Opportunity Zone Project Underway for BayCoast Bank
We are very pleased to have been able to represent BayCoast Bank in the acquisition of the Standard Times Building on Rt. 18 and Elm Street in New Bedford through an Opportunity Zone entity. Through this strategic Opportunity Zone acquisition, BayCoast Bank has made a significant investment in New Bedford that is expected to expand growth opportunities for its team, bring new jobs to the New Bedford area, and substantially improve the Standard Times Building as a cornerstone of New Bedford’s downtown district.
Six years ago, we negotiated a lease and obtained the necessary permits for BayCoast Bank to establish a branch, executive offices, and a drive-thru at the property. The 37,000 square foot building was constructed in 1997 to house the Standards Times newspaper on land formerly owned by the New Bedford Redevelopment Authority. Over time, the newspaper needed less space due to changes in the industry and consolidation of the Gatehouse newspaper functions. Gatehouse decided to sell some of its real estate assets prior to merging with Gannett Publishing (USA TODAY) recently. Lease provisions gave our client the right of first consideration on the purchase of this property.
We are proud to have assisted BayCoast Bank with what is believed to be either the first or among the first Opportunity Zone projects in New Bedford. As you may recall from our earlier newsletter (available here), Congress created the Opportunity Zone program to incentivize investment in communities where significant economic development is most needed. Following the passage of this law, a number of areas in the SouthCoast were officially designated as Qualified Opportunity Zones. Significant areas of New Bedford and Fairhaven, particularly along the waterfront areas, are in Opportunity Zones.
The new law affords individuals and business entities significant tax incentives for investing capital gains into Opportunity Zones in the form of deferred capital gains taxes until the earlier of December 31, 2026 or the date on which the taxpayer sells its interest in the investment. Additional, very substantial tax benefits are available for Qualified Opportunity Zone properties held at least 5, 7, and 10 years. If the Opportunity Zone entity holds the property for at least ten years, the owner gets a stepped up basis on sale which eliminates the capital gain tax on the appreciation entirely.
This was the fifth branch location that we have helped develop for BayCoast Bank. We have also assisted in the development of additional bank office buildings, including the former Compass Bank headquarters, which is now the DeMello International Center on Union Street in New Bedford.
If you would like to know more about the Opportunity Zone program and how you might utilize it, or if you would like our assistance with a real estate development project, please call at your convenience.