Coalition Building In Opportunity Zones, With Bob Richardson

What are some of the biggest lessons learned from the first three years of the Opportunity Zones program?

Bob Richardson is managing partner of Blue Cardinal Capital, a real estate private equity firm with Opportunity Zone projects in upstate New York.

Click the play button above to listen to my conversation with Bob.

Episode Highlights

  • A review of the “disconnects” within the Opportunity Zone program that Bob identified on his first appearance on the Opportunity Zones Podcast.
  • The disproportionate impact of the pandemic and policies enacted in response to it on Opportunity Zone communities.
  • How Opportunity Zone funds measure the impact that they are having in the communities where they invest, and the industry’s responsibility to embrace proactive and transparent reporting.
  • Blue Cardinal’s focus on an Opportunity Zone in Niagara Falls, New York that is largely vacant.
  • Lessons learned from the first two years of the Opportunity Zones program, including the role of real estate developers as “coalition builders” in the neighborhoods where they work.
  • What makes a successful Opportunity Zone investment, starting with the principle of “do no harm.”
  • Success stories of the impact made by Blue Cardinal during the first few years of its Opportunity Zone program.
  • The wake up call about the disproportionate pandemic experience that is continuing to impact Opportunity Zone communities.
  • The importance of the Opportunity Zone program as a recovery tool that can “future proof” its communities.

Featured on This Episode

Industry Spotlight: Blue Cardinal Capital

Based in Buffalo, NY, Blue Cardinal Capital is a full service real estate private equity firm that invests in secondary and tertiary cities. Their Niagara Falls economic development fund was one of the first Opportunity Zone funds in the nation.

Learn More About Blue Cardinal Capital:

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. Today, my guest and I are going to be discussing some of the biggest lessons learned from the first three years of the Opportunity Zone program and the realities on the ground. Joining me is managing partner at Blue Cardinal Capital, Bob Richardson. Bob joins us today from his office in Buffalo, New York. Bob, welcome back once again to the podcast.


Bob: Jimmy, great to be back with you. Congratulations on all of your success and the ongoing podcast program you’ve put together that’s pretty remarkable.

Jimmy: Yeah. Thanks, Bob. Glad to have you back on the program. You joined me, it’s been almost two years. You were on the program in November of 2019, episode number 63. If you haven’t listened to Bob, you should go back and check him out. I’ll be sure to link to it in the show notes for today’s episode. But last time Bob was on the program, he and I discussed what he thought were some of the biggest misconceptions or disconnects regarding the Opportunity Zone tax incentive. Bob, I wanted to revisit a few of those now, since it’s been a couple of years since we discussed that, I wanted to know from you, have those disconnects played out the way that you had expected them to, or are there any new ones? And just to very briefly recap some of the disconnects that we discussed involved. One, the timing requirements around the program. Two, the locations of the Opportunity Zones and how that affects typical real estate principles. Three, the challenge of developers becoming fund managers and vice versa.

Four was, you know, some securities issues, Opportunity Zone funds being treated as regulated securities by the SEC. Number five was large firms needing capacity, often ruling out smaller locally run projects. And number six was the headwinds that fund sponsors and fund issuers faced in getting adoption from wealth managers and financial advisors. Bob, so I turn to you now, which of those disconnects really resonated for you over the past couple of years, but which of those held the way that you had originally thought?

Bob: Well, I guess I’d first wanna indicate just that I’m somewhat surprised that I think all of them have been relevant through the lifecycle of the program. And, of course, when we sat down and talked, we couldn’t have known that just a couple of months later, we would have been in the throws of a pandemic. And so, it would be hard not to focus on the timing disconnect as one of significance just because so much has changed in regard to the timing of the program because of the pandemic, and the timing of real estate development and the financing related and required to complete projects all have been significantly impacted by the pandemic. And so, yeah, the timing certainly is one of those sort of jumps out as an obvious one, but I think maybe the location disconnect is maybe a more subtle reality and the things that made some of these Opportunity Zones difficult to operate in, difficult to find success in are now worse and more challenging than they were in the past.

So, the pandemic hasn’t hit every neighborhood equally. And I feel like the neighborhood where we’re particularly focused has been harmed significantly by the things that have happened in the last couple of years with the pandemic and loss of jobs and certain types of jobs that have been lost more than others, which have impacted our community disproportionately. So, in some ways, I feel like the whole has gotten deeper for us to help work our way out of, and so those disconnects really have compounded while the others maybe continue to persist.

Jimmy: I wanna get back to the pandemic’s effects on the Opportunity Zone communities all over the country, but particularly where you’re developing a little bit later in the episode. We’ll have some discussion of that, but, you know, first. I wanted to ask, are there any new disconnects or misconceptions that you’ve noticed pop up over the last couple of years since we last spoke, or any others that you’d just like to point out at this point?

Bob: Well, disconnects are really evolution of the way we think about and approach Opportunity Zones maybe. You know, I think there’s been a real interest in understanding what we mean by impact and how we measure impact and how we report on the success or lack of success that we’ve had in terms of impacting these Opportunity Zone communities in the right way. So, I think we could have maybe called the disconnect two years ago and say that the disconnect is that we’re not tracking the impact that we intend to have, and we’re not measuring what we’re trying to do. And therefore, we’re going to have a challenge in reporting and sharing with our constituencies with the government, who’s effectively sponsored this program, what the results of their investment are. And I think it’s easy to maybe get lulled into the fact that it’s not required, and therefore, we don’t need to do it or think about it and I’ve taken the position that that’s a disconnect there in the sense that it is a responsibility that we should put on ourselves and on each other to hold ourselves accountable for the outcomes that we’re trying to create.

So, we’ve spent a lot of effort in the time since we spoke last understanding as best we can, the neighborhood where we’re operating and putting down some infrastructure to allow us to track how the neighborhood is changing over time. So, you know, that’s a proactive step that I would recommend for everybody. I think it’s in our interest as developers in Opportunity Zones to be able to answer kinds of questions.


Jimmy: Yeah. I think it’s absolutely in the interest of developers like you to be able to point to some good data that may not be government required at the moment, but can help paint the picture of success within the Opportunity Zone initiative. Is it working or is it not? Any type of story you can tell that can show constituents and Congress, and the White House administration that yes, we’re moving the ball forward here. This is having positive social impact. This is creating jobs. Here’s what we’re tracking. All of that data, all of those anecdotes would help this program potentially get extended at some point down the road. Without those stories, without that data, and like you rightfully point out, the government is not requiring that this data be collected, but the funds’ issuers and deal sponsors themselves should still be incentivized to track that data on their own so that they can share those good stories at some point down the road. I agree with that.

Bob: Yeah. I’ll just add one thing to that. I guess my observation is that in absence of actual independent third-party data, the presumption is that real estate development in a blighted community is unwelcome gentrification. And if you don’t have facts to dissect the nuances of that question, the presumption is that it didn’t help. It made it worse. And so, we have to be equipped to educate people with facts and not with our good intentions or not with suppositions, but with independent information. And frankly, sometimes that comes with a level of critique of your effort. And you have to be willing to say, “Listen, we did well in categories one, four, and six, but we need to do better in two and five.” So maybe there’s a little reluctance to put that out there. But I think in the end, one of the things that I’ve maybe taken to heart about developing in this particular blighted community is there’s a real premium on honesty and being able to have a direct and frank conversation about what needs to be done, what is being done, and who’s being impacted by it. And speaking in facts and being able to share facts with the constituencies around us has been really a valuable lesson from the last two years.

Jimmy: Good. Well, I want to dive into that a little bit, actually. So, I think now would be a good time, Bob, if you could tell us a little bit more about your developments, where are you developing? What are you developing? I mentioned that you’re located in Buffalo, New York. I think a lot of your developments are in the Buffalo and Niagara Falls area if I’m not mistaken. Maybe you can go into that a little bit more. Where you are, what you’re developing, and what have been some of the big takeaways from your experience in developing in those blighted communities?

Bob: So, our focus is a particular neighborhood in Niagara Falls. It’s the historic downtown portion of Niagara Falls. So it’s not what you might think of as a tourism district, but really the old retail community built around the core of the downtown 100 years ago, really. And the neighborhood that we’re in is one of the highest unemployment and highest poverty neighborhoods in all of New York State. It’s largely vacant. I’m told at one time there were between 12,000 and 14,000 people living in the neighborhood. And now, there’s about 1,200. So there’s a lot of vacant parcels, a lot of homes that are not occupied or maybe shouldn’t be occupied, and it’s in rough shape. And there’s a lot of challenges just on the real estate perspective in this neighborhood. But it also has some of the factors that we like about potential Opportunity Zones that are maybe poised to outperform.

One of those is that it’s adjacent to a very high-performing, actually, really two high-performing neighborhoods. One just north in the United States, and more significantly, one across the river in Canada, which is actually one of the highest-performing jurisdictions in North America. And that dichotomy between the Niagara Falls, New York location, which is blighted and struggling mightily and a place literally on the other side of a narrow river, where you can’t find a place to live because the housing is so expensive and there just aren’t enough places to live, even for the people who work in Niagara Falls, Ontario. So that’s always been a fascinating, interesting part of the neighborhood. The other factor is that the river frontage until recently was blocked by a highway that separated the city from the river. And New York State removed that highway in the last two years. And so, what once was a blighted community up against a neglected highway that separated it from a river and a natural wonder, that’s all been cleared away now. And so, we have a three-mile-long park that runs through our neighborhood and really creates a new opportunity, a new way of addressing a community and bringing new residents to a place that they wouldn’t have considered before.

Jimmy: Good. And what would you say have been some of the biggest takeaways from your experience developing where you are? What have you learned basically from the first three years of Opportunity Zone development?

Bob: Well, first and foremost, the majority of the lessons learned are built around the idea that the problems and challenges that are holding this neighborhood back from realizing its full potential are not only real estate problems. The real estate problems are, in fact, the easy ones to address, but the poverty, the substance abuse, the homelessness, mental health issues, the child care issues, lack of transportation, lack of employment, the list goes on and on and on. And when you say, well, which of these problems is a real estate developer well equipped to address? The only answer is mostly none of them. We really aren’t in a position to address a lot of those issues, and yet they stand in the way of our success. And I think where we’ve come in the last two years is really seeing ourselves as a coalition builder to bring resources and people together to help tackle those issues. And so, when we think about our neighborhood and the buildings that we own and what we would like to do with them and all of the real estate plans and documents that we’ve prepared, that real estate substance is only one part of the plan.

We’ve had to independently develop a municipal strategy for the neighborhood, a master plan for the neighborhood. We’ve independently developed an economic development plan for the neighborhood. We’ve independently developed a demographic plan for the neighborhood. And now trying to find partners and other interested organizations to kind of coalesce around those ideas and support them and become part of the team that’s tackling the bigger issues that are required to really have the kind of breakout success that we’d like to have.

Jimmy: You bring up that term success. I wanna know from you, Bob, what is it in your mind that makes a successful OZ project?

Bob: Well, I’m not a doctor and I don’t have the intellect to maybe even be one, but I would say we’ve started with this idea almost of the Hippocratic Oath, do no harm. And so, any answer in terms of what is success starts with we’d first do no harm. And beyond that, I think we have a duty to our investors to produce the kind of return that justifies…taking an extra step and taking an extraordinary step in trusting the process to generate an above-expected return on a risk-adjusted basis. They’ve taken additional risk, they need to receive on an after-tax basis a disproportionate reward. So we take that very seriously. And again, that comes from being able to address all of the issues in the neighborhood. And I don’t think it’s reasonable to have the kind of real estate return generated in a community as blighted as the one where we’re operating if you don’t make it a place where people who don’t live there today want to move and see themselves as part of a community. And maybe that’s pioneers in the beginning and maybe more conventional migration into the neighborhood later on, but it has to be a place that’s safe, and secure, and welcoming, and active, and interesting.

And all of those factors have to come together, not just for the people who live there today, who we pledge no harm, but to the broader region. And it has to really transcend this placemaking minimal expectation that our community has these days. So the do no harm, a disproportionate return, and I think the last issue which maybe is another one that’s become front and center in our society in the last two years since we spoke is really making sure that everyone benefits and that there’s not this one-sided equation, where one class of people benefits while the others don’t or are harmed. So, really making a commitment to bring everybody with us has been part of our definition of success.

Jimmy: No, I think that’s great. You know, what I’m hearing from you is on the one hand, you recognize that as a real estate developer, there’s only so much that you can do for some of these communities. There’s a lot of harsh realities of the lives of the residents in these black communities. You can’t address all of their concerns as simply a real estate developer, but on the other hand, you are cognizant of the fact that a lot more is needed besides real estate to pull these communities out from under their distressed nature. Can you talk a little bit more about that? How do you build a community coalition? How do you build an ecosystem or a self-sufficient neighborhood in these Opportunity Zones?

Bob: Yeah. There’s a couple of steps in that process. You know, we start with a place that is not a functioning ecosystem. It has no economic engine that generates employment or wealth or savings, and that’s a completely absent from our neighborhood. There’s very few places to actually go to work anywhere for any skill level. So to specifically answer your question though, I think, the first element of this is to be able to be in a direct conversation with the neighborhood and to not fall into the temptation of really using emissaries to communicate with your neighbors. We’ve every time that we can, and certainly challenged by the pandemic, to be present, and to be accessible, and to respond to any neighbor on any issue with promptness and respect, and to take seriously the challenges that they’re facing. And, you know, that frankly through the pandemic has extended into the tenants that we have and the challenging situations that they have in their lives, and just doing sort of having a golden rule kind of approach of helping them in the way that we would want to be helped if we were in their circumstances.

So there’s no substitute for relationship building for being present in person and being the person that can speak with authority in terms of what the plans are and what we’re gonna do and how we’re gonna work together. And I mentioned earlier that part of that is just having an honesty about the needs and the challenges and not promising to be a silver bullet. It’s just not a credible promise. So, I think with that as a starting point, what we found is that there are other like-minded leaders around the community. Leaders from the religious community, leaders from the political community, leaders from the non-profit community, from the educational community. Once they see that process happening, they want to be a part of it. And I think where we have an opportunity as a developer and a property owner and an organization of influence in the community because of that, we can hear from the residents and advocate for them with the broader neighborhood and community and bring people together from the community, from outside the community to start to work on the issues that need to be addressed.

Jimmy: Bob, I know that you’ve only been developing in this Opportunity Zone community or under this Opportunity Zone tax incentive for about three years now or so. So I recognize it’s still very early this being a long-term program, but what successes have you seen so far personally with, you know, reaching out to the constituents in the communities where you are developing in? Do you have any wins or successes there you can share with us from early on?

Bob: Well, I think the biggest win that we have had and we probably haven’t been able to demonstrate it in the community as much yet, just because of the timing and the challenge of the timing of financing, particularly during the pandemic is really using the Opportunity Zone traction within the neighborhood to attract other forms of capital that are say, philosophically aligned. To use the Opportunity Zone as catalyst to have a broader conversation with the investment community about how we do things of impact. There’s certainly a growing movement toward impact investment that is maybe less constrained than the Opportunity Zone program in itself. There are increasingly organizations, institutional investors, family offices, high-net-worth individuals, who’ve adopted investment criteria that is more broadly-minded than simply return. And that’s a trend that has been coming for some time. And I think, you know, as a firm, the Opportunity Zone put us in a great position to be ahead of the curve on that issue, and to have thought much more about what impact we hope to have in our neighborhood, how we were going to achieve that, and the role that real estate does or does not play in meeting some of those goals. So, I think that’s probably been the biggest win is attracting non-OZ capital who wants to be a part of the same journey.

Jimmy: That’s interesting. Yeah. So the Opportunity Zone initiative, essentially just being a catalyst for additional capital to flow in. That’s good.

Bob: That’s right.

Jimmy: And I’m glad to hear that happening.

Bob: Opportunity Zone capital is pretty nuanced. You have to have a capital gain. Your timing has to be right. It has to fit in the balance of your investment strategy, and so on and so on. And the impact investor is less constrained by those issues, but has a similar set of goals in mind. And again, being able to articulate those goals and our response to those goals, and to be further along in demonstrating our capacity to achieve those goals has really helped us, in particular, attract some pretty significant impact investment.

Jimmy: Fantastic. I’m glad to hear that. We’ve touched on the pandemic a couple of times throughout the course of the show today, you know, before we wrap up, I wanted to get your sense of, or I wanted you just to characterize for us, Bob, really the effects of the pandemic on Opportunity Zone communities throughout the country, but, in particular, you know, in the Niagara Falls area where you’re developing. What impact has the pandemic had on those communities and the residents there?

Bob: So I’ll tell you a quick story. You know, one of the goals that we had as I’ve mentioned was to really have a direct communication with our neighbors. And when the pandemic hit, we were just about to launch a pretty extensive community engagement campaign, what included a whole range of things from going door to door in the neighborhood to small groups of different types of constituencies, to public meetings, all of those things. And we obviously had to cancel them. We couldn’t have meetings, I think, of more than a handful of people at the early days. So not long after that, we decided that we would conduct a survey and we would send surveyors around to knock on doors and take survey information. And we set up some tables in some public areas around the neighborhood to have the neighbors coming outdoors take the survey. And we thought we should give some kind of a gift or acknowledgment for those who participated in the survey. So we gave them a gift card for food, that was our idea.

And one of the things that happened, again, this would have been August of 2020, so we were still pretty deep into the pandemic. Just as a matter, of course, had a box of masks and hand sanitizer for people who were taking the survey. And one of the things that came out of the team that was conducting the survey was extraordinary number of people who asked if they would be, could be allowed to keep their mask instead of taking the gift card for food. And it just really struck home just how disproportionate the experience of people in our neighborhood where we work was with pandemic and pandemic issues compared to where you and I probably live. They were just concerned about basic safety and basically having a paper mask was a privilege. So, I think that was a bit of a wake-up call as just how significant of a setback the pandemic was for the people in our neighborhood. That put us, I think, in the right frame of mind to be helpful and to be a facilitator of other resources, and be mindful of what was going on in the neighborhood.

To your broader question, I don’t know that we’ve completely seen the full impact of the pandemic yet. The kinds of jobs that have been most impacted by the pandemic, are really negatively affecting our neighborhood, how quickly those come back, or if they even come back is still a question. You know, I think childcare has become an issue of prominence out of the pandemic and maybe affecting the amount of people available in the workforce more than we could have ever anticipated, and maybe heightened our sensitivity to needing a solution for childcare within the neighborhood if we’re gonna recognize or realize the level of success that we aspire to. And finally, I would say, I don’t know yet where the business community’s gonna come back in terms of, are we working from home? Are we working in the office like we used to? Are we going to split? Are we going to have smaller offices that are in more diverse locations to better manage these shutdown kind of issues, particularly here in our region where so much of the economic activity is cross-border and the border has been closed for 18 months?

So there’s a lot of uncertainty, I think, is maybe the bottom line answer and that uncertainty is disproportionately affecting the people in our neighborhood in a negative way. So, I think that’s maybe caused us to be more cautious about our pronouncements and to just make sure that when we make an announcement or make a statement that we’re prepared to follow through all the way to the end just because there’s a desire to have some certainty and some firm commitments when that comes.

Jimmy: Yeah. Excellent really good insights there, Bob. You know, the Opportunity Zone tax policy was really born out of this concept of an uneven recovery from the Great Recession of 2008/2009. You know, the wealthier zip codes across the country were able to rebound much more quickly and much more prominently whereas the poorest zip codes in the country really got left behind and did not experience the same recovery that much of the rest of the country experienced. And in some ways, they never fully recovered. I think we’re seeing something similar happening with the recovery from the pandemic now. I think there’s going to be certain parts of the country, certain wealthy zip codes that rebound just fine from the pandemic, that we’re able to live through the pandemic with very little disruption, whereas a lot of the poorer zip codes, poor communities, Opportunity Zone areas around the country are once again, going through a period where they are not recovering nearly as quickly or as prominently as the rest of the country. So I think it makes the Opportunity Zone policy all that much more important as a recovery tool, not just from the uneven recovery of the Great Recession, but now from the uneven recovery of the pandemic as well.

Bob: Yeah. That’s a really great insight, Jimmy. And I would just add to that really an observation that you asked me about earlier I didn’t probably fully answer, which was how does the ecosystem concept fit in here? And when I say ecosystem, I often use that interchangeably with the idea of future-proofing the neighborhood. What that means to me is that we have to make our neighborhood self-sufficient and put it in a position where the population growth creates job growth, which supports the population and additional population growth. And we’re in a place where the concentration of poverty is so acute that there really isn’t a future growth potential without recruiting in some source of cash flow from other communities. And that needs to come both in the form of jobs, but it needs to also come in the form of additional residents and residents whose income sources are more diverse than the population that we have now.

So that is not to say we’re hoping or asking anyone who lives in the neighborhood to leave, not the case at all, we just need to grow the population. And one of the things that I’m often surprised about is the presumption that because we’re working in this neighborhood, that our answer is to build affordable housing. And that’s frankly not the direction we believe in. We need an income diversity that comes from people who are employed in all kinds of different industries. And in Niagara Falls, that means not in tourism. We need people who are in other professions. So creating a place where all of those people see themselves living together in a place that’s interesting, and integrated, and vibrant is part of that ecosystem mission. And so, you know, one of the things that we’ve probably spent the most time on during the pandemic is what kinds of employers fit in this place and what do they bring in terms of jobs, not just for people who might relocate and move to the neighborhood or to the region, but what do they mean in terms of jobs and workforce development and training for the people who live there today, so that they’re part of this participating and part of the upside for what comes from the Opportunity Zone?

Jimmy: Fantastic thoughts there, Bob. A lot to think about. I’m afraid we’ve run out of time for today. I think we’ve covered everything that we wanted to, but one final question before we go, Bob, where can our listeners go to learn more about you and Blue Cardinal Capital?

Bob: Sure. We’re on the web at That’s probably the best place to get directly connected to us. And we’re always happy to connect with your listeners in person and have a follow-up conversation and get to know them a little bit personally as well. It’s always a great opportunity.

Jimmy: Fantastic. Yep. Please do visit that website to learn more about, Bob, and feel free to reach out to them, of course, if you’d like to learn more. And for our listeners out there today, I will, as always, have show notes for today’s episode on the Opportunity Zones Database website. You can find those show notes at, and there you’ll find links to all of the resources that Bob and I discussed on today’s show. Bob, it’s been great talking with you catching up. Thanks for all of your insights today. And thanks again for joining us. Appreciate it.

Bob: Thank you, Jimmy. All the best.

Jimmy: That’s it for our show today. A huge thank you to you, our listener. If you liked this episode, please rate and review us on iTunes. The “Opportunity Zones” podcast is produced by the Opportunity Database. Visit to learn more about Opportunity Zones and Opportunity Zone fund investing. You can learn how to subscribe to this podcast and read more about today’s guest in the show notes by visiting And we’ll be back soon with another episode.