Can Opportunity Zones Recover from the COVID-19 Crisis? (Episode #104)

Egils Milbergs

Do Opportunity Zones have the potential to create a more optimistic and hopeful outlook, and to help build national recovery and resiliency in the wake of the COVID-19 pandemic and economic crisis?

On August 5, OpportunityDb co-hosted a live national webinar briefing with Egils Milbergs at OZ Accelerator. The webinar featured opening remarks from Senator Tim Scott (R-SC) and a panel with guests from Urban Institute, Sen. Scott’s office, Sorenson Impact Foundation, Emsi, EIG, and SBA.

Click the play button below to listen to the condensed audio recording of the webinar.

Or, for the full video recording, click here.

Episode Highlights

  • Opening remarks from Senator Scott, conveying his belief that the Opportunity Zone incentive can help low-income neighborhoods recover from the current economic crisis.
  • The relatively shallow nature of the Opportunity Zone benefit, per recent Urban Institute research.
  • New guidance from Treasury that provides timeline and deadline relief for Opportunity Zone investors and fund managers, and the need for an extension beyond the 2026 end date.
  • How intentionality and collaboration are key to generating competitive returns with measurable social impact across four key impact categories: housing affordability, economic development, access to services, and environmental sustainability.
  • How data can help tell a community’s Opportunity Zone story to fit with your community’s economic recovery strategy.
  • Examples of Opportunity Zone investments that are ongoing, post-pandemic.
  • How the SBA’s mission intersects with Opportunity Zone areas in helping support small businesses that are already located in OZs and businesses that want to re-locate to OZs.

Featured on This Episode

Video Recording

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.

Webinar Transcript

Jimmy: Welcome to the Opportunity Zones Podcast. I’m your host, Jimmy Atkinson. Today’s episode is a condensed audio recording of a live national webinar briefing on COVID-19 recovery strategies in opportunity zones. This webinar was sponsored by OZ Accelerator, ASTRA, and OpportunityDb and features Senator Tim Scott plus several expert panelists. For the complete version of this webinar in video format, head to and find episode number 104. Enjoy.


We’ll get to the panel shortly but first I would like to introduce Egils Milbergs, co-founder of OZ Accelerator and CEO of the Center for Accelerating Innovation and the mastermind behind today’s webinar. So, Egils, please take it away.

Egils: Thank you, Jimmy. Thanks for taking on the moderation role. I wanted to say a good morning to people on the West Coast and a good afternoon on the East Coast. This is a very important event from our standpoint and I’m glad to host it. A crisis is a unique opportunity to change the path of a nation, community, family, individual, or an opportunity zone. We’re in the midst of a COVID-19 word cloud, quarantine, social distancing, PPE, N95 masks, $600 a week, stimulus, community spread, eviction, lockdown, flattening the curve, spike, virtual work, hybrid education, vaccine trials, masks, and so on.

The question for today is how opportunity zones will respond to this context. They have been devastated with unemployment, school shutdowns, and a financial freefall. For many residents of OZ communities, a sense of despair, fear, anxiety, frustration. The impact has been hard on the African-American community especially.

Opportunity zones have the potential to create a more optimistic and more hopeful outlook, a once in a lifetime moment to change the course through investments and innovative solutions. The billions that are being committed to opportunity funds can offer capital, empowerment, and community impact, help build national recovery and resilience. And for sure, this is a very multi-dimensional and extremely complex challenge. We’re fortunate today to have a panel of expertise and experience, so we can learn, give us insights, hopefully, guidance on what can be done.

We cannot wait on a magical recovery. We must leverage the uncertainty for innovation. Opportunity zones need to act, not be acted upon. This is the mission of the OZ Accelerator which is proud to be the organizer and host of this event. Also grateful to the collaboration with Bob Boege of ASTRA and our moderator, Jimmy. And Senator Tim Scott, an author of the Opportunity Zone legislation, he has graciously prepared some remarks to kick off our conversation today. Senator Scott, thanks for your leadership.

Senator Scott: Hey, Senator Tim Scott here. Thank you for giving me an opportunity to talk about one of my favorite subjects, opportunity zones. And they continue to take off, amazingly so, through this pandemic while there’s been some consternation around, how do we get our economic activity moving again? One of the easiest ways to do that is through opportunity zones.

Why do I say that? Simple. Because today, more than $75 billion have been identified for opportunity zones. More than $10 billion of capital has been vetted and sent out, deployed in opportunity zones. What does that mean? That means that, long-term, we will see a recovery unlike what we saw in 2008. That is good news. Opportunity zones will ensure an amazing recovery without any question, a better recovery than we would have had without it.

If you think about opportunity zones, also what you’ll realize is because of the pandemic, we’ve seen the relaxing of some of the reporting requirements in opportunity zones. That’s good news. It takes some of the pressure off of meeting those deadlines that were based on a pre-pandemic America. And so because of the pandemic, lots of changes to the reporting requirements and the investment requirements. Take a closer look.


If you need more information, feel free to give us a call. Phase Four includes… Phase Four said differently, in the coronavirus response package, we call it CARES 2.0 or Phase Four, it includes a new $100 billion loan program for our hardest-hit small businesses which has an estimated 65% overlap with opportunity zones in terms of geographic requirements. This is great news. Senator Marco Rubio, the chairman of the Small Business Committee talked about the importance of this new small business loan program that would be extended for a 20-year loan at 1% for the most devastated areas of our country and the hardest-hit businesses.

We are looking forward to seeing greatness arise, like the phoenix, from the global pandemic. Thanks so much.

Jimmy: Okay. Thank you, Egils. And thank you to Senator Scott for providing that pre-recorded video for our group today. I’m gonna quickly introduce each of today’s panelists now and give each one of you, the panelists, a quick chance to say hello. Don’t dive into your discussion points just yet. If you could just limit it to about 30 seconds, maybe tell us a little bit more about you and your organization. Brett Theodos will be our first panelist. He’s a senior fellow at the Urban Institute. I recently had him on my podcast a week or two ago. Brett, can you say hello, please?

Brett: Hi, everyone. So, good to be with you. I’m happy to talk about OZs. I study community development finance at the Urban Institute which is a nonprofit research group based in DC.

Jimmy: Fantastic. Thanks for joining us today, Brett. Our second panelist will be Emily Lavery. She’s a legislative assistant for Senator Tim Scott. Emily, please say hello.

Emily: Yeah. Hey, everyone. Thank you so much for having me on today. It’s always great when I can get some time out of my day to talk about opportunity zones, Senator Scott’s keystone legislation. So, thank you guys again for having me.

Jimmy: Fantastic. Our third panelist today will be Jim Sorensen. He’s an impact investing pioneer, Chairman of the Sorenson Impact Foundation and Managing Partner at Catalyst OZ Funds. He’s fantastic and I do hope he’s able to join us. Jim is here. So, we will hear from him very shortly. I’ll be sure to get that panelist invite link to him so he can log in as a panelist.

Dustin Lester will be our next panelist. He’s the Vice President of Consulting for Community Insights at Emsi. Dustin, please say hello.

Dustin: Hello. Thank you, everybody. I really appreciate the opportunity to talk about opportunity zones. I’ve done a lot of work with opportunity zone research and analysis in communities. I come from an economic development background, both as a practitioner and a consultant. So, I really appreciate the opportunity to talk to you all today. Thank you.

Jimmy: All right. Thank you, Dustin. Catherine Lyons is joining us from the Economic Innovation Group. She’s the Manager of Policy and Coalitions there. Catherine, could you please say hello?

Catherine: Hi, guys. Thanks so much for having me. Catherine with Economic Innovation Group. We are a nonprofit, bipartisan research and advocacy organization based in Washington DC. And we were essentially the architects of the opportunity zones concept. I’m working, obviously, very closely with Senators Scott and Booker and our House champions as well to turn that into legislation and have been very active on the implementation of the incentive since its passage.

Jimmy: Fantastic. And then finally, last but not least, we have Robert Scott joining us today from SBA. Robert, can you please say hello?

Robert: Hi, I’m Rob Scott, Regional Administrator for the U.S. Small Business Administration in the Great Lakes region.

Jimmy: Fantastic. Thanks, Rob, we’re looking forward to hearing from you. So, we do have Jim here. I’m gonna get that sorted out while Brett kicks us off with his prepared remarks. Brett Theodos, you’re our first panelist today, senior fellow at the Urban Institute and a recent guest on my Opportunity Zones Podcast. And recently he was the lead author on a research report titled, “An Early Assessment of Opportunity Zones for Equitable Development Projects.” I know you have quite a bit of information to share and insight from your perspective, Brett. So, please take it away.

Brett: Great. Thanks so much. And again, great to be with you. So, I’m not going to go into too many of the findings from my report. I’m gonna dwell on some of the questions motivating this webinar and, in particular, the impact of COVID-19 on OZ projects, investors and funding. And as I see it, as I observe the world and have conversations and then look at data, the effects are serious. And they are, of course, locally contextualized.

And so we have a lot of different markets. I mean, that’s one of the realities of OZs to begin with. We have areas that have, you know, zones that have a median home value of $2 million, and we have zones that have a median home value of $14,000. So, we really have quite a divergence and diversity among the zones, and so certainly, how they’re experiencing COVID also has some diversity. But we are in a much more challenging environment than we were. So, just in DC, for example, we have record-level commercial office vacancies north of 15%. And that was a dynamic that predated COVID, but for which COVID is certainly making things worse.

And to the question of whether OZs can recover, I would say as a program, as a whole, yes, you know, definitively. To me, a more nuanced question is then, how about the zones themselves? And I think they’re the answer that lies more in the realm of, yes, for some, and for other zones, not anytime soon. And all of this, of course, depends on the timeline for a vaccine and returning to something closer to normal.

So, when we think about new opportunities for investment generated by COVID, is there a silver lining? Is COVID gonna disrupt things in a good way? Are we gonna produce some benefit from all the sacrifice? And I struggle to see that many upsides. I’m sure there will be some. But at least in terms of the investment market, at the moment, we’re not actually seeing big price drops. So, we’re not seeing people able to, you know, repurpose and be able to retrofit and rethink a new economy locally. Mostly people are still kind of holding on and hoping we get back to normal pretty soon. So, whereas the ’08, ’09 crisis, you know, we certainly saw a lot of decreasing land values, property values that allowed for some reinvestment with time, though, obviously, a lot of consequences. Well, we haven’t observed that yet. We have seen some fire sales. We’ve seen some projects, you know, move ahead at lower prices than they would have otherwise, but we haven’t seen kind of a wholesale correction yet to property values. But the longer this goes on, the more that that may well be coming, especially with rent.

And I think part of the answer, and this does draw from our research findings that informs my take on how OZs are faring in a time of COVID, is to remember that OZs are often a small part of a project’s capital stack. So, it could be 5%, or 3%, or maybe 10%. But sometimes they’re more. But often they’re a small part of the project capital stack. And so the subsidy delivered through the opportunity zone incentive itself is relatively shallow, at least, especially when we’re talking about the temporary deferral and the basis step-up. And so that means we’re swapping out, hopefully, what is a lower-priced equity for other equity, but it means, you know, often, as we have seen in our research is that a lot of project sponsors and investors, the majority of which we spoke with, though, not all, to be clear, reported that the OZ projects they were engaging in would have gone ahead in the same timeline, in the same form even if the incentive wasn’t available.

And that, in part, reflects the relatively shallow nature of the subsidy, at least, the upfront parts. So, if OZs are a relatively small part and they’re relatively substitutable for other forms of equity on the whole, again, lots of examples individually where that’s not the case, but on the whole, then we would expect the broader dynamics in the commercial real estate market and in the multifamily market, for which are the biggest uses so far of OZs, to really be the trend for OZs as well. OZs are gonna rise and fall with those markets. And so to the extent that those markets are slowed down, which they are, then OZs will be, too. So, some deals are getting done. Construction is happening. But this is also a very challenging time to be a landlord, not to mention a very challenging time to be a tenant.

And so then I’ll wrap with a couple of reflections on what kind of projects are needed for a more robust and resilient recovery. And the most important thing as I see it, which really has been the most important thing even before COVID but is all the more to the front now, is projects that can generate jobs, which principally means projects that are operating business investments, less principally real estate investments. Real estate investments often substitute one investment for another. This grocery store opens, but that means that one goes out of business. That’s not a one for one, but it is the case.

When we look at the economics of real estate investments, they’re less additive to local economies. And so we’re really interested in OZ-type investments that are not just moving a building across the street from where it would have been, but really adding new economic activity where it wasn’t there previously and most notably through job creation and business formation. And that also means, especially, and this was true pre-COVID and it’s true post-COVID and it’s true post-COVID recovery, but really pushing much more into communities that are truly lacking from investment. And that is true for certainly many of the zones, though, not all of them. And so that’s really the place where if we need to emphasize going forward, we need to double-down in those communities, in particular. Thanks.

Jimmy: Fantastic. Thank you, Brett. Thanks for joining us today. By the way, we did get Jim Sorenson in the room and I’m gonna bring him in in a minute. But first, we’ve got our second panelist today is Emily Lavery. As a reminder, she’s a legislative assistant to Senator Tim Scott and she’s one of the nation’s leading opportunity zone policy experts. We’re very pleased to have her with us today. Emily, how are you doing?

Emily: Good. You are far too kind to me in your introduction, but I appreciate it.

Jimmy: Absolutely. Well, Emily, I know you don’t have any prepared remarks, but we’ve got some questions here. This panel is gonna be a little bit different. I’ll be throwing some questions at you. So, obviously, today’s panel is gonna focus on COVID-19 and opportunity zones both in terms of how opportunity zones can recover from the pandemic and how the incentive can help the nation recover as a whole and particularly in those low-income areas that get hit so hard by these recessions. So, Emily, my first question for you is, how are opportunity zones faring during this uncertain and tumultuous time?

Emily: Yeah, absolutely. So, I think Senator Scott said it best when he said that, you know, opportunity zones continue to take off. Mike and his team over at Novogradac are actively tracking more than $75 billion in planned investments, which is incredible to see. I mean, in terms of anecdotal evidence, just in the last few weeks, Second Chances Farm in Delaware secured a $1.5 million investment. A startup in Erie just received a $1.2 million investment. Launchpad, who does incredible stuff in co-working and entrepreneur space that is based in New Orleans, but will be opening its first location in Arizona shortly.

So, as we talk about developing entrepreneurship, specifically, and giving rise to job creators, skill-building entities, you know, this is the kind of stuff that gets us really excited and I know that Senator Scott gets really excited about as well. And of course, you know, we also recently had the U.S. Conference of Mayors adopt a resolution affirming their support for opportunity zones. So, it’s been a good couple of weeks even in the midst of a pandemic.

Jimmy: Good, good. Yeah, hopefully… Obviously, one of the catalysts for opportunity zones was that a lot of areas got left behind from the previous recession of now about, you know, 11, 12 years ago. We’re hoping things can go a little bit differently this time around. And we saw recently that the IRS issued key guidance to provide additional flexibility for opportunity zones in terms of pushing back some deadlines. Investors in many cases now have until the end of this year.

The 180-day window has been kind of disregarded just because of what’s happened here with the pandemic and our nation’s response to it. That guidance came a few weeks after Senator Scott, your boss, had issued a letter to the Treasury Department requesting this relief. Could you give us some background on that guidance and specifically share how you think it will help to ensure that the OZ incentive continues?

Emily: Yeah, absolutely. I mean, first and foremost, huge shout out to Treasury for getting that turned around in just six weeks. Similarly, EIG and Novogradac sent letters as well. And so we super-appreciated that. Senator Scott pulled together on the letter outlining 10 main requests for immediate relief for opportunity zones during the pandemic. He was joined by nine members, seven of which are Senate Finance Republicans. So, it’s always great to be able to see some committee support for opportunity zones where and when we find it, especially now.

And so, Treasury turned that around in about six weeks, which is incredible and we’re super-grateful. But yeah, in a nutshell, you know, I think you kind of started to cover it, but, again, the new guidance extends certain 180-day investment windows until the end of the year. It gives folks more time to meet substantial improvement timelines. It gives funds more time to invest and ensures that funds, businesses, projects, community organizations, etc., are not held liable for circumstances beyond their control by allowing for a reasonable cause exception for the 90% asset test through the end of the year.

So, again, in our view, these are extremely common-sense, you know, fixes and solutions that needed to get done. And again, those were echoed in EIG and Novogradac letters as well in a number of places, though, of course, there’s always, you know, a bit of nuance. So, again, that was huge to see that get done so quickly. And again, it’s about providing that additional layer of flexibility during this time when, again, the markets are all over the place.

Jimmy: Right, right. Your boss, Senator Scott, he’s been vocal for a while and I’ve been hearing the same thing about, you know, needing certain legislative changes to the opportunity zone statute. In particular, a lot of the people that I talk to regularly really want that 2026 deadline pushed back at least a couple of years. I mean, that would do a couple of things.

One, it would allow more time to harvest more capital gains and just push the sunsetting of the program back, you know, a couple of more years, but also it would reopen that seven-year window to get that 15% basis step-up, which I think is important. Is there a potential to get any legislative changes and, in particular, that one pushed through this year, do you think, Emily?

Emily: Yeah. Well, I mean, in short, I would love to see that as well. Frankly, I think, especially when you’re taking into account the realities of the COVID-19 pandemic… I was laughing with a friend the other day thinking about how in March we were thinking, “There’s no way this goes until July.” And here we are in August as we talk about needing a two-year timing extension. I don’t think it’s ever made more sense than it does right now.

And similarly, EIG, who just had a really awesome national survey come out not long ago, that found that 64% of respondents said that having a timing extension of the 2026 window would make the incentive a more effective goal for the recovery, more broadly. So, again, having that kind of data and those kinds of answers for us to lean on is really helpful. But again, it’s not only about, you know, providing more time to provide those benefits, but it’s also addressing the realities that, again, you know, opportunity zone implementation takes some time in certain localities to begin. And we want our community organizations and our local governments to have as much time as possible to reap the benefits and harness the potential of the incentive.

Jimmy: Fantastic. Well, Emily, I wanna make sure we have enough time for the rest of our panelists today. We’re gonna…

Emily: Yeah.

Jimmy: We’re gonna be continuing our discussion on our “Opportunity Zones Podcast” interview coming up in a week or two here, so be on the lookout for that later this month, most likely. Jim, hello? Can you just very briefly introduce yourself?

Jim: It’s great to be here. And I’m sorry for the delay, Jimmy. I’m here really to talk a little bit about Catalyst, which is an opportunity zone fund, our investment thesis and strategy, a little bit about our real-world case study, and how we’re striving to really drive deeper impact through our capital and through our financial models and key partnerships with government, philanthropy, and nonprofits. So, a little bit about me. I’m a serial entrepreneur for most of my life. I’ve spent two decades as an impact investor. I founded the Sorenson Impact Foundation in 2012 and was quite involved in the passage of the Opportunity Zone legislation. I formed Catalyst Opportunity Fund to be an example for transformative impact investing.

Our current funds are focused exclusively on real estate, but we do plan to do businesses later. We partner with best-in-class developers, community stakeholders, and focus on overlooked markets that are usually off the coasts. Intentionality and collaboration are key to generating competitive financial returns alongside measurable social impact and that’s really our goal.

Our strategy really involves finding opportunities in four key impact categories. The first is housing affordability. And that’s along a spectrum of deeply affordable to workforce housing. The second is economic development, which really involves business incubators, accelerators, Launchpad was mentioned. They’re a great partner out there. The third category is really access to services, that’s health clinics, charter schools, affordable grocery, and nonprofit wraparound services where needed.

And then finally, environmental sustainability. We really focus on net zero development and adaptive reuse. Our markets are initially in the secondary and tertiary markets that are off the coasts. And these are examples of where we’re at. And our in-depth analysis of these markets suggests an encouraging early resilience to COVID-19 impacts.

A hallmark of our strategy, our investment strategy is our impact scorecard. We take impact measurement seriously, and intentionality is a big part of that. So, we do a community needs assessment upfront. We then utilize the scorecard that you see in helping us to underwrite the factors such as the commitment of development partners to impact community engagement, housing affordability. What is needed? Social inclusion. How can that be generated? Access to services, economic development, and sustainability. And then we have a post-investment dashboard of over 20 data sets that we collect and measure and we report these impact metrics over the life of the investments.

Financial innovation in the form of blended capital stacks is a key framework for moving beyond traditional real estate development into deeper impact in opportunity zones. And that really involves project-level blending of market rate seeking return from Catalyst with public subsidy, philanthropy, and impact capital. I will give you some examples of these in actual projects now that we have done. The first is an adaptive reuse of a turn-of-the-19th-century iron foundry. The capital stack here involves grants for business incubators, CRA concessionary debt, and city participation in the funding. The social impact is really a best-of-class business incubator that involves a coding boot camp tenant, flexible office, maker space, and collaborative services to help in economic development.

The next is a mixed-use project. This is in Minneapolis. It’s a blended capital stack, again, an innovative approach to financing that involves state grants and also local environmental remediation support. The social impact is really, I think, access to services, an immigrant-focused charter school, and really the environmental improvement of this very distressed area. The third case study involves, again, the blended capital stack. And here you have a health system, a local health system that is providing concessionary capital, 2% money. There is a city land grant, CRA bank debt which is also on concessionary terms. This enables really deeper impact with really low rates for nonprofit wraparound services and providers and community programming.

And then finally, an adaptive reuse of an eight-year-old grainer rebuilding. And this utilizes my tech, historic tax credits and CRA debt on concessionary terms in the capital stack. And again, it really enables, through this collaborative, innovative approach to finance, a social impact for refugees, focused workforce training, low-income housing, and space for community program and wraparound services. I think these are really great examples of the type of investing and attentional approach that Catalyst has taken. And I think it’s this collaborative effort working with communities, understanding what the needs are, being long-term in your outlook and systematic in your investment that’s going to ultimately transform over the long-term these distressed communities to more vibrant communities.

Jimmy: Fantastic. Thank you very much, Jim. Egils, I don’t know if you have any follow-up questions for Jim there, otherwise, we can move on.

Egils: Yeah, sure, I have a question. So, it looks like Catalyst puts in a small amount of equity into this capital stack that you talk about. What kind of difference is the equity investment make to the overall value of the project and its potential return, the way you look at it?

Jim: Right. Well, I think, first of all, we take a very, again, collaborative approach with the developers. We seek developers that share our ethos, that have track records in communities that have been successful, that are working with local and state government to begin with, and share the vision of really the impact that we want to achieve. I think that approach and effort really enables us to add value in the programming of the space. We have relationships with national grocers, with health systems, with nonprofits, workforce development, so forth, that we can bring as tenants and participants in the area.

So, there’s value from that standpoint. Certainly, the capital is necessary and is, you know, going to be needed, and that patient capital is enabled by the Opportunity Zone legislation and the alignment of investors to invest in that manner.

Egils: Right. So, the other related question is regarding projects you’re looking at. What kind of asset appreciation are you looking for in projects that you invest in? That’s one of the questions from one of the attendees.

Jim: Right. So, we generally measure that in internal rate of return over the 10-year life. And that takes into account the income that’s coming during the period of the cash-on-cash yield each year, you know, and we’re targeting, you know, 9% to 11% on these investments as before the tax incentive. We have a fairly conservative underwriting process, so, you know, we feel confident in being able to meet those returns. I don’t know if that answers your question there, but that’s typically what we’re looking at. On a MoM basis, that’s usually, you know, about a 2.5X on the investment.

Egils: Yeah. Thanks.

Jimmy: Yeah. Thank you, Jim. And thanks, Egils, for providing the questions. So, our next panelist is Dustin Lester. He’s joining us today from Community Insights at Emsi. He is the Vice President of Consulting there. Please do take it away.

Dustin: Okay. Well, I wanna start by saying thanks again. It’s really a pleasure and an incredible opportunity to speak with you today. This is an important topic and really want to demonstrate today how data can help tell your opportunity zone story and connect to the recovery. And it’s to tell your opportunity zone story to fit with your strategy and to position your opportunity zones for success. And so, you know, there are… Emsi, we’re a data and analytics company. That is our specialty.

And being the Vice President of Consulting, what I do is I apply Emsi’s specialization in providing, modeling labor market information and industry analytics and applying that to solutions for economic development, workforce development, and, you know, community resiliency. And it’s an important thing to marry the two. I’ve been an economic development practitioner working in a lot of economic development projects, been on a workforce development board.

And from that experience, the most important tool that I had in working with businesses and with the community is data. And so, I’m so proud to have the ability to, in this role now, lead a team of consultants to apply Emsi data, other data, too, third-party data, and then work with communities to provide solutions. And opportunity zones is no different from our typical work.

So, a little bit more about Emsi. Emsi’s mission is to use labor market data to inform and connect people, education, and employers. That’s our core mission. That’s the work we do on a daily basis. We provide labor market and economic data, job postings data, profile and resume data, and Emsi’s skills. And there’s really just… There’s so much here to unpack, but the big picture here is we can really work with communities from a national level to states, MSAs, counties down to the local level to really tell that story down to the census tract level. Obviously, that’s a big part of why we’re here today, is, you know, connecting that data to the census tract level for opportunity zones, but really to understand what the workforce dynamics are in those communities, and what industries and what the demographics are, and then how to apply this data.

And then with our Emsi Skills data, we’re starting to look, you know, why this is so important not only for Emsi but for many communities. And I’ve heard other panelists today talk about skills. Skills cuts across rigid SOC codes. SOC codes are standard occupation codes. Very important to understand the labor market landscape. Sometimes it doesn’t always tell the complete story. You may have one… You may have two workers, one that works for a financial institution and one maybe for a, you know, particular software development company. And they may fall into the same SOC code, occupation code, but their skills may be completely different in the skills required for employers.

And communities, the demand on the community side may be completely different. So, that’s why Emsi has invested a tremendous amount of our work to not only focus our attention on labor market information in a traditional way, but also adding that dynamic of skills and what that means for communities.

So, a big thing about opportunity zones. A big thing that we’re understanding is that there’s this inaccurate tendency to treat opportunity zones as the same type of geography. They are all different. There are urban opportunity zones, rural opportunity zones, suburban opportunity zones. And so they should be treated different because there’s so many variables that are impacting their performance as these tools to advance economic opportunity in their communities. And so that’s what… Really, one of the only ways to assess the conditions of marketability of an opportunity zone for your community is through data.

And there are various different types of data that can be applied here, and I list some here. Labor market information, industry analytics, what we really thrive on here at Emsi. Business intelligence, real estate data, obviously, very, very relevant. Complementary tools and incentives. What’s the community’s package of resources to really tell that story? And then qualitative data, that’s something that can be easily missed in really telling the story of what’s going on in an opportunity zone. It’s so important to ground truth, to get into the community, have conversations with your residents, your businesses, your stakeholders, and understand applying that objective quantitative data with, you know, the individuals who live and work in opportunity zones.

And so a little bit about how Emsi, our data, and how it can directly impact and help in opportunity zone analysis. We have census tract data, which is great. We have demographic data which is available. Because of, you know, a small limitation is that there’s a little bit of lag in data. Our data and other model data uses government sources, and so those government sources can have a few months’ lag. So, this data is available now, but the first true round of COVID-19 data is available in early October. Same with industry data. Very important to understand that. And what’s really special about our data is it’s down to the six-digit NAICS code level. So, it gets very specific about what type of industries are in an opportunity zone. Once again, the first round of COVID-19 data, this fall.

Emsi is in the process of modeling occupation data down at the census tract level. So, this is in development. We’re hoping that this will be available sometime this year. And then business listings data, this is very important to understand. Who are the existing business? What’s the existing business community? Who are those businesses in the community? And what are those opportunities to work with those businesses to expand investment in an opportunity zone? There’s also additional Emsi data that’s available at a higher geography, at the county or MSA level.

But I wanna stress that that data can also be applied at the opportunity zone level. Just because it’s not modeled and confined at the census tract level doesn’t mean it can’t be applicable and relevant to census tracts and opportunity zones. And we have some broader sets of labor market information, educational data, understanding the labor shed. Obviously, not everybody who works in an opportunity zone lives in the opportunity zone, and vice versa, not everybody who lives works there. So, it’s good to apply a broader regional labor shed to a opportunity zone analysis supply chain. It’s great to understand what those gaps are in a regional industry supply chain and then understanding those gaps can be applied at the opportunity zone level. So, I think that can be a good opportunity for an entrepreneur to be successful and come in and fill a market gap. And then, of course, I mentioned our Emsi Skills data.

I have two quick examples. I wanted to demonstrate how we could… There are so many different stories and different data stories to tell in working with investors and developing a prospectus or working with existing businesses. But I picked San Antonio as an MSA to look at an urban example in Bexar County and a rural example in Atascosa County to demonstrate just some differences, some differences in the numbers and, you know, what might be relevant for a community and how data can be applied to really dig in deep and get dynamic with the story you wanna tell about an opportunity zone.

So, a quick example in Bexar County, which you’re seeing the map here. It’s right here right in the… Virtually right in the center of San Antonio. I sold the numbers on… I compiled the… I aggregated the numbers on IT-related industries, 170 jobs, financial services, 219, restaurants, obviously, very hard hit with COVID-19. So, it’s good to understand kind of pre-COVID-19 numbers. Once again, that’s what we’re dealing with right now. And then demographics. We can dive really deep into the demographics. It’s very important as you’re looking at, you know, issues of equity and, you know, looking at opportunities, you know, in the community, so it’s good to understand what the demographic makeup is of a community.

And so we can do that down to the census tract level. So, this is that one opportunity zone in Bexar County. And then a rural example. In this county, natural resource energy-related jobs were very large. We have 352 for a county. This is one opportunity zone in a county with not even 50,000 people. Small enough for manufacturing jobs. And I think, it’s easy to forget, you know, actually, education and local government. Government jobs can really be a big base of employment for some communities. So, once again, part of the analysis and then, once again, the demographics for Atascosa County on the rural end.

So, one thing that we’re doing in Emsi is, since we have a bit of a data lag, we wanna combine real-time data with our labor market data and also COVID-19 data. So, we’ve actually released the Emsi reemployment data. This is the Atlanta example. I’ll just quickly click through here. But it really… It provides some great data that’s combining COVID-19 statistics real-time with workplace and economic development data. So, you’re looking at industry postings, company postings. Who’s posting the most? Who’s posting the least? What careers are trending and not trending? So, I wanna thank you so much for the opportunity and happy to answer any follow-up questions.

Jimmy: Fantastic. Thank you, Dustin, really appreciate it. A lot of great data that your organization provides there. We’re gonna move on to… We’ve got two more panelists today and then Egils is gonna give some closing remarks. We’ll start with Catherine Lyons. Catherine is Manager of Policy and Coalitions at the Economic Innovation Group or you may know them as EIG. They’re the research group in Washington, DC that really spearheaded the Opportunity Zones initiative and created the legislation. Please take it away.

Catherine: Great. Well, thank you again for having me. It’s really great to be here among such an esteemed group. So, I will try not to repeat what a lot has, was already been discussed by several of my fellow panelists. But I’ll start with just giving kind of a brief overview of where we were at the beginning of this year, kind of pre-pandemic. I’ll go into a little bit more detail of the survey that Emily mentioned post-pandemic and its impact on opportunity zones in the market. And I’ll end with a few examples that we are seeing actually kind of post-pandemic that are continuing on with a particular emphasis on deals into operating businesses since that’s been also a point of conversation and one that we think is going to be really important for a robust recovery.

So, I’ll start by just probably going through what everyone already knows here. We entered the beginning of 2020 with actually quite a bit of clarity. Finally, we got final regulations that had been in the works for about two years. We also saw the expiration of the seven-year tax benefit at the end of last year, which really led to an uptick in investment before the end of 2020…or sorry. Before the end of 2019, at the start of 2020. As Senator Scott said at the top of this webinar, Novogradac has estimated as of April 2020 that more than $10 billion has been raised.

But then, of course, we entered a period of great uncertainty with the onset of the COVID-19 pandemic. So, in response to that, a lot of the questions we received was, how is this impacting the market? And so we wanted to get a better sense of that from practitioners actually on the ground. And so we hosted a survey in May of this year with about 108 survey respondents, 42% of those were fund managers, but it also included responses from service providers across the spectrum, project sponsors, capital providers, and some of those community leaders who are leading the strategy and efforts in particular cities and their work on opportunity zones.

So, I’ve just included a couple of the highlights here, but certainly, there’s more information on our website where you can really dig into some of the results. But as you can see here, in terms of investor behavior, which I think is the most common question that we received about how that was impacted by the onset of the pandemic and the economic disruption that it caused. Seventy-one percent of prospective investors remain interested even if they were currently hesitant to commit. And we did hear that some were waiting for a bit more stability to come into the market to get a better sense of, you know, how long this crisis would be, how it was continuing to unfold.

Again, this was kind of around the Memorial Day weekend timeframe that we conducted this survey. So, obviously, it’s a point-in-time kind of situation and things are certainly shifting and continue to shift, you know, from there. Also of note, this was conducted before the guidance that IRS and Treasury put out that we’ve discussed earlier that did provide some additional flexibility around timelines and other requirements of opportunity funds and investors, which was obviously hugely helpful, you know, in providing a little bit more certainty there as well. What we saw also is that 48% of investors said that they’re looking to place capital. And while only 24% said that they’re not going to pursue OZ investments at least at that point.

Since we have Emily and other policymakers here on the call and participating, I did wanna also call out that there is a clear case for policymakers here as well. And of course, we’re working closely with their offices on some of these initiatives, too. A lot of the respondents said that, you know, how they see opportunity zones as a tool for recovery is at least in part dependent on the actions of policymakers and particularly, as Emily already mentioned, a majority of respondents said that extending that deferral beyond 2026 would be incredibly helpful to some of their work. You can see here some of the other types of policies that also had support, including, you know, new tax benefits and funding local capacity building, which I think is incredibly important especially now in the wake of this, too.

I won’t go through this in great detail since we’ve already discussed it, but, again, this… EIG was involved in asking IRS for additional guidance and flexibility. They responded, I think answered nearly all of the recommendations that we provided and many of the ones that Senator Scott asked for as well. So, again, this really did provide some great assistance to investors to continue on in their investments. And I think, you know, a lot of investors that we’ve talked to both through the survey and outside of that have said that the patient capital that opportunity zones really incent, and, you know, the 10-year hold period through which you get the best or the kind of most lucrative benefit certainly makes this an incentive that is possibly kind of well-timed for or well-suited to, I think, the moment that we’re in.

So, I’ll close out with just a few examples of investments that are ongoing. And again, you’ll see here by the dates that many of them are actually…were either in process or continued even post-pandemic. And so this is a real focus to…I kind of picked certain projects that really highlight the investments that we’re starting to see into operating businesses. The regulations were hugely helpful to providing clarity for both communities and investors to start to make these investments into operating businesses. I know that real estate certainly has seen the…or the vast majority of, you know, deals currently are into real estate, but that is at least in part a function of the regulations as well. And so I think that we’re really starting to see an uptick in part of the market focused on operating businesses.

So, for example, and I think I wanna point out a couple of things, too, a couple of trends, really, in that co-working and accelerator spaces are really playing an important role here in the kind of community ecosystem building around operating businesses and funneling investments into qualified businesses and in these opportunity zones. So, we’re seeing that when we’re on Ohio. BRITE Energy Innovators announced, too, its portfolio companies would receive opportunity zones investments.

I know Launchpad has been mentioned, I think twice already. So, I’ll go ahead and mention them a third time for good measure. And that Mesa, Arizona deal that was just announced last month is a great example of, really, a cornerstone of community revitalization for Mesa. And also, of course, they, as a business, are also receiving, you know, Series A funding through that deal and co-locating into the Caliber Commercial real estate, opportunity zone deal as well. And so, again, I think a really great kind of example of some of that balance.

I know I’m probably running up on time, so I will close out quickly here. One I just wanted to note, because I think it’s particularly well-suited again for this time, is that in Chicago, Illinois, their OZ fund is connecting underrepresented jobseekers to a broader network of opportunities. And so they’ve created a company, they’re invested in a company there that will, again, help jobseekers find new employment in this time. We actually have an investments page that lists… I believe all of these investments are part of that. So, you can dig into this a little bit more on our website as well.

The last one I’ll mention just because it’s a personal favorite as a former journalist. In Brookville, Indiana, a case study, actually, that LISC did, the CDFI there or the national CDFI did a case study on this. Residents who sold a business and had capital gains invested in a few different areas in real estate, but also in buying their local newspaper, which is one of the oldest newspapers in the state of Indiana. And they have kind of revitalized that and breathed new life into that publication. So, again, made possible, at least in part, through the Opportunity Zones incentive.

I’ll close out with a couple of resources there. Definitely recommend taking a look at some of the activity map and investment highlights where we are aiming to track some of this information and the latest investments, funds, and initiatives across the country.

Jimmy: Fantastic. Thank you, Catherine. That was great. I love all those case studies that you have. So, we’re gonna get to our final panelist here today. Last but not least is Robert Scott. He joins us from the Small Business Administration. He’s the Regional Administrator for the Great Lakes region. Robert, I don’t believe… I think you said you did have a slide deck, but you might just wing it. So, up to you what you wanna do here. Go ahead.

Robert: Yeah, absolutely. I’ll show it here in a second. But Catherine brought up a very good point. My region as the Regional Administrator actually includes the state of Indiana, Ohio, Michigan, Illinois, Wisconsin, and Minnesota. And I’ve actually personally been to Brookville, Indiana and met the gentleman that created that opportunity zone fund and turned around and bought the real estate and bought that newspaper. And actually it’s two newspapers. It’s one of the very few newspapers that produces a Republican newspaper and a Democrat newspaper. And it goes besides like in the olden days when the big dailies used to do that. So, it’s actually a fascinating story.

This town is about 45 minutes outside of Cincinnati and it’s kind of northwest of Cincinnati, kind of in the middle of nowhere, but they have a large man-made lake and a little, cute rural downtown, and it’s one of the poorest counties in the state of Indiana. This gentleman sold a manufacturing company in Cincinnati, he’s from Brookville, Indiana, and decided to create this opportunity zone fund and do a lot of good in his hometown. So, it’s a fascinating story. Highly encourage anyone listening today to certainly look at that.

I also have another cool example outside of Chicago, in the South Side of Chicago, where a woman decided to use the opportunity zone area and use SBA resources, Small Business Administration resources and she bought a building and totally rehabbed it. I actually toured that building a couple weeks ago. Fascinating story where she builds landscapes on top of buildings, green spaces that go on top that serve as, like, a protector barrier for the roof. Another fascinating story, they’re called Omni Ecosystems, if anyone wants to do so, but…

So, the great thing about the U.S. Small Business Administration, and if you didn’t hear about us before the pandemic, you definitely know us now because we are the tip of the spear when it comes to the economic recovery during the COVID-19 pandemic. Obviously, most of you have probably heard of the PPP loan or the Economic Injury Disaster Loan or EIDL for short. That’s kind of been our thing the past four months as I’ve lived it, breathed it. And actually, this is the very first webinar I’ve done that wasn’t related to that, specifically. So, happy to talk about something new. But just for all your listeners’ knowledge, the PPP, we will stop taking applications for that on August 8. So, if you want it, go to to research it and certainly apply.

But the great thing about the Small Business Administration is we’ve been engaged with the Opportunity Zone program since President Trump signed it into law. We are actually one of the leaders within the White House entrepreneur development initiative and leading the entrepreneur track. And why do you think that is? Well, the sole purpose of the U.S. Small Business Administration is to help, create, support, and expand small business. That’s why we were created in 1953. It’s what we’re doing now.

And now we’re saving businesses, certainly, during the pandemic. But it kind of intersects with the opportunity zone areas because we have focused a lot of our attention in those areas in the country that need some uplifting and certainly these OZs were selected because of that, that they needed a kick to help them and certainly government, you know, all partnering together to do it, and helping support, one, the small businesses that are already located in the OZs, but also helping businesses if they want to locate in the OZs to take advantage of, obviously, the tax benefits that are there. We’re there to help. And then finally, obviously, the use of OZ funds to start businesses within the opportunity zone area.

Probably one of the coolest examples I have of this actually in practice is in Canton, Ohio. Most people are like, “What’s in Canton, Ohio, except for one thing, the National Football Hall of Fame?” It’s kind of like the staple for Canton, Ohio. I’ve personally been there several times. I’m a native Buckeye. But people that come to Canton, Ohio, they only stop and go to the Football Hall of Fame and then they’re out of Dodge. They go to Cleveland or Akron or somewhere closer where there’s nicer hotels and nicer amenities. Well, the county along with the city of Canton, along with the National Football Hall of Fame, along with the NFL decided, “You know what? We need to make this a destination.” And they kind of came together and created an opportunity zone fund and everyone put money into the fund to start, one, redeveloping the area, but attracting small business.

So, what’s happening now is there’s a ton of small business owners that are, A, from the area that are now buying land, building high-end hotels, there’s gonna be a Topgolf that’s built that’s kind of centered around football, not necessarily golf, but as simulated football playing along with all the other restaurants and all that. And all of these are small business owners in the area that are taking advantage of the Opportunity Zone program. Along with that, they’re taking advantage of the U.S. Small Business Administration’s programs, whether it be free counseling or lending programs such as the 504 loan or the 7(a) loan that are still here. They’re not gone just because of the pandemic. But they’re tapping into us as well as a government-guaranteed lending program to assist them in buying a building, buying land, or whatever it may be.

When you work with the SBA and you’re working with a lender, it helps that opportunity zone fund manager feel a little better because the U.S. government, though we’re not perfect, with these government-guaranteed loans, if you’re getting backed by the government, it gives those investors, it gives that opportunity zone fund manager a little more safety net saying, “Oh, well, they’ve got some skin in the game.” The government has guaranteed their loan whether it be that parcel of real estate or that building or the business or whatever it may be, we’re there to certainly assist you. I know I’m running tight on time, so I didn’t wanna go.

But you can read about us and all the services that we provide at Again, I’ll say that again. We have district offices, 68 of them, across the country. Feel free to tap into us. What I always like to tell everyone is, “You know what? We’re free. You might as well utilize us.” But it is prepaid. You pay your taxes. So, we’re prepaid services, but we don’t pay any additional fees. So, feel free to use. Again,

Jimmy: That’s great. All right. Well, thank you, Robert. SBA, a lot of great resources, absolutely, for small business owners. Egils, I know you wanted to say a few remarks before we move on, so, please go ahead. Close us out here if you’d like.

Egils: It was a great turnout. So, let me tell you what I think we’ve gotten out of this. Number one, the OZ incentive is a bipartisan success story and it’s going to continue, in my opinion. So, all of the kind of uncertainties that are revolving around politics and a number of other things, I think, are to be considered, but I think overall, this program is going to have a chance to prove its value. But COVID has created, I think, a pause in how this program is gonna move forward at the moment. There’s a lot of dry powder and people are holding back, I think, in order to see, more clarity, what’s happening in the economy, what exactly is happening inside of opportunity zones, etc.

But the story, I think, is mixed. I’ve been on the phone with a number of different OZ funds. And some of them are doing gangbuster business in certain parts of the country in which there’s high demand for their projects in the multifamily types of projects. I don’t see much in hospitality. I see a lot in diversification starting to take place. And this is what’s interesting, I think, right now in the evolution of this program. We’re seeing projects in, you know, areas like entrepreneurship and accelerators and workforce training, childcare, education, broadband, all that. Pretty exciting that entrepreneurs, OZ funders are interested in not just, if you will, you know, real estate multifamily, which is important, but other kinds of assets.

The other thing that strikes me from the presentations is the leveraging of multiple sources of funding. I think Jim Sorenson put it best in terms of his capital stack, that in putting these projects together, one should use multiple programs. And I know the White House has got 160 different programs identified at the federal level that are supposed to align with the OZ incentive. I think we’ve barely scratched the surface on what those opportunities are to do that kind of integration.

And finally, just data. I think there’s a big opportunity for the data people and the data mavens to pull together some important data on opportunity zones, socio-economic data, what’s happening, healthcare, etc., as well as the impact measures that are necessary to… What we need is a set of success stories that are not just for investor return, but also for community impact. So, I think there still is a challenge to educate the public and educate the political class that there are major benefits to this program if we give it a chance to grow.

Anyway, I wanted to personally thank the panelists and the audience for being here for this program. It was an honor to be a host.

Jimmy: All right. Well, thank you, Egils. And thank you for asking me to co-host with you and help moderate the panel. Thank you, everybody. We’re at 3:00 Eastern Time, so we’re gonna sign off. But thanks to our panelists again and for all of our attendees, really appreciate your time. Thank you.