Montrose, Colorado, is the ideal destination for business investment. While the community has all the essentials for commercial success, such as Gigabit broadband service, a robust regional airport, and wide-open and affordable space for development, it is the city’s affinity for a fulfilling lifestyle that adds a special luster.
A historic and picturesque city of 20,000 residents situated on the Western Slope of the Rocky Mountains, Montrose serves as a basecamp for accessing some of the very best recreational assets in Colorado. Black Canyon National Park, mountain resorts such as Telluride and Crested Butte, and vast diverse and picturesque landscapes in between are just a few examples to get the lifestyle conversation started. It’s no wonder why Montrose was highlighted by Forbes Magazine in both 2016 and 2018 as the top-ranking coworking space in the world and an Opportunity Zone to watch.
Opportunity Zones were enacted as part of the 2017 tax reform package (Tax Cuts and Jobs Act) to address uneven economic recovery and persistent lack of growth that have left many communities across the country behind. They are low-income census tracts nominated by governors and certified by the U.S. Department of the Treasury into which investors can now put capital to work financing new projects and enterprises in exchange for certain federal capital gains tax advantages. The country now has over 8,700 Opportunity Zones in every state and territory.
In the broadest sense, the Opportunity Zone designation is a federal tax incentive to invest in low-income urban and rural communities through the favorable treatment of reinvested capital gains and forgiveness of tax on new capital gains.
The incentive is a deferral, reduction, and potential elimination of certain federal capital gains taxes.
Opportunity Funds are new private sector investment vehicles that invest at least 90 percent of their capital in qualifying assets in Opportunity Zones. U.S. investors currently hold trillions of dollars in unrealized capital gains in stocks and mutual funds alone— a significant untapped resource for economic development. Funds will enable a broad array of investors to pool their resources in Opportunity Zones, increasing the scale of investments going to underserved areas.
Investor Benefits of Opportunity Zones
Opportunity Zones offer investors the following incentives for putting their capital to work in economically underserved communities:
- Temporary tax deferral for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is sold or December 31, 2026.
- A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis of the original investment is increased by 10% if the investment in the qualified opportunity zone fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxation.
- A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund, if the investment is held for at least 10 years. (Note: this exclusion applies to the gains accrued from an investment in an Opportunity Fund, not the original gains).
Zones in Montrose
The opportunity zones in Montrose include the areas primarily located to the north of Highway 50 and east of the Uncompahgre River and those in the Downtown Development Area in downtown Montrose.
The designated zones focus on new investment in the existing downtown and the areas between the airport and Main Street. While other areas of Montrose County outside the City of Montrose are also designated Opportunity Zones, this prospectus assesses development and investment market and potential around the core downtown.