The document summarizes a presentation on Opportunity Zones given by Christopher Coes of Smart Growth America and LOCUS. It discusses how Opportunity Zones are aimed at encouraging long-term private investment in low-income communities. It provides an overview of the Opportunity Zones tax incentives and timeline. It also notes some concerns about the program, such as lack of local capacity and reporting requirements.

1. CPAR Opportunity Zones Summit
November 18, 2019
Attracting
Opportunity
Fund/and
[smart
growth]
investment
in Florida’s
Central
Panhandle

2. Welcome
Christopher Coes
Vice President of Land Use and Development
Smart Growth America
Director
LOCUS

3. Smart Growth America
Smart Growth America empowers communities through technical
assistance, advocacy, and thought leadership to create livable
places, healthy people, and shared prosperity.

4. LOCUS
A national coalition of private real
estate developers and investors
working to meet the country’s
pent-up demand for sustainable,
equitable, walkable urban
places by advocating for local,
state, and federal policy change .

5. National Opportunity Zones Academy
Aims to provide the cities of Seattle,
Los Angeles, New Orleans, Miami,
Chicago, Norfolk, and Pittsburgh with
a place -based technical assistance
program that prepares them to make
the most of the federal Opportunity
Zones tax incentive.
Boston

6. Introducing Opportunity Zones

7. A new federal economic
development initiative aimed at
encouraging long term private
capital investment in America’s
low-income urban and rural
communities.

8. Search America’s 8,761
Opportunity Zones for…
➔ Transit stations
➔ Brownfield sites
➔ Poverty rate
➔ And more
LOCUS Opportunity Zone Navigator: An interactive mapping tool for individuals and
organizations interested in real estate, policy, and business, economic, and community
development activities in America’s newly designated Opportunity Zones
Understand…
➔ The economic, environmental,
housing, and infrastructure
characteristics of each OZ
➔ The type of development needed
to revitalize distressed
communities and stimulate
economic growth there
locusdevelopers.org/opportunity -zones

9. At a glance, the nation’s Opportunity Zones:
● Account for nearly 12 percent of America’s land mass.
● Are home to over 30 million Americans, 56 percent of which are demographic minorities.
● Have an average30 percent poverty rate and house residents earning, on average, 59
percent of AMI (Area Median Income).
● Employ 73% of residents in commercial jobs and 27% in industrial ones.
● Only 9% of already-designated Opportunity Zones have at least one transit station.
● 42 percent are located in rural census tracts, 35 percent in urban, and 23 percent in
suburban.
● On overage, residents spend 53.2 percent of their income on housing and transportation in
these zones.

10. How does the Opportunity Zones tax incentive work?
Uses private investment vehicles to funnel up to $8 trillion in public and privately held capital gains
towards economic development activities in our nation’s most distressed census tracts.
Scalable tax incentives for investing
Incentive #1: Temporary Deferral Capital
Gain Taxes until Dec. 2026
Incentive #2: Step -up In Basis: 10% (5
years) or 15% (7 years)
Incentive #3: Permanent Exclusion of New
Gains after (10+ years)
Place-based Requirement: 90% of
qualified investments must be in an
Opportunity Zones

11. What can Opportunity Funds Invest in?
Multi-family
Housing
Energy &
Infrastructure
TOD
Master-Planned
Development
Business
Incubators/Startups
Build and invest in...

12. Timeline
Year 1: Gains must be
rolled into an
Opportunity Fund
within 180 days of sale
in order to be eligible
for QOF tax benefit.
Year 5: 10% basis
increase on deferred
gain.
Year 7: 10% basis
increase on
deferred gain. (15%
total reduction ).
Year 10+: All capital gains
taxes eliminated on
potential Opportunity
Fund profits
December 31, 2026:
Deferred tax on original
gain is due. Investors pay
tax on 85% of original
capital gains.
December 31, 2028:
Federal Opportunity
Zone designations
expire.
December 31, 2047:
Eligibility to hold
interest in a QOZ ends.
December 31, 2019 Last
day to invest in a QOF to
be eligible to receive all
potential tax benefits.
December 31, 2021: Last
day to invest in a QOF to
be eligible to receive 10%
basis increase on deferred
gain.

13. ★ Unlock and leverage patient
capital to deliver innovative
projects
★ Earn long-term tax benefits while
accelerating equitable
neighborhood redevelopment
★ Create new partnerships with
local like-minded organizations
to maximize economic and social
impact
The private sector has a
unique opportunity to:
However, there are still
concerns about the
Opportunity Zones tax
incentive.
★ Lack of local capacity to support the
Opportunity Zones program and
projects
★ Uncertainty from the U.S. Treasury
and the terms of “substantial
improvement”
★ Lack of a reporting and tracking
mechanism
★ December 31, 2026 (taxable year)

14. Federal push for transparency is on the rise

15. Bipartisan Bill to Strengthen Reporting Requirements
● Introduced by Senators Cory Booker (D -NY), Tim Scott (R -SC), Maggie Hassan (D -NH), and Todd
Young (R-IN).
● Directs the Secretary of the Treasury to collect information on investments held by Qualified
Opportunity Funds and share it with Congress. Information to be collected includes:
● Number of QOFs;
● Amount of assets held in QOFs;
● Composition of QOF investments by asset class;
● Percentage of designated Opportunity Zones that receive QOF investments;
● Impacts and outcomes of zone designation on economic indicators including job creation, poverty
reduction, and new business starts;
● Total amount and date of an investment;
● Type of investment;
● Location of a business or real estate investment;
● Type of activity being supported by the investment;
● Approximate number of full -time employees at the time the investment was made; and
● Approximate total square footage and approximate number of residential units.

16. IRS releases new draft Form 8996
● Form 8996: Document attached to annual tax filings to self -certify as an Opportunity Fund.
● Changes require an Opportunity Fund to disclose more specific information about its investments
with respect to Opportunity Zone Business Property and Opportunity Zone Stock or Partnership
Interests.
○ Every census tract where business property is owned or leased by the OF is located,
○ Value of such property on each testing date,
○ Every census tract in which the tangible property of an OZ business is located, and the EIN
of that business,
○ Value of the tangible property on each testing date,
○ Value of OF investment on each testing date, apportioned to each census tract.
● Opportunity Fund must indicated which valuation method it is using (application financial
statement or alternative).
● Must report whether any Opportunity Fund investor disposed of part or all its equity interest in the
Fund during the tax year and attach a statement of investor name, date of disposal, and interest
transferred.

17. Communities are now in a
ferocious competition
over place
(and private capital)
(whether they know it or not)

18. LOCUS National Opportunity Zones Ranking Report

19. Ranking
Walkable Urbanism in
America’s Largest Metros
2019

20. WALKABLE
URBAN
DRIVABLE
SUB-URBAN
WALKUP:
Metro Area Acreage: 1%
EDGE CITY
Metro Area Acreage: 3-4%
NEIGHBORHOOD
Metro Area Acreage: 2-6%
BEDROOM COMMUNITY
Metro Area Acreage: 90-94 %
REGIONALLY SIGNIFICANT LOCAL SERVING
METROPOLITAN LAND USE OPTIONS:
WalkUPs:
● A form of development
with higher density,
multiple real estate
product types in close
proximity or within the
same property, and
multiple modes of
transportation to move
people and goods to the
place.
● Within the WalkUP,
nearly everything is
within walking distance.

21. Walkable urban office space in the 30 largest metros
commands a 105 percent rent -per-square -foot
premium over rents in drivable suburban areas.
Rental multi-family commands a 61 percent rent -
per-square -foot premium over rents in drivable
suburban areas.
These price premiums continue
to grow .
Walkable urban development is not limited to the
revitalization of center cities ; it is also the
urbanization of suburbs.
Key Findings

22. Smart Growth America conducted interviews with senior -level employees at relocated
companies to understand why they chose the location they did. In the course of our
interviews six common themes emerged explaining why companies chose to locate
downtown:
● To attract and retain talented workers
● To build brand identity and company culture
● To support creative collaboration
● To be closer to customers and business partners
● To centralize operations

23. Types of Opportunity Zones

24. Potential WalkUPs
Census tracts whose economic, geographic, and real
estate indicators do not support walkability, livability,
and job, transportation, and housing diversity.
Established WalkUPs
Census tracts whose economic, geographic, and real
estate indicators support walkability, livability, and
job, transportation, and housing diversity.
Low Smart Growth Potential (0 -6) High Smart Growth Potential (12 -20)
High Social
Equity
(12-20)
• Low National Walkability
Index score (<14)
• Low job density
• Low housing density
• Distance from Top 100 metro
area central business district
• High transit accessibility
• Low H + T (<45%)
• High percentage of rental
units (>50%)
• Total Population: 9.9 million
• High National Walkability
Index score (14-20)
• High job density
• High housing density
• Proximity to Top 100 metro
area central business district
• High transit accessibility
• Low H + T (<45%)
• High percentage of rental
units (>50%)
• Total Population 494,928
Low Social
Equity
(0-6)
• Low National Walkability
Index score (<14)
• Low job density
• Low housing density
• Distance from Top 100
metro area central
business district
• Low transit accessibility
• High H + T (>45%)
• Low percentage of rental
units (<50%)
• Total Population: 20 million
• High National Walkability
Index score (14-20)
• High job density
• High housing density
• Proximity to Top 100 metro
area central business district
• Low transit accessibility
• High H + T (>45%)
• Low percentage of rental
units (<50%)
• Total Population: 15,554
Opportunity Zone Classification Matrix
Emerging WalkUPs or
Bubble Communities
These communities’ social equity (7-
11) and smart growth potential (7-
11) fall in the middle of the pack;
they are most in control of their
future, but could experience the
fastest rapid change in social equity
or economic performance if they’re
not intentional about their
investment and policy frameworks.
Total Population: 494,928
HighRiskof
Displacement
LowRiskof
Displacement
At Risk of Neighborhoods

25. LOCUS Equitable Investment Atlas: The Equitable Investment Atlas is an interactive mapping tool
that allows users to search all designated Opportunity Zones in the 50 U.S. states and the District of Columbia
for information regarding their Smart Growth Potential (SGP) and Social Equity. It is intended to guide
communities in designated Opportunity Zones, as well as other stakeholders and investors, to better
understand designated zones’ SGP status relative to other locations across the country.
locusdevelopers.org/opportunity -zones

26. The Central Panhandle has 8 Opportunity Zones

27. The Central Panhandle has 8 Opportunity Zones
Together, they:
● Are home to over 30,184 people and host
over 20,363 jobs.
● Majority Low Smart Growth Potential, Low
Social Equity.
● Average SGP of 0, SE_VI of 8.3.
● Have a 27.25 percent poverty rate .
● Have an average annual household housing
and transportation (H+T) cost of 69
percent .
● None have at least one transit station.
Bay County
Jackson County
Calhoun County
Holmes County
Washington County

28. How do the Central Panhandle’s counties compare?
Bay (3) Jackson (2) Washington (1) Calhoun (1) Holmes (1)
SGP 0 0 0 0 0
SE_VI 9.03 6.82 8.09 5.52 4.47
Poverty
Rate (%)
27 252525 28 25 28
H + T (%) 52 82 68 82 81

29. Growing Smart Growth Potential
What do we need to increase Smart Growth
Potential?
1. Housing Density near Jobs (Zoning Policy)
2. Job Density (Entrepreneurs/Small Business)
3. Walkability (Complete Streets)
What do we need to become more socially
equitable?
1. Density
2. Increase access to transit
3. Lower Housing + Transit Cost
4. Diversity of housing choice

30. How to Attract Private [Smart
Growth] Development and
Investment

31. Let’s be honest:
There will be multiple waves of Opportunity Zone investment.

32. Investors would like to invest in Opportunity Zone communities that…
● Provide a path of least resistance .
● Effectively align state and local development incentives.
● Have easily identifiable and underwritten project pipelines .
● Are interested in TOD and infill development.
● Favor coordination amongst state and local regulating authorities.
● Provide opportunities for both project and portfolio development.
● Seek to encourage equitable development investment (social impact).

33. What does an investor need to take on smart growth projects?
★ Marching orders: Developers respond well to a clearly articulated vision. Aim for
proactive rather than reactive policies.
★
★ Predictability: Generally speaking, the development community wants to know what is
possible by right on a parcel, not what might be if the ZBA is in a charitable mood on
the right day.
★ Give &Take: Universal Design, Inclusionary housing, and other regulatory
requirements cost money. If there isn’t relief provided then the impact of additional
regulations could have the effect of driving up costs. What type of relief is your
community willing to consider for builders who want to create the most accessible
projects? Density bonus? Setback or Parking relief? Property Tax abatements?
Concurrent public space infrastructure investments?
★ Local Political Will to Support the “Vision”

34. Understand the gap
How much subsidy is it going to take to
close a smart growth project’s funding
gap?

35. Ask the right questions.
What’s the “right” risk profile and exit strategy?
Small
business
retention
Affordable
Housing
TOD
Infrastructure
★ Is this community or project a high growth
opportunity?
★ Can we meet regulatory deadlines?
★ What is the expected return on
investment/IRR? Potential Strategic
partnership?
★ Is it mission-driven? Will the community
support long term?
★ Do you trust the Opportunity Fund
manager?

36. Recommendations:
Central Panhandle Opportunity Zones

37. What can the Central Panhandle do now?
❑ Convene an Opportunity Zones task force to
establish priority projects
❑ Align state, local and philanthropic
resources and incentives.
❑ Create one -stop shop and project pipeline
database
❑ Reduce regulatory process for project
approval
❑ Create an Opportunity Fund accessible to
local residents and business
❑ Institute “do no harm” policies
❑ Create measurable, people -based social
equity outcomes (real-time monitoring)
❑ Develop a real attainable housing strategy
❑ Build cross -sectional coalition in support of
transit & equitable development
❑ Establish equitable development scorecard to
direct local investment
Ensure equitable development outcomes in
Opportunity Zone areas
Inspire investor confidence in local
development projects and processes

38. Best Practices:
Opportunity Zone Strategies

39. Renaissance HBCU Opportunity Fund
Tuscaloosa, Alabama
● Real estate fund based in Washington, DC that provides assistance and financing to
historically black colleges and universities.
● Partnered with Stillman College to build a 125-room hotel on the college campus to serve as
a teaching center for the school’s hospitality management program .
● Project includes mixed -use residential and commercial space , including market -rate housing
for faculty and graduate students.
● The hotel will be sold back to Stillman College for its long -term use at the end of a holding
period, with the cash flowing back to the college .

40. Urban Array Opportunity Fund
Chicago, Illinois
● Fund investing primarily in Chicago’s Opportunity Zones.
● Fund identifies properties to rehab and rebuild, and entrepreneurs to incubate and facilitate
in the newly renovated space.
● Properties purchased by the fund are rehabbed and rebuilt for Entrepreneurs being
incubated through business accelerator E.G. Woode.
● As assets are grown they may be sold back to the community members who contributed to
them.
● Investors’ money is locked into the Fund for 10 years.

41. Birmingham Inclusive Growth (BIG) Partnership
Birmingham, Alabama
● P3 effort to identify potential
Opportunity Zone projects in
Birmingham and find OZ dollars to
fund those projects.
● Putting 140 units of workforce
housing , 5 of which will be for
people reintegrating into the
workforce after prison or other
obstacles, in the Stonewall
American Life Building.

42. US Waste to Energy Green Industrial Fund
Seattle, Washington
● Seattle -based fund authorized to raise $500 million for industrial park projects in Qualified
Opportunity Zones.
● Projects whose objective it is to eliminate toxic waste with a focus on waste plastics and end
of life tires.

43. Opportunity Funds and Small Business Development
Nationwide
● Golden Door Partners Opportunity Zone Fund (Northeast)
○ Private equity firm focused on lower middle market, labor intensive businesses.
● Money Behind the Dream QOZ Fund (Louisville, KY)
○ Support the building of 342,000+ sqft of commercial space to implement an Entrepreneurship
Command Center. The Center will include space for business incubation, health and medical
resources, and research and technical training facilities.
● Local Grown Salads i95 Opportunity Fund (Nationwide)
○ AgTech start -up growing produce year -round in a controlled environment with the highest
standards of food quality and food safety while helping to address the problem of food
deserts.

44. What are other places doing about Opportunity Zones?
● Brockton, MA
○ Matchmaking efforts with developers and an investment prospectus.
○ Zoning code permitting high commercial and residential density in core areas, including downtown and near transit.
● Stockton, CA
○ Navigable website with all of Stockton’s Opportunity Zone development opportunities.
○ This includes an Opportunity Zone Prospectus and tools to “Find Your Perfect Building” and compare Stockton’s
Opportunity Zones with those of other communities across the U.S.
● Newark, NJ
○ Encouraging locally-grown Opportunity Funds, including one in partnership with the City of Newark, Rockefeller
Foundation, and State of New Jersey to begin Opportunity Zone investment.
○ Compiled all development projects in Opportunity Zones into a central database that is publicly available.
○ Partnering existing financial programs and incentives with Opportunity Zones.

45. Thank you!
Questions? Contact:
Christopher Coes at ccoes@locusdevelopers.org