By Aaron Clapper, GOPC Project Manager

Those interested in the Opportunity Zones program are still awaiting guidance for the remainder of the program details – specifically the guidelines for the Opportunity Funds portion of the program. These regulations should be issued sometime in Q4 of this year. In the meantime, GOPC wanted to provide an update for some preparatory action underway to attract investments into Opportunity Funds.

For the latest information on the Opportunity Zones program, please visit our previous blogs.

As a reminder, in order for investments to occur in Opportunity Zones, investors will have to channel their money into Opportunity Funds. Investments in Zones can only occur through these investment vehicles, or Funds. As we await guidelines for the regulations regarding the establishment and operation of Opportunity Funds, a few entities have started the process of creating Opportunity Funds. Fundrise, a crowdfunding company, has announced their intention to create a Fund and accept investments with a $10,000 minimum for their anticipated $500 million Fund. From their website, they state that “The Fundrise Opportunity Fund intends to focus on investing in high-quality real estate in major US cities with long-term growth potential.”  GOPC is concerned that Fundrise, and other similar funds, will skip over weak-market communities in the Midwest.  It will be critical for communities in Ohio to demonstrate to local and national investors the value of investing in their Opportunity Zones.

As the guidelines for the program near completion, GOPC recommends cities demonstrate that they are prepared for investment to occur by documenting their assets and building a portfolio for which investors can easily utilize. Cities can highlight their necessary foundations of affordable housing, transportation, and infrastructure as they work to attract investment into their Opportunity Zones. GOPC encourages public and private partners to collaborate in their efforts to promote investment by attracting and/or creating Opportunity Funds.

Some cities are utilizing their resources to prepare for and attract investments into their designated Opportunity Zones. Last week, Erie, Pennsylvania’s mayor announced that the city, County, Erie Downtown Development Corporation, and 35 local organizations were working together to prepare a pitch to prospective developers. Their goal is to have this pitch prepared by October 31st as a means to attract investment into their designated Opportunity Zones. Recently, Louisville, KY released an interactive map of their established Opportunity Zones as a resource for investors to search addresses and find if they fall in the Zones section. In Baltimore, Maryland, the mayor has proposed to use the profits from leasing city-owned parking garages as a means to start a Neighborhood Investment Impact Fund, which she hopes will put $1B in the most distressed Zones over the next four years. The mayor’s plan includes the establishment of a nonprofit entity to manage the fund, which would be governed by a board of business and civic leaders alongside city officials. By establishing a city-operated Opportunity Fund, the mayor states she is hoping to spur investment and direct it into strategically-decided neighborhoods. 

As the regulations for Opportunity Funds is expected in Q4 of this year, and investments starting in early 2019, we encourage cities to plan strategically on ways they can prepare for investment.

As new updates emerge, we will continue to update.