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Remember the Trump tax cut? Here's how it might benefit low-income areas in Dallas

Using benefits from the 2017 tax cut act, developers aim to lift up run-down areas.

There's more separating Pleasant Grove from Deep Ellum than 11 miles of roadway.

Deep Ellum, the rise-and-fall entertainment district adjacent to downtown Dallas, is on the rise again, attracting millions in development dollars.

Pleasant Grove, one of the poorest areas in the city, doesn't share the same allure.

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Yet both stand to benefit from an unheralded part of the 2017 Tax Cuts and Jobs Act that will offer investors tax breaks for pouring dollars into lower-income areas dubbed "opportunity zones."

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The idea of offering investors tax breaks for launching projects in poor areas isn't new. And the latest initiative is more seed catalog than a crop — no projects have been announced for Dallas, according to a city spokesman.

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Still, the initiative has fans, including Facebook-famous Sean Parker, who is credited by some with crafting the genesis of the plan. Backers see it as flexible enough, and potentially lucrative enough, to generate progress against some of the most stubborn problems facing urban America.

"We ... think qualified opportunity zones are the next big things," said Brian Dethrow, a Dallas-based tax partner with Jackson Walker. "Nobody's heard of them, but these rules may change the face of our cities."

The tax cut act allows investors to lift up down-at-the-heels stretches, and some rural areas, while also cutting their own tax bills.

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The vehicle is an "opportunity fund." Investors take recent capital gains, roll them into a fund and defer federal taxes on the gains until Dec. 31, 2026. When the capital gains tax is paid, the normal tax would be cut by up to 15 percent.

Meanwhile, profits from the venture created by the fund are tax-free if the investment is held at least 10 years.

The funds must invest at least 90 percent of their capital in opportunity zones, which are largely census tracts with a poverty rate of at least 20 percent. However, up to 5 percent of the census tracts in the program are permitted to be in non-low-income communities.

Dallas gave Texas Gov. Greg Abbott a list of 52 census tracts for possible inclusion in the program, stretching from near the northwest city boundary to the southern border with Lancaster.

"We submitted the kitchen sink almost," joked Vana Hammond, who heads Mayor Mike Rawlings' Grow South initiative.

Abbott, who is on record as saying the program can "attract billions in investment and economic growth to cities across Texas," then selected 15 census tracts in Dallas, the majority of them south of Interstate 30.

Abbott "understands the passion around Grow South and how important southern Dallas development is to Dallas as a whole, so it wasn't surprising that he chose the majority of the southern Dallas opportunity zones," Hammond said.

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There's one census tract in Collin County, in Plano adjacent to Central Expressway, and there are seven tracts in Tarrant County.

The program also allowed the governor to pick tracts hit by natural disasters. Harris County, swaths of which were submerged last year during Hurricane Harvey, has more than 100 census tracts in the program, including much of downtown Houston.

In Dallas, the area just south of downtown and heading south along Interstate 35E is included, though it already is attracting investor interest.

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Deep Ellum is set to welcome new entertainment spots, an office complex and a mixed-used development with a hotel.

And the city is planning a new deck park for Interstate 35E. Known as the Southern Gateway Public Green, this 5.5-acre park is seen as an opportunity to unite the eastern and western parts of Oak Cliff.

The tax program "seems likely to accelerate that development," Dethrow said. "It's like added gas to the flames. I'm no economist, but golly darn it's amazing."

The IRS has yet to finalize details on how, exactly, the tax breaks will work. And that's keeping a lid on announcements about some potential projects, Hammond said.

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Dethrow said he's "hearing about" potential multifamily and retail projects.

"Maybe

be a way to have access for the poor and solve the food desert,"  he said, referring to inadequate access to nutritious foods in some areas.

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Dethrow said his firm has helped close a "handful" of deals already, though he wasn't able to give details. "And we've got a basketful that

ready to go: clients with plans made and deals done, ready to close."

Hammond said she's heard only "casual conversations" around potential investments, but she knows where there is

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.

"We have a huge issue and gap with housing," she said. "We know as a city we can't fill that gap even with federal funds. ... It's going to take private funding to help fill these gaps."

"On its surface, it seems like it's a good deal for Dallas because it creates this investment opportunity in low-income areas," Hammond added. "And if it truly works like what it's supposed to do, it will help with that gap financing."

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Hammond said Pleasant Grove was only recently added as a focus area for Grow South.

There, the U.S. Census Bureau listed the median household income in

2016 American Community Survey as about $33,000. That's about half of the Dallas-Fort Worth metro area's median household income of $63,812.

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Beyond southern Dallas, selected census tracts include two parcels in East and northeast Dallas near LBJ Freeway.

"The city doesn't have enough funds to be able to fund every gap of every project that we would like to see happen," Hammond said. "In these areas at least, there would be some other mechanism."

Not everyone is a fan. The Dallas Morning News ran a commentary in April in which the authors compared the opportunity zone program to other "place-based" efforts aimed at revitalization that did not always make obvious improvements in poverty or employment levels.

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Benjamin Miller, chief executive of the real estate investment vehicle Fundrise, said he thinks one of the most promising aspects of the new program is its ability to channel investments into a variety of programs, not strictly real estate.

And, he noted, the program is "extremely broad-based in terms of who can avail themselves to it," which should open up investment opportunities to more than just major developers.

"There's no question more will invest because the access is so open," Miller said. "Virtually any group of investors could decide to do this. It's not limited to a handful of gatekeepers, as are most tax programs."

Initially, he expects many of the projects to be focused on real estate "because that's the simplest execution"

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"As the ecosystem matures," he said, "people will use it in unexpected ways."

He said investors could put money into a business or equipment, and he compared it to the early days of the tech boom, when "you have a few examples that create enormous success and then you have a lot of things that don't work.

"You have to be willing to have both if you want great outcomes," he said. "Facebook comes out of something like this. How many things like Facebook do you need to say the program was a success? Not many."

Twitter: @krobijake