WASHBURN, Maine — Struggling with the loss of population and businesses, the town of Washburn and 13 other Aroostook County communities have been included in a new economic development program under the recent federal tax cut law.
The 2017 Tax Cuts and Jobs Act parameters have designated the regional census tracts comprising Washburn, Limestone, Madawaska and other adjacent communities as “opportunity zones,” according to the Maine Department of Economic and Community Development.
The program allows businesses and investors to reduce or eliminate the taxes they pay on capital gains profits from certain investments they make in communities with low average incomes as determined in the U.S. Census.
“This is a huge incentive for investors and could potentially be one of the biggest economic development tools we’ve seen in Aroostook County in decades,” said Maine Rep. Dustin White (R-Washburn) in a media release. “This is about attracting business, capital investment and most importantly jobs to our area.”
Under the federal tax law, a state can designate 25 percent of its low-income census tracts as opportunity zones. In Maine, 32 census tracts spanning more than 40 communities received the designation, including rural northern towns such as Millinocket and the cities of Auburn, Lewiston and Westbrook.
Crews with Soderberg Construction begin groundwork on May 16 for a new Dollar General store opening in Washburn. (Anthony Brino)
The opportunity zone program attempts to attract business investors that would otherwise be leery of putting money into rural and underserved communities.
Under the program, if investments are kept in a designated opportunity zone for five years, the investor will qualify for a 10 percent reduction on their capital gains taxes. After seven years, the investor can see a 15 percent reduction and after 10 years, they can be fully exempt from any tax on profits they earn within the zone.
“It’s big incentive,” said Washburn town manager Donna Turner, who worked with White and the DECD to classify Washburn’s Census tract for the program. Washburn’s census tract includes the neighboring towns of Wade, Perham and Woodland.
“It was basically a joint effort. We all put in a huge effort to choose Washburn,” Turner said.
Turner said Washburn, like other Aroostook County towns, has been trying to garner new businesses. A new Dollar General store is currently under construction in Washburn on a town-owned parcel that used to host a McCain Foods processing plant until the 1980s.
Turner said that it’s possible the new Dollar General store could participate in the opportunity zone program, in addition to other employers for whom the capital gains tax exemption would be attractive.
“We’re always looking for new business,” Turner said. “Anything at all would be a plus.”
