OZ Pitch Day - March 7, 2024
In this webinar, Powers Miller discusses the Chicago Musictown master planned community on Chicago’s west side, a first-of-its-kind development that will include the Chicago Music Experience and Chicago Music Hall of Fame.
- An overview of Chicago Musictown, a “master planned” Opportunity Zone project that will feature dozens of live music and entertainment venues.
- The role that Opportunity Zones can play in addressing disinvested communities in Chicago.
- How Opportunity Zones in Chicago can become home to the equivalent of the French Quarter in New Orleans or Beale Street in Memphis.
- The unique approach of a “master planned” project that looks to the community as whole and creates a blueprint for comprehensive revitalization, rather than a few individual residential projects on a project-by-project basis.
- The characteristics that make the West Side of Chicago ripe for revitalization and development.
- An overview of the potential investments for Chicago Musictown, including turnkey Airbnb, corporate, and medical stay furnished income properties.
- Q&A with webinar attendees.
Featured On This Webinar
Industry Spotlight: Chicago Musictown
Chicago Musictown is a “master planned” opportunity zone development in Chicago. It will feature the Chicago Music Experience and Chicago Music Hall of Fame, a state-of-the-art interactive museum showcasing Chicago’s rich musical history and homegrown stars in every genre including gospel, jazz, blues, rock, hip hop, R&B, and soul.
Learn More About Chicago Musictown
- Visit ChicagoMusictown.com
Jimmy: One minute, I’m gonna bring up Powers Miller here. He is our final presenter of the day, and he also has a deal in Chicago, this time on the west side of Chicago, he has a master-planned community. He believes the first of its kind Master-Planned Opportunity Zone. So, very excited to hear from him, the fund is going to invest in a few different Opportunity Zones on the west side of Chicago with a total population of approximately 150,000 residents.
Powers: My name is Powers Miller. Just a little background on me. I am the founder of USA Income Properties. I at a time back in 2009 and 2010, ’08, ’09 and ’10 really, I was part of, I was a partner in a firm with JL Gutterman out of New York, we were the largest provider of Gulf Opportunity Zone Properties following Hurricane Katrina. For those of you that don’t know the GO Zone was a, at the time the largest tax incentive ever offered on real estate prior to these Opportunities Zones we’re talking about. I’m a founding sponsor of the Music Town Master Planned Qualified Opportunity Zone Fund, and a Music Town Aligned Unity Fund, which is a separate from Opportunities Zones. Also the founder of Music Town Development Group LLC and MTD Partners LLC. I’m the general contractor and developer for a project that we’ll be talking about today, one of our catalyst projects which is the Chicago Music Experience and Hall of Fame, and when it’s all said and done folks, what I am and what we do, is we’re market makers, and that’s what we’re gonna talk about today.
We’ve aligned our interests in a way that is different than anything else that I’ve seen out there. I did hear Jimmy say, “First of its kind Master-Planned Opportunity Zone.” And we are just in the prime, we’re kind of late. We’ve kind of analyzed a lot of separate things and then with the pandemic, we never got off the ground and we’re now off the ground. So we’re just starting out. So most of what I’m gonna tell you about today is really the business model. It’s very simple, it makes a lot of sense, you know, on typical developments in the City of Chicago, if a developer comes in with a big project, they have to go to the city first and they negotiate and then it comes down to the community. Our business model is the complete opposite. We are community up, meaning I’ve been involved with the community now for three years. The community itself has written, it took them two years has finished a quality of life plan that’s a big part of our master plan, and we believe that in situations like this, when you’re dealing with disinvested communities especially, that the city’s role is really to do what the community tells it to do, and it’s not the other way around, and, and we, we really strengthened ourselves. In fact, our fund will be a joint JVP with the community, we’re gonna do that, we’ll achieve that through community benefit agreements. The aim is to create a sustainable business model whereby the community is able to receive residual, passive income on an ongoing basis from all the tourism and things that we’ll be bringing into the community and, and most important to our investors and potentially other investors because we do on the turnkey side, we do a lot of providing to the providers, is we have all the relationships.
We have, again, we’ve put in the time, the work, three years in the community, community meetings, working with all different types of organizations as people wanna come to Music Town for investment purposes and you’ll see why we really believe it’s gonna snowball. They would do very well if they would, you know, contact us because we, we pretty much have laid all the groundwork for this and we have those relationships. What we’re talking about here with Opportunity Zones, in our opinion, is a paradigm shift. It’s not a really a challenge of raising money, that’s why you folks are here. You have you have a incentive to invest this money into Opportunity Zones. So the challenge is finding enough qualified investment opportunities to satisfy the demand, and your investment should stand on its own two feet. You wanna make an investment that you would make, even if the tax incentives are there. That’s something that we, we couldn’t stress enough when we were down in the Gulf Opportunity Zone with those Opportunity Zones. You don’t wanna just make the investment for purposes, other than you would make it otherwise, and you wanna look for something that’s forward-thinking, impactful, solution-oriented. We believe that what we’ve created whereby our entire fund, and we’re gonna be looking for about $2 billion in funds for this area that we’ll put in over the next 10 years, some of that’s Opportunity Zone Funds, some of that’s just regular funds.
We have venture capital funds, pre-IPO’s, there’s a lot of things going on right now. But action breeds actions, and we’ve all heard the expression less is more, in this instance, no, that’s not the case. Less is less and more is more. Every time a new business comes into our Opportunity Zone, which we are planning to thoroughly fill, it gets better for the next guy, and that’s just real simple to figure out. So, the tax incentive that you’re gonna get by investing with our fund is really gonna be the icing on the cake, and although the deferral is nice, we’re really focused on creating opportunities and you’ll see, as I get a little further in here, and I know I gotta go fast, is that we’re focused on the, the no capital gains into perpetuity as long as the business is in business for 10 years.
So when I, when I first got the idea to get involved again in tax-incentived real estate, I challenged my team. I asked them a simple question. I said, “What is the solution to a disinvested community?” If we’re gonna get involved in impact investing, we wanna do it, and we were successful in the Gulf Opportunity Zone. We wanna know that our investments are really making an impact and we wanted to be a part of a solution. So, the question is for all of you, the solution to a disinvested community, and our answer is everything. Every other opportunity or amenity any other community has access to, is the solution to a disinvested community. That’s where we came up with the term Master-Planned Opportunity Zone. We looked at the business model of, you know, investing in a multi-family over here, multi-family over here, diversification, and we felt like we were leaving too many variables outside of our control, and what we’ve created here is a situation where we control our own destiny and most importantly, we’re able to make a true impact.
We believe what we’ve created is really the model for Opportunity Zones, because see, we’re not leading with housing. You’re gonna have a hard time finding Opportunity Zones that aren’t putting in more housing, affordable housing. With all due respect, you know, a lot of these Opportunity Zones are places where people don’t really wanna live. So, we’re leading with the economy, we’re leading with jobs, and we believe that comes first and that the housing will take care of itself. So, first of its kind Master-Planned Opportunity Zone, stands out from all other Opportunities Zones because our focus, as I just said, is economic engine creates business jobs and new residents. History has shown us that simply building housing in areas with no local economy does not solve the root of the problem. Location/Areas/Zone you invest in should have a localized solution for the economic inequities that have created/contributed to the disinvestment within the community in the first place, and the most successful projects will create value through economies, their new economies that produce jobs and businesses within the community.
So, the objective is to maximize the impact of Opportunity Fund Investment Dollars and an MPOZ, as we’ve kind of coined, will achieve that objective by looking at the entire community as a whole creating a blueprint. Regeneration, our term is regeneration without gentrification. We have a plan for that. I want you to know because I really have too much respect for Jimmy and the great job he’s doing that I don’t wanna keep people too long. So, we, all of you will be getting an invite to a, just a Music Town only webinar, where we can really not have to talk so fast, and we appreciate you. Here’s some of the external demand drivers, the catalyst to what’s really gonna create the economy that I keep speaking of. First of all, our fund will be a principal investor in the Chicago Music Experience and Chicago Music Hall of Fame, which is going to be, if you know anything about Chicago architecture, it’s going to be a world-class iconic facility and with Chicago’s whole business being conventions and tourism, well actually it’s tourism and conventions. It used to be conventions and tourism. We get 60 million visitors a year, it’s over $16 billion in economic input. This will be something that will drive economy into the community. We’re gonna couple that with a walkable live music and entertainment district. In fact, the Chicago Music Commission did a study and Chicago leads the country in the number of genres with the minimum tickets sold. So, ours is gonna be unlike anything else, it’s gonna be multi-genre. You can picture your Beale Streets, you can picture, you know, New Orleans, Nashville. A lot of places have an area like this, but not really have a multi-genre area, and that will be right there in the community as well. There’s a already a lot of music and TV, excuse me, movie and TV business going on, state of Illinois doubled the tax credits. We’ve created an area where artists, musicians, actors, millenniums and Generation Z will, will want to live. It’s a place where people will wanna visit, people wanna work and people wanna live.
Look what’s already taking place, this is some of the things that the city’s got in gear, the INVEST South/West program, where a portion of that $250 million for the next three years will be brought in directly into Lawndale. We’ve got the City Catalyst Fund which is another $100 million that’ll be spread around for Opportunity Zones. Ogden Commons is right there around the corner from Cinespace Film Studios, it’s a $200 million development, and then the Hatchery is the first food and business incubator outside the downtown business district and it just happens to be in our most dynamic industry, which is restaurants and foods.
Recently we got confirmation and that a TV docu-series will be filmed in Music Town, and as you can see right here, the show will feature a twist on other real estate type reality shows. First of all, it won’t be curated. A docu-series is kinda takes on a life of its own. It’s gonna be led by A-list music celebrities, and then it’ll include a lot of everything from community members to city and it’s basically, it’s just the, it’ll be a show about the making of Music Town, and we feel that’s real important to the long-term viability because it creates an emotional connection with the guests excuse me, with, with the, with the audience to a very popular place that will really help us Chicago’s tourism, we’ve never taken advantage of this. Our fund has an option to invest on this. As I mentioned, backed by two of the, well, two for sure, two of the biggest names in the music industry, one is from Chicago, one is not, and I’m told that they have a whole group of music, big time music people, and they’re starting to work with some of the Hollywood people. It’s a pre-IPO, which is very important for Opportunity Zones because of that back in 10-year you know exclusion of capital gains into perpetuity. We believe that this is something that has a tremendous upside. It’s next generation music, news entertainment, and social media platform. It will be headquartered in Music Town, jobs will be created there, it’s a technology play. It’s backed by some of the biggest names in music.
I want to say, if you had the chance to get in Facebook early on when Myspace was out there, because we believe that these other, these other apps, you know, your Spotify, all the apps you know, even YouTube, Apple, there’s a number of them, there’s no loyalty to an app, and they really haven’t maximized the ability of technology to become something that’s, that’s, that’s really unique and the fact that we are being led by the people that are actually in the business, who are used to having their product controlled by somebody else and this is an opportunity for them to get in on the inside and control their product, we believe that we’ll have the opportunity to do a lot of exclusive deals and things like that, and really have a competitive edge over other platforms to aggregate customers.
One of the things that we do as a company, which is kinda separate from our fund, which I really wanted to talk about today, is we have the ability to do as a turnkey provider, a lot of you out there may have, you know, a couple of $100,000 even as little as $60,000, we can leverage out turnkey opportunities for you. We work with an associate of Jimmy’s actually, he did a presentation here, Ashley, will be working to set up individual funds for investors. If you if you like the idea of being more of an owner rather than a fund sponsor, there’s all kinds of opportunities here, just to get through that. Here’s an example, just so you know, of a 2-4 unit building that you could do on your own with your own opportunities, own fund, and as you can see there, the prices are incredible. I’m out of time, but we’re gonna be able to provide you 10% + CAP RATES. We’ve got cash-on-cash returns of 25%+, you have a five-year total ROI on leverage, cashflow plus equity 350%, and the last thing I wanna say is, this area is, is, is primed for, to boom, it’s, it’s, it’s the location is second to none, and there’s, there’s properties, you know, less than two miles away that sell for five times as much per square foot. Right now, you’re getting, you can get properties at half of replacement cost, the city’s building 100 new houses. There’s plenty of land. We’ve got a whole plan for regeneration without gentrification that includes improving the quality of life that the people are already there. We don’t want anybody to leave, and this is a well thought out, detailed, new type of model for Opportunity Zones, there’d never be enough time in 10 minutes to tell you everything, and I look forward to following up and answering any questions. Thank you very much, Jimmy, and I apologize about the technical difficulties.