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W W W. M A I N E B I Z . B I Z 19 N OV E M B E R 1 2 , 2 0 1 8 I t's rare that the word "exciting" and tax law are joined in the same sen- tence, but excited is what everyone from attorneys to developers are about the new Opportunity Zone tax benefit. "I think it's really exciting," says Kris Eimicke, a tax law and economic development attorney at Pierce Atwood in Portland. "It has the potential for significant impact." Drew Anderson, real estate direc- tor at Murray Plumb & Murray in Portland, says there's more attention on the new law than he's seen on a tax rule in a long time. "It's a new toy, and people are pretty excited." Kevin Mattson, of Dirigo Capital Advisors, a partner on what may be the first Opportunity Zone project in the country, feels the same way. "e impact this is going to have is really exciting," he says. e program is new, the rules aren't final, and developers and investors are very interested in the possibilities. As the front line of any commercial develop- ment, law firms that have a focus on real estate development are scrambling to stay on top of the program. e Opportunity Zone tax benefit, which came out of the federal tax over- haul, is designed to encourage develop- ment in designated zones across the U.S. that are considered low-income or in need of development. Maine's 32 zones were announced in May. ere are 8,761 zones across the U.S. and its territories. Proposed rules were released by the U.S. Treasury Oct. 19 and may be final- ized by the end of the year after a 60-day comment period. e program allows capital gains to be put into a fund for a designated Opportunity Zone within six months of the gains being realized. Once that's done, they're not taxed until Dec. 31, 2026. e longer the property is held, the more the tax benefit. After five years, 10% of the property would be excluded from taxes; that rises to 15% after seven years. After 10 years, all of the gains are tax-free. A special fund must be set up for a zone project, usually in the form of an LLC. e money is expected to be used to redevelop a struggling property or business. Money rolled back into the fund can be reinvested into the same building or business, or others in the same zone. e U.S. Treasury has estimated $100 billion may pour into the program. Figuring it out Anderson was the legal advisor on what may be one of the first Opportunity Zone projects in the country, the rede- velopment of 333 Water St., in Augusta. "I guess that makes me an expert," he says with a laugh. e former Odd Fellows Hall is in the Opportunity Zone that extends from Augusta's western border to the Kennebec River, bounded by Western Avenue to the south and Bond Brook to the north — which includes all of the city's downtown and a huge part of its historic residential area. When the project was brought to Anderson, "I tackled it without much choice," he says. "Since then, I've been doing some research." He says he's not different from attorneys at other firms. "We're just starting to grapple with it. More and more clients are asking about it, and we're having to figure it out." Sorting the nuances "is building could've been an Opportunity Zone project," Eimicke says as he sits in Pierce Atwood's fifth-floor conference room on Port- land's waterfront. When the zones were announced, some questioned the fact that part of Portland's active peninsula commer- cial district was included with places like huge swaths of Aroostook and Washington counties, Millinocket, downtown Augusta and other areas that seem more obviously distressed. P H O T O / T I M G R E E N WAY Making sense of Opportunity Zones Law firms jumping into the new development field B y M a u R e e n M i l l i k e n C O N T I N U E D O N F O L L OW I N G PA G E » F O C U S L AW It's part of the basket of tools. — Kevin Mattson Dirigo Capital Advisors Rob Ravenelle, left, and Kris Eimicke, tax specialists at Pierce Atwood in Portland, say the new federal Opportunity Zones have the potential for significant impact.

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