Opportunity Zone reform legislation, social impact, and fundraising trends were hot topics at last month’s Novogradac OZ Conference in Long Beach, California.
Ashley Tison, co-founder of OZ Pros, joins the show live on-site to discuss where the Opportunity Zone program currently stands and what the future holds for OZ investments.
Watch On YouTube
- The idea of shifting the narrative of Opportunity Zones from a tax incentive program for wealthy investors, to an impact investing program that supports neighborhood revitalization.
- The social impact of OZ projects in low-income urban and rural communities via qualified OZ funds.
- Importance of expanding reporting requirements to provide transparency into how well the Opportunity Zone incentive is working.
- Discussion on bipartisan and bicameral legislation that would improve Opportunity Zones and push back the tax incentive’s deferral date by two years, from 2026 to 2028.
- Expert opinions on the proposed legislation and what amendments could mean for current and future OZ investors.
- Market trends and investor perception specific to opportunity zones in 2022 and beyond.
- Enhancements of the OZ program and how to advocate for its continued expansion.
- How dynamism funds would provide operating support and technical assistance to underserved communities.
Featured On This Episode
- Opportunity Zones Improvement, Transparency, and Extension Act
- 2017 Tax Cuts and Jobs Act
- Novogradac Conferences
Today’s Guest: Ashley Tison, OZ Pros
About The Opportunity Zones Podcast
Hosted by OpportunityDb.com founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.
Jimmy: Welcome to The Opportunity Zones Podcast. I’m your host, Jimmy Atkinson, joining you today live from the Novogradac Spring 2022 Opportunity Zones Conference here in beautiful, sunny Long Beach, California. And I’m joined today by my colleague at OZPros, Mr. Ashley Tison. Ashley, how are you doing?
Ashley: Fantastic, Jimmy. It has been a great show. It is awesome to be back in person. It’s been fantastic being back here in California. And maybe the best thing is that I didn’t have to fly here with a mask.
Jimmy: That was really nice, wasn’t it?
Ashley: It was unbelievable.
Jimmy: Yeah. We probably both took flights, I think a day or two after the mandate was…what happened? It ended? It got struck down in court.
Jimmy: The extension got struck down in court. So let’s talk about the conference for a minute here. We’re here with a lot of other industry professionals. Funds are here. Investors are here, attorneys, accountants, of course.
Ashley: Oh, yeah, we got those in spades here.
Jimmy: Yeah, we got a lot of those. So, a lot of discussion has been centered around the legislative bill that was introduced in the House and the Senate earlier this month. And we’ll get to that in a minute, but first, you just got off the stage not too long ago. Tell me about your panel and what you guys discussed.
Ashley: So it was interesting because, you know, it was about tax and legal issues that are continuing to pop up in Opportunity Zones. And Lisa, who was my co-panelist, just walking by there, appreciate all your feedback, Lisa. Thank you again. But it was an opportunity to kind of flush out some of the issues that keep continuing to pop up in the bootcamp and in the strategy calls that I have that are kind of arcane issues that are really nuanced.
They kind of have some results that aren’t necessarily what you would think would be in line with the legislation. And so we had an opportunity to be able to talk through that and to be able to walk through about how important story and about how important your impact story is within the context of some of those nuanced details.
And so I think that that’s what it all kind of came around back to is that, you know, typically, when you’re talking about legal structuring and tax structuring, that can kind of be boring stuff, but that when you really focus that in on impact story, it transitions it out of boring and it brings it into something that really resonates with you and I think that resonates with what this legislation was all about and the reason why I get up in the morning and I’m fired up about going to work and putting on my Opportunity Zone cape.
Jimmy: You are fired up.
Ashley: I’m always fired up.
Jimmy: I had to dial down the gain on my mic because you were blowing all the levels there a second ago. So, you know, Reid Thomas of JTC Americas said something really interesting earlier this morning on one of the other panels, which was, we need to reframe Opportunity Zones as an industry to be less about it being a tax incentive program and more about it being an impact program, more about it being an economic revitalization program.
Jimmy: And it kind of goes along the same lines of what you were talking about.
Ashley: Well, then he also made a really good point that, you know, it’s been portrayed in kind of the mainstream media is this thing for the super-rich, but the recent results from that survey that they did showed that the average investments are right around $500,000 with most of them being between $100,000 and $500,000. That’s not coming from the uber-wealthy.
No. That’s coming from, you know, not Main Street America, maybe it’s the next street up from Main Street America. It’s Main Street America that’s made it and they’ve made a little bit of money inside of a capital gain. And now they’re looking for somewhere that they can put it that has impact. And that’s what’s really interesting is that that was actually one of the fascinating points about that survey is that…and there goes Reid right there.
We’re just talking, you know, about how that impact is a crucial piece of what the investors are looking for.
Jimmy: Yeah, Absolutely. So the big topic for discussion here at the conference is the new bill that was introduced.
Ashley: Oh, yeah. It’s very timely, this conference. I know they wanted this conference to happen shortly after the bill was introduced and…
Jimmy: I don’t know how they pulled that off, but I’m really glad that they did.
Ashley: I think they got lucky, right?
Jimmy: Sure. I’d rather be lucky than good.
Ashley: That’s right. The bill was introduced earlier this month, just a few weeks ago. Tell us your thoughts on it, what’s involved in the bill. I just had a podcast episode with Shay Hawkins not too long ago. We broke down the bill point by point. So I don’t know if we need to hash over it too much, but what are your thoughts on the bill overall, and do you think it’ll get passed?
Jimmy: So I think that…and instead of going down and getting into the weeds of that, I’m going to go big picture on it. And what I was excited about as it related to that bill is that it indicates that this still has relevance on a bipartisan bicameral basis. And so those folks are really focused on this not as a tax incentive, but as a means for creating impact in these areas.
And I think that that’s really exciting. And it presents an opportunity inside of the news cycle to recast that story, to actually tell that story, and to bring it back into what it really is, to recharacterize this into the impact opportunity that the legislation really is. And I think that that’s what’s exciting.
Ashley: Yeah. Bring it back into the news cycle, but in a positive way.
Jimmy: Exactly right.
Ashley: Unlike kind of the exact opposite of how it was brought into the mainstream media early on in 2018 and 2019, right?
Jimmy: That’s right. And I think that that’s the really cool part about the legislation is that it actually… so number one, it’s going to extend the program, which is great for everybody. That’s great for investors. That’s great for the beneficiaries, you know, that are in the communities. That’s great for developers. That’s great for everybody involved inside of the Opportunity Zone space, particularly folks that want to be able to get into the game, but that might have been sitting on the sidelines, may have missed some of the deadlines.
It’s going to bring all of that back into the mix. And so that’s really exciting. I also think that one of the really exciting things about that is the Dynamism Fund, right? So this specific mandate that Congress is doing to actually provide funding to really move the program in the direction that it was intended. And that’s going to provide technical assistance, that’s going to provide the much-needed resources for the cities and counties and that kind of thing to really be able to take advantage of what Opportunity Zones are, which is a fulcrum.
It is a fulcrum for them to be able to leverage all of their available resources for this to become kind of a corralling point and for folks to get behind that, but to do so in areas that may not have the cash to be able to afford high dollar lawyers or whatever. And that’s what we’ve been really excited. That’s the reason why we started OZPros was to…
Jimmy: …democratize access to Opportunity Zones.
Ashley: Exactly right. And so I think that this legislation within the creation of that Dynamism Fund actually provides cash for other people to be able to take advantage of that as well.
Jimmy: Leveraging the resources of the federal government to further unlock private capital investment into Opportunity Zones, right?
Ashley: Which is the way that it should be because private capital doesn’t cost the taxpayers anything. So let’s use the money that the taxpayers are kicking in to really, really explode it.
Jimmy: So more about the Dynamism Fund because Shay and I didn’t actually talk about the Dynamism Fund on our podcast interview. We basically just stuck to, like, the main OZ talking points, but it is a part of the OZ reform bill, although I don’t think it’s restricted to OZs, the Dynamism Fund specifically.
Ashley: No, it’s not.
Jimmy: So what amount is it currently in its current form in the bill?
Ashley: That’s a great question. And I’d have to go actually back to the text, but I think it’s a billion dollars.
Jimmy: Yeah. I think it’s…
Ashley: Yeah, it’s a substantial amount. But what I think it actually…you know, and what I think it’s going to result in, in addition to communities being able to utilize the money for technical assistance and for being able to expand is that we noticed this phenomenon when Opportunity Zones first came out, that they became this unifying rallying point for a lot of different diverse federal organizations and other kind of local community organizations that normally would not be communicating with each other.
And it got them in the same room. It got them in the same room with private investors. And now all of a sudden, you had this not one plus one, you know, equals two, but you had this multiplication and exponential effect relative to all of those people kind of rallying around a central point.
And I think that that’s what the Dynamism Fund is really going to do and that’s what the power of it is really going to do.
Jimmy: It has a multiplying effect.
Ashley: It does.
Jimmy: The amplification effect. What about…
Ashley: A force multiplier. It’s a squad-level machine gun, right?
Jimmy: I love it. I love it. You know, one other thing that’s come out of this conference is an update to the Novogradac survey of qualified opportunity funds. So their Opportunity Zone survey at the end of last year showed an incredible amount of capital raised in the last six months of the year.
And, in particular, the last quarter of last year as that 10% basis step-up benefit expired. So people were concerned, okay, well, now that that’s gone, are things going to taper off? We just heard a couple of hours ago an update that over $4 billion was raised just in Q1 of this year, which actually surprised me.
I didn’t think it would…
Ashley: It didn’t surprise me because…
Jimmy: I didn’t think it would carry that momentum. Well, you’re talking with the funds more often than I am and the investors, but give us your thoughts on that.
Ashley: So at the end of last year, it was nuts. I mean, you know, we were having strategy calls all the time. We were setting up funds. We had shelf funds that were flying off the shelf because people were coming up on that deadline. They needed to wire their money last minute. We were able to help them do that. And so it was just this crazy push up until, you know, December 31st, bam.
I mean, I was working at 5:00 on New Year’s Eve to help somebody get their cash into a fund. And I was like, whew, right? So now we got to…
Jimmy: While you’re putting your tux on, right?
Ashley: Exactly right. To go to the New Year’s Eve celebration. My wife loved that by the way.
Jimmy: I’ll bet.
Ashley: And yeah, exactly. You know, I got to finish this call, honey. So I was looking forward to a break, you know, come the first of the year and maybe, you know, into January, and lo and behold, it did not slow down. We still had people really, really interested in Opportunity Zones and doing massive amounts of influx and funds set up and that kind of thing.
Jimmy: That 10% basis step up is a nice benefit.
Ashley: It’s great.
Jimmy: But I really just have been equating it to the cherry on top of a big hot fudge sundae because the cherry’s gone now, but you still got a nice hot fudge sundae.
Ashley: Exactly right. Well, it’s that 10-year step up in basis. And I think the people are really starting to get the real benefit and the unbelievable impact of that, especially as it relates to eliminating that depreciation recapture, which as you’ve said before, is the fourth benefit of Opportunity Zones.
Jimmy: The fourth hidden benefit.
Ashley: That’s right.
Jimmy: Well, it’s the third hidden benefit now because there’s only two main benefits with the reduction out of the way. What else? What’s on your mind, Ashley? OZs, what trends do you see for 2022?
Ashley: So, I think we’re going to see a lot more conversations and I think that this is what we’re talking about, especially as we’re going into the opportunity for folks to be able to kind of join our advocacy efforts on trying to get this legislation passed is that I think we’re going to hear lots more about the positive impact that’s coming out as a result of Opportunity Zones.
And I think that that’s going to be really exciting because I think it’s our chance to once again, change that narrative that has historically been out there around Opportunity Zones to one of social impact, to one of positivity, to one of humans helping humans and helping the folks that need a little bit of extra assistance in incentivizing folks to do that.
So really excited about seeing how that develops and how the legislation impacts it. And then also seeing, you know, what happens kind of in the grander scheme of the economy as it relates to this as well. Because once again, you know, the seventh wonder of the world is, you know, tax-free compound interest, and that’s what Opportunity Zones represent.
Jimmy: Yep. It’s a super Roth.
Ashley: It is. It is. And the quintessential hedge.
Jimmy: And the quintessential hedge against inflation.
Ashley: That’s exactly right.
Jimmy: Yeah. We talked about that on our last live episode we did in Novogradac conference in Cleveland. I’m glad you brought that up again. So I think we should probably bring the volume level down a little bit because they just started the next session over there.
Ashley: Okay. That’s right.
Jimmy: We’ll wrap up the episode in a minute here.
Ashley: I got to tone my voice down.
Jimmy: But before we go, I wanted to get your thoughts on do you think the reform bill that is going to enhance, improve, expand Opportunity Zones, do you think it’ll pass this year in this session of Congress?
Ashley: Wow. That’s really tough.
Jimmy: I put you on the spot there.
Ashley: I was going to say that was one of the things that they really kind of discussed inside of that first session. And I think it’s going to be tough. And I think that the only way that that gets through is if it’s attached to something else.
Jimmy: Oh, sure.
Ashley: Yeah. And so I think that if I was prognosticating…
Jimmy: Yeah. Give me your pick like we’re picking a football game. Yeah.
Ashley: I’m going to say that, well, you know what, actually, everybody shows up, you know, for that webinar and we get the word out like we should, I think it’s got a chance of going through.
Jimmy: All right. It’s got a chance.
Ashley: It’s got a chance.
Jimmy: Not a great prediction. So I’m on the record predicting, I think it’s…I’m just looking into a crystal ball here, but you can quote me on this. I think it’s going to get passed during the lame-duck session after the midterms. That’s my prediction.
Ashley: I think you’re right. And I think to your point, that that could be a way that it could end up getting through as well.
Jimmy: Yep. And we are recording this toward the end of April. We have a webinar coming up at the end of this month. And by the time this airs, it may have already passed, but we’re hosting a webinar that’s going to be an advocacy event that we’re going to help to steer stakeholders like all of you watching or listening out there to sign your name to a letter that we’re addressing to congressional leadership urging them to get this packaged into a bill that gets enacted sooner rather than later.
You can learn more about those efforts at opportunitydb.com/advocacy. We’ll have some links up there to the letter and a replay of the webinar that we just ran. Ashley, any last thoughts you’d like to leave our viewers and listeners with today?
Ashley: Yeah. So, you know, this is one of the things that I said from the panel as well is that, you know, each one of us if you’re listening to this, you are an Opportunity Zone influencer. And each one of us has an opportunity, pun intended, definitely there, to put on our Opportunity Zone cape every day and to really think about how we can have impact and how we can, you know, make the world a better place and what a great legislative program to be able to do so.
So, get involved, right? Get involved, participate in the webinar, look for grassroots community methods to be able to get involved with Opportunity Zones, to get the word out about it. And if you’ve got a good impact story, tell it to the world because that’s what we need.
Jimmy: And explain how you leveraged Opportunity Zones to deliver that impact.
Ashley: That’s exactly right.
Jimmy: That’s hugely important. Those are stories that the country needs to hear and that Congress needs to hear.
Ashley: That’s exactly right. And then as you’re doing that, just get after it each and every day. And I think that that’s the key.
Jimmy: And again, head to opportunity db.com/advocacy. We’ll have links there to the letter. We’ll have email addresses there if you do want to get in touch with us to help tell your story, we can highlight your story. Ashley, it’s been a pleasure speaking with you as always. Hey, before we go…
Ashley: You as well, Jimmy.
Jimmy: …tell our listeners where they can go to learn more about you and what you do at OZPros.
Ashley: Absolutely. So, ozpros.com. And we got ozpros.com/podcast for discounted links for a strategy call with either myself or my team. We also have the Opportunity Zones…the OZPros Compliance Bootcamp, which is a weekly call from 10:00 to 11:30 Eastern Time.
And that’s administered through the OZworks Group to where we answer people’s Opportunity Zone questions and it’s a chance for them to be able to learn from others and also to be able, you know, to make sure that they’re doing things correctly. And then the final piece is OZworks Group, so that’s ozworksgroup.com. That’s an excellent resource for educational materials and also ways to connect with other folks who are operating in the Opportunity Zone space.
So we look forward to seeing you in the bootcamp or on a strategy call or inside one of the OZworks Group events.
Jimmy: Fantastic. Well, and for our listeners and viewers out there, as always, I’ll have show notes on today’s episode available at the Opportunity Zones Database website. You can find those show notes at opportunitydb.com/podcast. And there you’ll find links to all the resources that Ashley and I discussed on today’s show. Ashley, thanks again. It’s been a pleasure, buddy.
Ashley: Absolutely. Appreciate it, Jimmy.
Jimmy: Thank you. Clear – Bam.