupancy and development. In addition to the 1000-acre Airport complex, the MCITD includes approximately 1000 acres, including some existing buildings and greenfield sites for new development. A full list of the existing building assets can be found here: MCITD Available Industrial Buildings.
Castle is part of a large census tract, 000503, which has been designated as a CA Opportunity Zone. This is a federal tax incentive to encourage people with large capital gains in a year to invest in an opportunity zone to defer/eliminate their capital gains. The only obligation that the County has in this process is that if public land is sold at Castle or any County owned property in any other designated Opportunity Zone in the County under this tax provision, they need to collect the information listed below. There are 11 designated zones in Merced County.
An Opportunity Zone is economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. On December 22, 2017, President Trump signed HR 1, which enacted fundamental changes to the federal income tax, including allowing governors of states to designate certain census tracts as Opportunity Zones in their states. Under HR 1, investments made by individuals through special funds in these zones can defer or eliminate federal taxes on capital gains. The Governor can designate up to 25% of census tracts that either have poverty rates of at least 20% or median family incomes of no more than 80% of statewide or metropolitan area family income. In March, Governor Brown designated a total of 879 census tracts, which the U.S. Department of the Treasury subsequently certified. California does not offer any corresponding tax benefits.
A qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in an Opportunity Zone and that utilizes the investor’s gains from a prior investment for funding the Opportunity Fund. To become a Qualified Opportunity Fund, an eligible taxpayer self certifies. Thus, no approval or action by the IRS is required. To self-certify, a taxpayer merely completes a form and attaches that form to the taxpayer’s federal income tax return for the taxable year.
California passed additional legislation which requires a city or county leasing or selling property to a qualified opportunity zone fund to collect specific information regarding:
• Timeline for completion of the investment activity on the property.
• An estimation of the number of jobs that will be created as a result of the investment activity on the property.
• A summary of local workforce utilization strategies that will be employed as part of the investment activity on the property.
The California legislature wanted to ensure that communities have access to key information from incoming investors which will help mitigate concerns that this strategy of using tax incentives to spur economic development may hurt the communities that these new capital investments are meant to benefit. Creating a standard of transparency and communication around community benefit is critical as it relates to the impact of the sale or lease of city or county owned property. This should extend to when opportunity zone investors obtain lands previously used for public benefit.
Merced County can offer a range of customized incentives for companies in key target sectors, including asset development support, labor force readiness and infrastructure. The County is also able to assist in supporting streamlined processes for regulatory approvals that may be required from other government bodies including the San Joaquin Valley Air Pollution Control District. The Foreign-Trade Zones Board has designated the Airport and its hangers, warehouses, industrial buildings, and distribution facilities as Foreign-Trade Zone #226. Additionally, there may be incentives from the State of California and the County and INVESTMerced will be pleased to explore these opportunities.
For more information, please contact us.