Perham weighs Opportunity Zone bid to draw investment

Perham is weighing whether to seek Opportunity Zone designation as Minnesota prepares to open a 90-day nomination window on July 1, 2026. For a city of 3,512 people spread across 3.6 square miles, even a modest influx of outside capital could ripple through housing, downtown properties and other redevelopment sites.

The incentive is straightforward. The Internal Revenue Service says investors can defer tax on eligible capital gains if they place those gains into a Qualified Opportunity Fund within 180 days. If the investment is held long enough, the rules can add tax breaks after five years and seven years, and can allow permanent exclusion of new gain after 10 years. Minnesota’s Department of Employment and Economic Development says the program was reauthorized in 2025, and that Gov. Tim Walz will designate a new round of zones during the coming nomination window.

Minnesota can choose up to 25% of its eligible census tracts, or about 73 zones out of roughly 289 low-income tracts. That means Perham would be competing with communities across greater Minnesota for one of a limited number of slots, and the question for local leaders is not just whether the designation brings money, but where that money would land.

The city already has some financing tools in place. The Perham Economic Development Authority says it has a $2.5 million revolving loan fund and gap-financing tools for projects that need help closing the deal. The Perham Housing & Redevelopment Authority says its mission is to help low-income residents obtain adequate housing at a price they can afford. Those existing programs suggest an Opportunity Zone bid would not be starting from zero; it would add another layer to an already active development strategy.

Housing remains the clearest pressure point. A 2014 housing study cited by the League of Minnesota Cities said Perham then needed 100 homes and about 10 additional housing units a year. The same league source says Grow Perham has since supported more than 300 apartment units for the local workforce. Otter Tail County’s 2024 community development and housing report said 10 first-time homebuyers outside Fergus Falls and Perham used lower-interest mortgages and down-payment assistance through a county-lender-Minnesota Housing partnership. Local reporting also put last year’s county housing total at 443 new and rehabbed units, representing more than $94.2 million in housing investment.

That is the fine print behind Perham’s Opportunity Zone debate: the designation could help attract financing for apartment projects, rehabs and other underused properties, but it would also raise the stakes on whether new capital matches local housing needs and the town’s scale. In a small market, the first projects to move are likely to shape who benefits first.