How America’s Poorest ZIP Code Is Attracting OZ Capital, with EDDC

John Persinger & Matt Wachter

Erie, Pennsylvania is home to the nation’s poorest ZIP code, and the nation’s first organization dedicated to promoting a municipality’s Opportunity Zones.

Erie Downtown Development Corporation is led by CEO John Persinger and VP for finance and development Matt Wachter.

Click the play button below to listen to my conversation with John and Matt.

Episode Highlights

  • How Erie’s Opportunity Zone Investment Prospectus has helped enable them to become a model for municipality-led OZ investment.
  • How a proactive approach and bringing investable, shovel-ready deals to market has given Erie a leg-up on getting designated and developed.
  • EDDC’s downtown project to develop retail and a food hall to address Erie’s status as a food desert.
  • The potential that real estate development in Opportunity Zones has to significantly increase the tax base for municipalities — improving local public schools, infrastructure, and other key social services.
  • The importance of local anchor institutions — corporations, universities, community foundations — in getting capital re-wired to flow back into local communities.
  • Tips for real estate developers seeking support from municipalities and capital from investors — and the importance of having a pro forma.

Featured on This Episode

Industry Spotlight: Erie Downtown Development Corporation

Erie Downtown Development Corporation

Formed in 2017, Erie Downtown Development Corporation is on a mission to transform the city of Erie’s downtown core and spark revitalization across the region. Their Opportunity Zone Investment Prospectus has been hailed as one of the best models for municipal-led OZ development.

Learn more about EDDC

About the Opportunity Zones Podcast

Hosted by founder Jimmy Atkinson, the Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

Show Transcript

Jimmy: Welcome to the Opportunity Zones Podcast. I’m your host, Jimmy Atkinson. Joining me today are two members of the Erie Downtown Development Corporation, CEO John Persinger and VP for Finance and Development, Matt Wachter. The EDDC is a member of Erie’s flagship opportunity zone, the nation’s first organization dedicated solely to promoting a municipality’s opportunity zones. John and Matt, welcome to the show.


John: Thanks so much for having us.

Matt: Happy to be here today. Thank you.

Jimmy: Yeah, happy to have you guys on. So Erie has been hailed as a model for municipalities by EIG, by the White House, and many others in attracting opportunity zone investment. Guys, why is that? What is Erie done to earn that distinction? What are you guys doing a little bit differently?

John: I think it just comes down to a lot of hustling. And we’ve been put in that position because of Erie’s history. Erie is similar to many other post-industrial cities. You can call them Legacy Cities, you can call them Rust Belt cities. They’re primarily in the upper Midwest. We’ve gone through 60 years of economic and population decline. We’re now at a turning point, a tipping point for the community, and it’s been interesting to see the community, kind of, get, rally together to try and figure out a way to reinvent itself.

Jimmy: I think one reason why you’re hailed as a model for opportunity zone development is, you guys are really about creating a proactive community response to this opportunity zone benefit. You were a part of creating Erie’s flagship opportunity zone, which I mentioned in the intro, is the nation’s first organization dedicated to promoting a municipality’s opportunity zones. Can you talk a little bit more about that and about the prospectus you’ve created, the investment prospectus, and how that’s drummed up a lot of support in your region and nationally as well?

John: Well, we’ve definitely been fortunate to be recognized across the country, but it really comes down to about two years of work leading up to opportunity zones. In 2016, the city had a comprehensive plan that was delivered, and it called for a investment in the downtown core. As I mentioned, we’re similar to other post-industrial cities, we have a lot of blighted, vacant, underutilized properties, especially in our downtown core. We also have a very soft real estate market. Properties here will appraise for about 65% of what you spend to acquire and redevelop them. The comprehensive plan identified this soft real estate market, this need to revitalize these blighted buildings, and recommended that a new institution be created. A group of local CEOs and philanthropic leaders got together, and they formed our entity, the Erie Downtown Development Corporation in 2017. They also raised just over $27 million for the Erie Downtown Equity Fund. The role of fund is to serve as what we call transformational capital. It’s to fill in those gaps where projects can’t get traditional financing. It’s to serve as patient capital because it’s going to land on very friendly terms, and it is to take a second or third position behind other lenders. So we got formed, as I mentioned, 2017. I was hired in March of 2018 to become CEO. I had been working at a regional law firm as a Transactional Attorney, and one of my colleagues was Matt. Matt was in the tax department also doing a bunch of business transactions. I was fortunate enough to be able to recruit him to come on board as our Vice President for Finance and Development.

And when we’re looking at revitalizing downtown Erie, we said we needed to take a shock-the-market approach, and we needed to dump a huge amount of cash and redevelopment into a small concentrated area. But in order to do so, we needed money, way more than the $27 million that was raised. Looking at our downtown, we realized we needed between $125 million and $150 million. As I’m sure you can imagine, there aren’t a lot of places just looking to handout $100 million to cities like Erie, Pennsylvania. So as we were looking at traditional economic development tools, things like state and federal historic tax credits, low income housing tax credits, new markets tax credits, we also realized that if we pursued those tools, it was going to take us a long time and, kind of, defeat the shock-the-market approach. It would take a long time because those are all government programs. You’re applying on a government program schedule, you’re waiting to get approved by government entities and it’s not a sure bet, and there are other contingencies that come when you’re applying for government programs. But around this time, opportunity zones were coming on the scene, and Matt was still at the law firm when the Tax Cuts and Jobs Act came online, and it was really the first person in the region to notice the provision. We saw opportunity zones as a missing piece of the puzzle for our approach to shock the market back to life in Erie. So I’m going to turn it over to Matt to, kind of, share some of the things that we did to move very quickly on opportunity zones.

Matt: So Jimmy, what became readily apparent to us was that opportunity zones being a provision in the Tax Cuts and Jobs Act was written for Erie in many ways, and the Eries like it all over the country. And the beauty behind it is, it’s not a program it’s an incentive, so it’s market-driven. Meaning, to the things that John was alluding to, you don’t have to apply, you don’t have to fall under a government timetable, you’re not essentially begging for grant dollars, you’re going after investment. And it’s true investment but it’s market-driven, which means that in many ways, you can move at the speed of the market. So it was very appealing to us as we looked for ways to raise a really tremendous amount of capital for a very challenging real estate market. So, believe it or not, we’re working in zip code 16501. It’s the poorest zip code of the United States of America with median income, something like $10,680 for the residents who live here. It’s not Nashville or Austin, Texas, so trying to find real estate investment dollars is extremely, extremely challenging. Fortunately, there was the Erie Downtown Equity Fund which was formed and the tremendous amount of capital there being raised which we can leverage and use as patient capital first at risk. But even with that, it’s still a tremendous challenge to try to bring dollars into downtown core of Erie. What opportunity zones, though? When we first saw and recognized the revision, I was at the law firms still, John was really transitioning into this… Well, this new role, was it even in your sight lines yet. But what happened was we realized that this was written for Erie and put together a group of people, because it was a race in many ways to have good real estate, good census tract certified ultimately by the Treasury department and blessed by the Governor. Because the Governors of the state originally had 30 days, it got extended out to 90 to do so. So what we realized was, we needed to put together a map and pick out zones that were logical for this area, and if we were able to do so and do so quickly, we had a good chance of getting them blessed by the Governor and certified by the Treasury department.


So we acted quickly. Got a meeting with the Mayor who had been elected for all about a week at the time back in January, and our state Senator. Our state Senator is… You know, it’s actually a good story because the Mayor is a Democrat and the state senator is a Republican. State Senator had the connections in Harrisburg and I was able to push this up the chain. But from that, we realized it wasn’t enough. And we worked with one of the local attorneys, actually my brother, who runs a municipal practice group, and does a lot of municipal consulting because of his connections in that area, and we put together a really bipartisan broad group stakeholders. And we said, need to act on this and we need to be proactive. Because like John had alluded to, we’re a community that, kind of, hit rock bottom. And this being a new tool and something that was written for Erie and for the community, something that we needed to be proactive. And that’s where the flagship came from. It was eventually then housed with the Chamber and was staffed. And from that, the first exciting thing that was really unleashed was the investment prospectus. So we went to, so I still remember the meeting, John and I went, met with the mayor, and said look, “We need to put together an investment prospectus. We need to work with Accelerator for America — Bruce Katz and Rick Jacobs — and put together a document,” which we did, the city, with the city, and it ended up being the nation’s first investment prospectus targeted towards opportunity zones, and it’s still in many ways held up a year later as, kind of, a model for other communities to look at.

Jimmy: Well, that’s great. So you guys were really proactive from the very get-go. You noticed the provision in the legislation shortly after it was passed. And I believe, correct me if I’m wrong, but if my memory serves correctly, the opportunity zones were certified by Treasury that following summer, I think, in around July of 2018. But you guys were campaigning your Governor for your census tract to be designated as opportunity zones, you know, probably earlier that year. So you were really on top of things. I get emails still to this day sometimes from local leaders asking me how they can have their opportunity zones recognized or designated, and I have to tell them that ship has sailed.

John: Yeah.

Matt: We got in front of the Governor in, I think, would have been December of 2017.

Jimmy: Okay. So you were right away there, yeah, before 2018 even. Yeah. So that’s, I mean, that’s really what was needed but I think you guys are the rare case of a municipal organization, municipal actors, really taking that proactive approach early on in the process, noticing that provision in the law and taking it to your state leaders. Because a lot of people, you know, sat on the sidelines, or maybe they weren’t aware of the program, or maybe they’re just becoming aware of the program now and it’s too late now to designate new opportunity zones. So I applaud you guys for staying on top of that, and being proactive about that. And then you were, again, proactive down the road in another way, getting the investment prospectus out and forming the flagship opportunity zone which is essentially a conglomeration of your eight census tracts that have been designated as opportunity zones. So the proactive in getting the zones designated and proactive in raising capital for the zones as well. Yeah.

Matt: You know, it’s not just being proactive, though. So, you know, the rah, rah and the cheerleading is great, and it’s important, and it’s done a tremendous amount for, I think, the self-confidence of our region, but one of the things that this tax incentive requires is truly shovel-ready projects. And what’s that mean? It means, they have to hit their substantial improvement requirements under the tax rate pretty efficiently. So you actually have to have projects that investors can invest in, and invest in today. And that’s something that we’ve spent quite a bit of time on. We’ve acquired quite a bit of real estate in our downtown core, and have been able to leverage the funds that have been raised locally to get to work some, and to actually get to work on, not just acquiring the projects, but the actual hard schematic design and taking a look at these buildings, how they can be developed, getting the drawings together. So they’re actually shovel-ready, meaning that we are ready to go. So we’re having a lot of success there in raising capital for these projects because we have deals. And that is something that people don’t always realize. It’s one thing if you have opportunity zones in your community, it’s one thing if you actually have investable deals. And that’s something we’ve spent a lot of time working on, is actually bringing deals to market investors or funds and take a hard and serious look at. That’s not the case in all places.

Jimmy: Yeah. I think a lot of other cities and communities around the country are, kind of, having private developers set the terms, so to speak, and bring in projects that may or may not benefit the community. But it sounds to me like what’s happening in Erie is very much municipality-driven, community-driven, from the ground up.

John: This is an area where Erie’s size plays to its advantage. We are a smaller city, we’re a city of about 100,000. We have about 270,000 in the region, and all the local actors who need to be informed, who need to make decisions, know each other, they’ve been working with each other for years. So the fact that we are able to get everyone in a room very quickly, make decisions quickly, and move quickly is what’s allowed us to catapult onto the national scene.

Jimmy: Good. So you told us a little bit about Erie, how it’s, you know, a pretty classic Rust Belt city, population declined over the last several decades. But can you go a little further, paint a picture of the city for us as it stands right now? And tell us your vision for the future. What is the EDDC doing and what is the flagship opportunity zone doing? What’s its vision for the future for Erie?

John: A good example for your listeners is our first project. In the fall of 2018, we acquired 100,000 square feet on property that is overlooking Perry Square, which is our main public park or central park in State Street, which is our main street. So 100,000 square feet in Erie, that’s equivalent to 50 single-family homes. It’s spread across five buildings and a open lot. In any other city, if you told someone that you had real estate that overlooks your central park and your main street, that’d be some of the most valuable real estate in that city. In Erie, of that 100,000 square feet, 80,000 is vacant and has been vacant for years. These buildings are falling down. The roofs or caving in due to water damage, there’s holes in the floors, there’s exposed wiring, there’s asbestos. It is not desirable real estate. But this is why we exist, is because no one else would take on this project. We are going to transform that block into Erie’s first culinary arts district. It’s going to feature a public market to address Erie being a downtown, a food desert, USDA designated food desert. It’s going to feature Erie’s first food hall. It’s going to feature a community kitchen, and it’s going to have a culinary incubator. In addition to those components, there will be several other ground-floor retail spaces, and right now on the upper floors, about 100 residential units.When all that is said and done, we’re going to pour between $33 million and $39 million into that block. It is going to create 25 new businesses, between 250 and 350 new employees. And here’s an unintended, I think, consequence that my colleague, the tax law expert likes to talk about, and that’s the revenue generated to our municipalities.

Matt: So we talk about unintended consequences quite a bit as if it’s a bad thing. And one of the things and merely misnomers about opportunity zones and what the tax incentive is, is that it’s a federal tax incentive, okay? So in most cases, the state or local tax bodies, right, so these local municipalities that in many ways provide the essential social services that most people rely on day-to-day aren’t affected. It’s going to be benefited. This is from the real estate perspective. So in this first project that we had mentioned, it currently pays something like $28,000 real estate property tax. If we’re able to revitalize these buildings and raise their tax assessed value tremendously, they could pay back in the envelope of about $800,000 a year in state property taxes. Well, what do real estate property taxes do in Pennsylvania? They provide for the school district, the city, and the county. So there’s really, truly, critical social services that are in a municipality. So that’s something we’re really excited about as we move through on this project, we are able to raise those dollars through this incentive because it’s going to help shore up a local tax base for everyone.

So that’s exciting. But, you know, the story’s just not there. And we talk about real estate because we’re a nonprofit formed to tackle very challenging real estate development. But in Erie, there’s also an innovation district, an Erie innovation district that was formed more or less simultaneously with us, and they have a great staff, are doing some really tremendous work. But at our Erie homecoming event, just about…it was August 21st and 22nd, there were a few big announcements. And one announcement that pertains to us, we can get into, but first announcement I want to talk about and something that’s not always looked at was investments for business startups. So our innovation district was proud to announce the formation of funding of a $10 million fund from Capstone Impact Investments, and that money being generated is raised to invest in startups coming out of the Erie Business Accelerator which they run. That’s phenomenal. I mean, that is actually phenomenal. So there’s actually seen money being generated from businesses graduating from a tech accelerator out of Erie, Pennsylvania. In many ways, that was the original intent of this tax incentive, was to get startup dollars out of places like Silicon Valley and into places like Erie, PA. So that’s something that we’re really excited about.

The second was, we were able to announce that we secured our first investment into the food hall that John had mentioned. So that was going to be a $3 million investment. And that investment was made by a local Fortune 500 company that formed a qualified opportunity fund. So Erie Insurance formed a $50 million fund, made its first investment in our culinary arts district, and we’re in talks with them about potential for further investment, we’re very optimistic there. But there’s another example. So we have two things, one, we have outside capital being invested into startups that are coming out of Erie, and then second, we have homegrown capital being invested back into the community. Bruce Katz, who worked a lot, we’ve talked a lot about wealth and this rewiring of capital, I think, he raised the key point. And it makes a lot of sense because the concern is that you have communities like Erie or Akron, Ohio, or Youngstown, Ohio, South Bend, Indiana, you name it. And there’s a lot of wealth that’s being generated. But where does it go? It goes to money managers in New York or San Francisco and is not necessarily being reinvested back in the communities where it was generated. This allows capital gains that are being generated in a community to be reinvested back into it. It gives those investors that additional kicker that they need. So when you take a look at IRRs, right, Internal Rates of Return, we can’t always compete with the returns that you’re going to get in those really hot communities like North Carolina, or in Nashville, or an Austin, but this is an incentive to help get those dollars back into communities like Erie and that unintended benefit that we talked about is going to really be the result. So hopefully we’re able to shore up the local real estate tax base and help bring more jobs into Erie through investment in startup companies.

Jimmy: Yeah. I think that’s a point that doesn’t get nearly enough attention. I don’t know that I’ve had it brought up on this podcast at all in any previous episode, that benefit of increasing the local tax base, being able to take that money and improve the social services in that community, improve the infrastructure, improve the public school education. I think that’s an incredible unintended consequences as you’ve referred to it. I think that’s a good way of describing it. That’s incredible that tax revenue that you’re going to get from that downtown building on Main Street there is going to increase by that much…

John: Not to place too much of an emphasis on it but, take for example the city. They have a $11 million deficit on a budget of about $80 million. We are giving them $37,000 right now from those properties. When we are done, we are going to be giving them over $800,000. So it’s quite a significant increase to help them plug the holes that they have.

Matt: And that’s just one development.

Jimmy: Right. That…

Matt: So meaning…

Jimmy: …that if you’re able to scale that out across several city blocks, you can, kind of, do the math there and your head and realize this could be big for Erie.

Matt: Correct.

John: Sure.I mean there was a flight to the suburbs like in many communities. So the size of our county has been, kind of, stagnant. For many, many years, the population of the city of Erie has declined dramatically. Well, it’s no secret, people fled to the suburbs. So this gives us an incentive to help build up the potential residential base in our downtown core which simply doesn’t exist now. There is a severe lack of residential housing market rate. That’s going to have really positive effects for this community and have a real ripple effect down the road. So that’s something we’re very excited at as we look forward to, really, the future and hopefully how this federal tax incentive is going to help drive private investment into communities like Erie and those communities like it around them.

Jimmy: So what has the opportunity zone program done for Erie so far? And by that I mean, how has it accelerated your development timeline? You had mentioned before that, you know, I believe you had gotten funding for about $25 million in funding, but you, kind of, estimated that you needed between $125 million and $150 million. So how has the opportunity zones program, kind of, helped supplement that capital stack required, and accelerated your development timeline so far?

John: Opportunity zones is shrinking our development timeframe from 25 years to 5 years. Before I was hired, the board engaged a consulting firm to advise on a, sort of, strategic path going forward. The path that they set forth basically said that it would take between 20 and 25 years to complete these projects. Again, as I mentioned earlier, a lot of that is because you’re relying on government programs and that is all about timing, and government funding cycles, so it really draws it out. Well, with opportunity zones, it’s the free market. So when investors are looking to make an investment, it’s when we have shovel-ready projects and when they have capital gains that are available, it’s not contingent on a yearly government cycle. So with our projects for our first phase, we are looking at between $125 and $150 million worth of development, and we are looking to do that in the next five years.

Matt: It’s also allowed us to put Erie on the map. So by working proactively, and John described it as hustle, which in many ways it was, it’s allowed us to at least get into the radar of these potential capital sources. So we’ve been able to meet with some of the largest financial institutions in the world and been in meetings to them where we literally had to point Erie out on the map. But they were interested in investing in Erie because of the work that’s been done, not just by us but as a community as a whole, to get the market talking about Erie once again. It’s been a long time since they have. So we’re not a first-tier investment market, we’re not really a second-tier investment market. We’re a third or a fourth-tier investment market. And that’s fine, but it’s a challenge because a lot of the institutional investors out there don’t have familiarity with Erie that it would with even a second-tier investment market, Cleveland, or Buffalo or Pittsburgh, which are cities surrounding us. So it’s been a phenomenal way to help, sort of, relaunch communities like Erie, and to get us into the limelight again. But I think a big part of that was being first out of the gate in many ways, and being very proactive. Like John said, this isn’t a federal program, there’s no application, it’s a tax incentive. And investment just isn’t going to come to communities like Erie, you need to go out and try to get it. And the market itself isn’t… It’s, kind of, a misnomer that the market isn’t actually that efficient, the market is a little lazy. You need to do everything you can to bring an investable product to that market. They’re not going to do the work for you, and especially in a place like Erie, PA. So we’ve been fortunate to have the opportunity to do a lot of that early, quickly, and I think in a smart way, and have, sort of, the support, and knowledge, and ability to speak their language and present things for them that pass that initial smell test and then got them talking with us seriously and looking at investments today.

Jimmy: Yeah. The old “Field of Dreams” adage, “If you build it, they will come,” may not apply to a place like Erie, Pennsylvania, right? You have to go get them, you’ve got to go show them what you got. I guess that’s where the investment perspectives comes into play. So does Erie, Pennsylvania have the capacity for institutional dollars or who is your capital base, essentially, who is investing in your opportunity zone developments?

John: Well, it’s been led by Erie Insurance. I really had to give them a lot of credit because they are the ones who were instrumental in the creation of the Erie Downtown Development Corporation and the Erie Downtown Equity Fund, not only in terms of providing the initial investments, but also in terms of just getting it organized, providing some staff resources. We continue to rely on them every day for outsourcing of, kind of, resources. We are fortunate to have two hospital systems located in the community, Allegheny Health Network and University of Pittsburgh Medical Center has a campus here. We have two local universities who are involved with our organization, we have a community foundation that manages over $270 million in assets, which is quite a significant sum for a community of our size. We also have five regional banks that are involved and some manufacturing businesses that are involved. So we’re drawing from a pretty wide range of the community, but again, I go back to Erie Insurance, has really been the leader on getting all this going.

Jimmy: Good. I want to shift gears for a second now and I want to talk to a very specific segment of our listening audience. A real estate developer, let’s say, who has a project that he’s trying to get local support from. What is your advice to him, a real estate developer who’s trying to get an investment for his project, he’s trying to get in front of someone like you in Erie maybe or in another city in the United States? What is it that you want to see in a development?

John: Well, I guess the first question is, what do you mean by support? Is it financial support or community support?

Jimmy: Let’s say it’s both. I think he’s looking for both, right? I think a lot of these developers are looking for community support from the local residents and from the local leaders as well, but they’re also looking for investment dollars.

John: So what’s interesting about us is, we are focused on revitalizing downtown Erie, but we are an entirely private entity. We have a private board of directors, we don’t have any elected officials that we report to, we’re not a government agency, so there’s no, sort of, public requirements that typically come with government agencies. So we walk that balance between being a private entity with private investors but also doing public work in a community. So for us with our projects, we look at, “Can we make an economic impact and can we make a social impact?” Our culinary arts district is a great example of how we’re doing both. We are able to make the numbers work with the culinary arts district on an economic impact thanks to opportunity zones, but also thanks to a liquor license that we’re acquiring as part of the transaction, but we’re also making a social impact. As I mentioned, that district is going to feature a community kitchen that we have available for members of the community, there’ll be a community meeting room that can be utilized by members of community. There’s going to be a culinary incubator which will help to create new jobs, businesses, and economic opportunity in the poorest zip code in America. So we’ve been really intentional about the economic and the social impact. What’s interesting, though is, we’ve talked with a lot of social quote-unquote “social impact investors” around the country. And this may be a controversial statement, but they’re a bunch of hypocrites. They say they want to make a social impact, but that’s only before the economic impact. They want to see that they can get an economic return and if they can then also do a social impact, great. We’ve given them opportunities to make social impacts in Erie. They will make a return on those investments, granted it may not be as large as other investment opportunities. But what we’ve heard repeatedly from social impact investors is, they want to investment in opportunities that are competitive or more so than general market returns.

Matt: And, I guess, to double down to the controversy. They also want to cut a ribbon in a city that they’re familiar with, and they know the players there and the actors. So to bring in some of those national social impact investors, right, in a community like Erie, it’s really that double challenge. So, one, the investment returns aren’t as sweet as they are in other communities, but then two, we don’t have necessarily the gravitas that an Atlanta has, or a Chapel Hill, or even a Pittsburgh. So that’s another challenge. But to John’s point, and I think, sort of, taking a look back at your question, that real estate developer better know how to use Microsoft Excel, because at the end of the day, I think John Lettieri, who from EIG, who we’ve worked pretty closely with, he’s got the best quote and it rings true. It says, “Look, an opportunity zone is not going to make a bad investment good. It’s going to make a good investment great.” We’ve got a lot of bad investments here and we’ve got a lot of good investments. We don’t have a ton of great investments. But this tax incentive helps put us over that edge, helps at least make an investment viable to outside investment dollars. Because there’s very little interest in trying to invest in deals where you only get a 3% return, right? You’ve got to at least get 8%, probably more like 12% or 13%. And that, in this tax incentive, helps us get there. So if you’re a real estate developer, it’s great to have a dream, it’s great to have some pretty images and renderings, but you’ve got to be able to get hard construction costs, very realistic expectations on what you’re revenue is going to be and you’re expenses, and model out the deal, and find what that IRR is going to be, and then, go pitch it and bring people on. Because, if you don’t have the numbers, the project is not viable. And at the end of the day, if you don’t have the competency to put together a pro forma or spreadsheet, you might not have the competency to run the project. So there is a skill gap there for a lot of people, but it’s a hard reality that they have to realize.

Jimmy: No, I think that’s a great suggestion. So I think a few things to take away if you’re a real estate developer listening and you’re trying to get support from a downtown development corporation, or you’re trying to get investment dollars or a little bit of both, your deal needs to have a social impact, but more so, it needs to have an economic impact, and you got to show it. You’ve got to show it with a real pro forma, you have to tell me what your IRRs are looking like, what your cash flow looks like, and just know that… I love that quote by John Lettieri, “An OZ is not going to make a bad deal good, it’s going to make a good deal great.” I think you’re absolutely right about that. I think John is absolutely right about that, I guess I should say. And then I guess that, maybe another requirement is, it doesn’t hurt if the project is shovel-ready too, right?

John: Well, it has to be. It absolutely has to be. So there’s a lot of time restraints or requirements on these Opportunity Zones. Investors have a lot of motivation to invest efficiently. So you’re going to have to do a lot of legwork, I think, to get these deals up to the point where they are quote-unquote “shovel-ready,” that’s true. And that, we’ve seen from our experience that investment class wants to see. They want to have deals that are ready, that can be turned around pretty efficiently so that they can meet their deadlines and get some cash invested fairly efficiently.

Jimmy: Good. So I wanted to talk about some of what you view as the biggest strengths and the biggest weaknesses of the opportunity zones program, and maybe the biggest challenges that the opportunity zones program has thrown your way. I think we’ve discussed a lot of the biggest strengths already. One, that it’s decentralized, you’re not waiting on the timeline of somebody sitting in an office in Harrisburg or in Washington, DC to get going with this. Two, that it’s really accelerated your development timeline. Those are two of the biggest strengths, you know. What are some of the challenges that you face or challenges you’re facing with the opportunity zone program?

John: So one of the challenges that we face in general is the layering of investments in a concentrated area. One of the lessons we’ve learned from other cities is that, to be successful, you have to layer all your investments together, both your public and private investments. While we’re seeing or going to see a flood of private investment dollars into this downtown area, we are still missing out on that public investment. There’s opportunities for the local, state, and federal government to play a role. Things like streetscaping, things like meaningful assets, like parking garages, these are all things where the federal government could, or state, and local governments could play a role. But it would be great to see preferences given to those in opportunity zones.

Jimmy: Yeah, I agree. Anything that other organizations can do to helps streamline the process, the better.

John: The White House has done a good job of, the President created the White House Opportunity and Revitalization Council, and they’ve directed agencies to give preference points to projects that are located within opportunity zones. But it’d be great to see more of that because it’s early on, and it’d be great to see state and local governments give those preferences as well.

Jimmy: Yeah, I agree 100%. Well, I want to wrap things up here in a couple of minutes, guys. Thanks for coming on the show with me today. But before we go, make the case for our listeners now. Why invest in Erie, Pennsylvania?

John: After years of economic decline, Erie sees nothing but upside. There are a lot of other places around the country that the bubble is expanding to the point of bursting, but Erie is just getting started. And it’s getting started with a significant amount of patient capital that’s local, that’s committed. You’re seeing growth from anchor institutions like Erie Insurance, like Gannon University, like UPMC Hamot Medical Campus. And you’ve got new organizations that are organized or have new leadership that are making sure everyone is working on the same page and rowing in the same direction.

Jimmy: Oh, that’s great. But before we go, can you tell our listeners where they can go to learn more about you and opportunity zone investing in Erie?

John: The best is our website, which is So that’s You can also find us on all social media channels as well.

Jimmy: Good. And for our listeners today, I’ll have show notes for today’s episode on the opportunity zones database website. You can find those show notes at I’ll have some information on that downtown Erie development that we were discussing earlier and links to all the other resources that John, Matt, and I discussed on today’s show. Hey guys, John, and Matt, this has been great. Thanks for coming on. And I hope to talk to you again soon about what’s going on in Erie.

Matt: Thank you so much.

John: Okay. Thank you.

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