Closer Look: York Exponential may be first in York to reap opportunity zone benefits

Logan Hullinger
York Dispatch
John McElligott, CEO of York Exponential, poses for a photo next to a robotic welder at his York City business Monday, November 11, 2019. His Innovation District project has nearly tripled in size thanks to opportunity zone funding. Bill Kalina photo

York Exponential CEO John McElligott has toured the nation, aggressively pitching his vision for a York City Innovation District to top U.S. officials and figureheads in the technology industry.

The reason for his success, he said, largely comes from potential tax incentives and deferrals investors could receive because the parcel of land in question is in one of the city's five federally designated opportunity zones.

"York would never have been on (investors') radar," McElligott said. "The federal opportunity zone basically took everything we had and magnified its value."

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McElligott's envisioned Innovation District earlier this year tripled its expected costs, now reaching nearly $170 million. The city's Redevelopment Authority approved the project in August.

The 763,000-square-foot project would be home to robotic device development, design workshops and office spaces for labs.

McElligott said the space also could facilitate joint technological developments in industries such as energy, defense, 5G infrastructure and cyber security.

York Exponential CEO John McElligott talks about testing his company is performing on police Rex units, left, at the York City business Monday, November 11, 2019. McElligott's Innovation District project has nearly tripled in size thanks to opportunity zone funding. Bill Kalina photo

McElligott announced the plans for the Innovation District, dubbed the "York Plan 2.0," in 2017 in honor of the country's first ordnance contract for World War II that helped solidify the city as a global manufacturing hub.

The planned site is in the city's Northwest Triangle, a vacant parcel of land along Codorus Creek, a few blocks northwest of the intersection of North George and Philadelphia streets.  

The entire parcel of land is within an opportunity zone. Such zones were created by the Tax Cuts and Jobs Act of 2017 that was signed by President Donald Trump.

The policy has been deemed controversial in some respects, as some experts say it could gentrify minority neighborhoods in areas such as York.

More:York City schedules opportunity zone town hall

More:Innovation District plan in York City receives big boost from opportunity zone

Gentrification, for example, could entail improving neighborhoods in a way that could inflate rents and push out low-income residents. Such residents are typically minorities.

But McElligott sees the plan as a way to, through passionate investors, bring the city back to the manufacturing forefront while providing middle-class, blue-collar jobs.

"A lot of the folks that are very wealthy are also patriots," McElligott said. "So we're getting very unique people that the message of protecting America and rebuilding the middle class resonates high with." 

The appeal for investors mostly comes down to potential capital gains deferrals and tax breaks. Opportunity zones also are beneficial for grant applicants, as any application that shows the funds would benefit an area within an opportunity zone would receive priority consideration.

Those factors have definitely come into play, McElligott said.

The Innovation District has already received recognition nationwide through publications such as the 2019 Rise of the Rest Ecosystem Playbook, which highlights a limited number of ambitious projects across the country.

The project is also on the radar of some of the country's most influential individuals, he said. McElligott has brushed shoulders with top White House officials, U.S. lawmakers and a swath of large investors and figures in the artificial intelligence and technology fields.

He would not supply names without the permission of such individuals.

In the coming months, McElligott said, he expects to reveal more information about who is coming on board and offering financial backing.

— Logan Hullinger can be reached at lhullinger@yorkdispatch.com or via Twitter at @LoganHullYD.