A fund created in Racine, called the Badger State Opportunity Fund, will try to ignite investments in Wisconsin's 120 Opportunity Zones.

Created by the 2017 federal tax cut law, opportunity zones were "designed to spur economic development and job creation in distressed communities," the IRS says, "by providing tax benefits to investors who invest eligible capital into these communities. Taxpayers may defer tax on eligible capital gains by making an appropriate investment in a Qualified Opportunity Fund and meeting other requirements."

City leaders in Racine say they've created the first statewide Opportunity Fund that offers investors diversified options for their money. Now, the leaders are recruiting upper-middle class and wealthy people, with a goal of raising $15-25 million.

Racine Mayor Cory Mason says for people who have sold stock or seen another sizable gain this year, there are advantages in putting money into an Opportunity Zone, compared to an area that's thriving.

He explains, "You could invest substantial resources here, and avoid tax liability on the gains that are made in that area. That has real value to it, particularly when you compound it over time. So, it allows us to say to the investors: 'Reinvest in the cities, reinvest in these 120 zones that are across the state of Wisconsin.' "

Mason joked that he's partial to the three Opportunity Zones in Racine. But he says at a meeting in July, the Urban Alliance, a coalition of Wisconsin's 30 largest municipalities, discussed ways to collaborate and said the federally-designated zones had not been attracting significant investment.

So, there was interest in a broader investment pool that could drawa wider group of people, and spread money across the state.

Racine's chief innovation officer, William Martin, has been closely involved in setting up the new fund. When Martin worked for former Republican Gov. Scott Walker's administration, he helped the state finalize the Opportunity Zone recommendations approved by the U.S. Treasury Department in 2018.

At a Thursday news conference at Racine City Hall, Martin took on one of the national criticisms of Opportunity Zones.

"You're going to see articles periodically from around the country that speak to inequity and how Opportunity Zones have been benefiting people with means, but maybe not as much people living in the neighborhood."

But Martin says with the new fund, "we're being very intentional, based on Mayor Mason's directive, that we ensure these projects be inclusive."

Martin touted aredevelopment project in Racine that promises people who live in an Opportunity Zone can help build the new project, and then work there, once the project is operating.

The Milwaukee-based Legacy Redevelopment Corporation has been working with Racine officials. The company's chief lending officer, Terese Cayo, says the fund won't be just for new real estate developments.

"This money is available for small businesses. It's going to be available for start-ups, which is huge. We also are looking for deals that could be acquisition-rehab projects for communities, and adaptive re-use of properties, as well," she says.

First, though, the Badger State Opportunity Fund has to bring in enough investors. Racine says census data indicate there may be as many as 90,000 Wisconsin households that qualify as "accredited," meaning people with high net worth.

To reach more of them, the fund has launched a marketing campaign to contact 14,000 accountants, who often help clients reduce their tax liability.

Support is provided by Dr. Lawrence and Mrs. Hannah Goodman for Innovation reporting.

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'Badger State Opportunity Fund' Tries To Spur Investment In 120 Wisconsin Neighborhoods - WUWM