Register Today For OZ Pitch Day - Nov 9th
Learn how you can voice your support for the Opportunity Zones Improvement, Transparency, and Extension Act (H.R.7467 / S.4065).
OpportunityDb founder Jimmy Atkinson recently co-hosted a webinar on this very topic with Chris Cooley of OZworks Group. Panelists included Catherine Lyons (Economic Innovation Group), Rachel Reilly (Aces & Archers), Jose Torres (Monllor Capital), Susan Springsteen (H2O Connected), Stacy Cumberbatch (Blended Impact), Donna Gambrell (Appalachia Community Capital), and Ashley Tison (OZ Pros).
Click the play button above to listen to the audio recording of the panel.
Or, for the video recording, click here.
- Description and commentary on the five ways that the new OZ reform legislation would improve the Opportunity Zone policy.
- Four examples of successful community-oriented Opportunity Zone projects.
- The OpportunityDb / OZworks Group letter to Congressional leadership, why it’s important, and how you can sign it.
- Live Q&A with our webinar panelists.
Featured On This Episode
- Opportunity Zones Improvement, Transparency, and Extension Act
- OpportunityDb letter to Congressional leadership (click to read and sign)
- OZ Enhancement Advocacy Toolkit
- Chris Cooley on LinkedIn
- Catherine Lyons on LinkedIn
- Rachel Reilly on LinkedIn
- GAO Report on Opportunity Zones
- Shay Hawkins on the Opportunity Zones Podcast
Read and Sign Our Advocacy Letter to Congressional Leadership
The new OZ reform legislation would enhance Opportunity Zones by extending the tax incentive for an additional two years, expand transparency and reporting requirements, and disqualify high income Opportunity Zones.
Now, we need your help getting this legislation passed by Congress.
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 today’s webinar, How to Advocate for Opportunities and Improvements. And today you’re going to learn how you can show your support for the extension and enhancement of the Opportunity Zones policy to congressional leadership. What we’ve done is we’ve drafted a letter that we’re going to ask you to sign your name to. But before we get to that, I want to introduce our panelists today and then get a breakdown of how the new bill would improve the opportunities on policy. Exactly. I’m Jimmy Atkinson, founder of OpportunityDb and host of the Opportunity Zones Podcast. I’m co-hosting today’s webinar with Chris Cooley of OZworks Group. And joining us as guest panelists today are Catherine Lyons, director of policy and coalitions at the Economic Innovation Group, and Rachel Reilly of Aces and Archers.
So I’m going to turn it over to Catherine and Rachel to get get us going today before we kind of dive into our advocacy efforts and before we hear from our other guests today who are going to highlight some really impactful stories of community driven opportunity zone projects and the success they’ve had. Let’s step back and get a get your take on what this opportunity zone reform bill is exactly why it was introduced, why it’s necessary, and why most opportunity zone stakeholders that I’ve spoken with are behind it. So, Catherine and Rachel, I’m going to turn it over to you now. Can you paint a picture of where we’re at with the legislative efforts and what this reform bill does exactly?
Catherine: Yes, absolutely. And thanks again for having me as part of this webinar. So on April 7th, Senators Booker and Scott led a coalition of bipartisan co-sponsors in the Senate. Representatives Kind and Kelly led a similar group of bipartisan Representatives in the House to introduce the Opportunity Zones Transparency Extension and Improvement Act. The Senators and Representatives were joined by Senators Warner, Van Hollen, and Young, as well as Representatives Kildee, Sewell, and Walorski. So a good ten co-sponsors came together again on a bipartisan basis to introduce this in both chambers.
And this legislation is really important. It’s a thoughtful set of improvements to strengthen the Opportunity Zones policy, and it is notable that the long time champions of this policy in Congress, the original co-sponsors of the Investing in Opportunity Act, which was that initial vehicle that first established the idea of opportunity zones and was ultimately incorporated into the tax law in 2017, that they are behind this group of improvements as well, and came together to put this set of policies together. So very notable as to who’s behind it. And I think the co-sponsors who came around it really represent a really fantastic group that will hopefully grow and again, with the support of this group as well.
So I’ll go through each of the provisions in some detail and Rachel and I will kind of tag team this conversation and provide some examples of how we potentially see this working in practice and some of the kind of intent behind the provisions and what the what they aim to do in terms of how it would strengthen the policy. So I think the first the first point is or the first really important provision that while it’s Section 202, I think in the in the legislation, I’ll address it first is the establishment of reporting requirements.
I think if you have been a part of any conversations around opportunity zones in the past four or so years, reporting requirements, something is likely come up. You know, the reporting was part of the original, the Investing and Opportunity Act. It was always intended to be part of the Opportunity Zones policy so we can all track better kind of what activities are taking place because of the incentive in communities across the country. It was taken out for procedural rules in the 2017 tax tax bill process. And so since then, several bills have been introduced, including by Booker and Scott, to reestablish reporting requirements and actually go above and beyond what was even originally included. And essentially what this what the provisions in this bill would do is make this one of the most closely monitored, if not the most closely monitored policy of its kind.
So the the the the reporting bill that’s actually included in this bill, the Impact Act, which was Senator Scott’s bill that he introduced on a bipartisan basis at the end of 2019. So that’s essentially been folded into this legislation. And what the Impact Act would do is is codify and expand Form 8996 and Form 8997. So reporting required for both opportunity funds and investors. It would also require an annual report for Treasury to publish an annual report of aggregated information from the collection of that data on those forms or through the process that’s established through this legislation. And I think what’s also really notable and again, what goes above and beyond, I think what most kind of place based policies require is it would also require a kind of community outcomes study as well.
So on a longer term basis, it would require Treasury in collaboration with other agencies to take a look at the outcomes of opportunity zones as compared to other low income communities that were not designated as opportunity zones but would have been eligible in that 2018 designation process. So it’s interesting and that we have almost kind of a natural experiment here and a built in control group with those low income communities that were eligible but not chosen. What are those outcomes of those communities versus those who receive the opportunity zones designation and measuring that again on a kind of longitudinal scale. So that report would be issued at the sixth and 11th year after the date of enactment.
So that would give us a much better sense of is this policy accomplishing its goals to improve the outcome, the economic outcomes and increase economic opportunities for residents of the communities that were designated as opportunity. So I’ll take an altogether really important policy to strengthen the transparency and the community outcome measurements around this policy and something that has generally been called on by a broad and wide group of the champions in Congress, but also by external stakeholders.
And I think what’s also really important about the Impact Act is that it’s, I think generally accepted by the market is something that strikes a good balance of not being overly burdensome, but yet still collecting really important information to help us assess how the policy is working and what activities it’s catalyzing nationwide.
Rachel: The only thing I’ll add to that, Catherine, you just mentioned it, but in our discussion with fund managers, fund managers have taken a look at the requirements here and have said this is not a problem. Know that was one of the key concerns. We don’t want this to be overly burdensome. We don’t want to be providing personal identifying information from investors. And fund managers seem to be on board with being able to meet these requirements. And to Catherine’s point made earlier, it’s going to be really important, especially if we want to see Uzis last into the future, even beyond a potential extension to be able to ground our perceptions of the policy in data as opposed to anecdotes which unfortunately we too often rely upon today. So that’s all I’ll add on reporting.
Catherine: Great, great. That’s helpful background. Yeah. The impact we’ve had the benefit of having that out in the world since 2019. And so folks have had a lot of time to take a look at it and even kind of build out some potential models to help meet requirements there if it were to indeed be enacted. And I think that the general consensus, just to echo Rachel’s point, is that it shouldn’t be too challenging to do so. Again, strikes that balance.
So the next kind of set of provisions is looking at the opportunity zones map itself and the designations of some of those zones. So it would modify the map slightly in taking a look at zones that are currently or according to the latest available data, are have a median family income of 130% or above the national average and early sunsetting the OZ designation for those tracks. I’ll kind of start out by saying that generally the map is very well targeted to high need communities. This was validated in the GAO report that came out late last year that found what what our research had also shown is generally that opportunity zones are lower income, higher poverty than than the national average, and even more so than the low income communities that were eligible but not designated. So governors on the whole, did a very good job of of picking places that were aligned with the intent of behind the incentive. But there are a handful of outliers and the small percentage of tracks do have were eligible, but do have a higher median family income that exceeds that threshold that’s set out in the legislation. And so the legislation would essentially lay out a process by which those zones would be identified.
And then ultimately early sunset. State executives, though, would also have the ability to replace those zones on a one for one basis with higher need communities. And there’s additional parts of the process as well. States we’ve heard from states that some mistakes were made in the designation process, true mistakes like the wrong census tract number that ultimately led to a battle, a former battlefield or a graveyard or a swamp land being designated where there’s truly no opportunity for investment, those would be eligible to be added to the list. Similarly, if state executives wanted to make the case to Treasury that attract that does have a median family income that exceeds that threshold is really critical to their economic development strategy or kind of make a similar case.
And if Treasury agrees, they could potentially get that track accepted as well. So there’s again, a kind of lengthy, thorough processes laid out in the legislation to allow for a kind of refinement of the map. And taking a look at, again, a small percentage of the tracks that would be would be eligible for that sunset. It also lays out rules and guidance for existing investments. So essentially investments that have already taken place in these zones or planned for these zones and provides, again, some rules for for how those investments should be treated. Essentially, if if they meet certain requirements. And these investments were kind of ongoing in these zones, obviously, these zones are currently zones. And so you should be able to receive the tax benefit if they can kind of show that that that investment was. Has made or was planned prior to designation. Yeah, go ahead, Rachel.
Rachel: Yeah, I just think it’s a great idea to do early sunset of zones that don’t lie within the intent of the policy. Just because we don’t think that there’s been a significant amount of investment in those zones. But again, perception it it leaves it open to to critiques and criticism around the amount of capital that could be going to those zones. So I think it’s a good opportunity to tighten that up a little bit. And just so folks know, Joint Committee on Taxation did find that only 6% of opportunities zone capital as of 2019 had gone to these contiguous tracts, which often get a lot of press about about potentially being these zones that don’t deserve capital but are instead getting investment. So, again, I just think it’s it’s limiting the exposure to risk around critique and criticism. And I love that the legislation has in it that designation of new zones will require some community input because we know that the way designation happen the first time around, some states had an open process, some states had a closed process. So I think that community input is going to be really important. We’re hoping for an open and transparent process across the board.
Catherine: Yeah, great points, especially on the last one. Yeah. Trying to kind of take some best practices learned from the 2018 process and apply those to this certainly more limited kind of process that would that would take place in states where if this legislation were to pass one thing, the one kind of follow on question that is natural and that we would usually get is what where are these zones? And at this point, it is we don’t have a full understanding or a map set yet of which of these zones would exceed that 130 or meet or exceed that 130% of median family income.
And that’s because the 2020 census data is the latest available data. Of course, that corresponds to 2020 census boundaries. IRS has provided guidance that opportunity zones will retain the 2010 boundaries. And the map is kind of set and remains so according to those designations. What that means is that will we or Treasury or somebody who has the capacity to do this will need to hopefully a federal agency will need to kind of correspond that 2020 data to the 2020 and 2010 boundaries, rather. So that is a it’s a bit of a task. And so that’s why we don’t yet have the information or the full scope yet of of the map. But based on previous sets of data, when we’ve done this this analysis, it’s safe to say that this will be a small percentage of the overall map in the similar vein of kind of relooking at the map, the legislation also incorporates the Rust to Revitalization Act that was introduced back in last month in March by Representatives Kildee and Ruppersberger.
What this would do was this is essentially it would expand the map very slightly to opportunity or to tracks, rather, that are zero population adjacent to an opportunity zone and formerly industrial and have a brownfield site. It’s a lot of criteria. And so because a tract would have to meet all of those and again, it’s a very narrow, narrowly scoped addition to the Opportunity Zones map, but generally very much in line with the intent of the incentive to try to bring capital to these areas. That could be real anchors of economic opportunity and activity, but traditionally of how to have a really hard time attracting financing because of the brownfield or formerly industrial status. And so and of course, we’re not eligible initially because zero population means that they can’t meet the poverty or income requirements as laid out in the statute. But again, still very much, I think, are in line with the intent behind the incentive. And so this would allow for zones like that one or like those two to be eligible to be designated as opportunity zone. So state executives essentially would need to identify those tracts based on that criteria and submit them to Treasury for review and certification. So kind of moving on to the away from the path and sort of back to kind of other other parts of the policy. So I think the next thing that this would do is extend the policy.
Essentially it would take the 2026 deadline for game deferral and to invest and extend that out by two years to the end of 2028. And it would also lower the requirements. So right now, you have to hold your investment for seven years in order to receive the 15% step up in basis or the additional 5% step up in basis. Of course, that deadline passed essentially at the end of 2019. This would lower that from seven years or change that from seven years to six years. So what that means in practice is that if this legislation were to pass sometime this year, then investors would have before, until the end of the year to invest and to take advantage of the full suite of benefits that the policy offers.
This is essentially, I think, another question that we’ve gotten as we’ve kind of participated in conversations like this one is why two years? Why not even longer? The two years is really essentially this is a perishable incentive, and it’s meant to make up for some lost time that it took to get the regulations set and finalized. It took about two years for Treasury to issue final, final regulations. And during that time frame, a lot of folks felt like they couldn’t fully participate in the market until they had those clear rules of the road. And so this is essentially to kind of recoup some of those some of that time lost within the regulatory process and as that was getting fully stood up.
Rachel: Yeah. And I think, you know, all available data points to the fact that there was exponential investment volume year over year of 2020 to 2021. I think having an additional two years just helps to further harness that growth and expand the marketplace. I think it’s particularly important for a lot of the communities that launched initiatives and pilots last year or in 2020 to be able to scale and be able to attract that investment so that they feel like they’re not coming in at the tail end of an opportunity, that they’re actually fully able to to realize the benefits of the policy.
Catherine: Yeah. I’m glad you brought up that angle. I think we’ve often heard from from communities to not just investors and other stakeholders in the market that they would really appreciate the extra time because it’s taken it’s taken a while to also just fully get comfortable with the incentive, fully understand it. And so having a little extra time to help attract investment, put the strategies in place to attract investment to their communities will be really, really helpful. So that we’ve also heard similar feedback, which is great, great. So I think that the next piece, there’s only a couple more. So bear with me. I know we’re going into a lot of detail here, but I hope this is helpful.
Jimmy: So you’re doing great. Yeah. Keep it going. I’ve got two more and then we’ve got a lot more planned for today. But this is important, so make sure everybody is on the same page about what this bill does. By the way, I had a sorry to interrupt, Catherine, but I had a couple of questions in the chat about which Bill it was we were discussing. I think some people may have joined later or missed that. So I did post a link to the bill in the chat in case anybody’s curious about what exactly it is we’re discussing. It’s referred to as the Opportunity Zones Improvement, Transparency and Extension Act. It was introduced in Congress earlier this month, as Catherine mentioned, at the at the top of the show here. Catherine, I’ll turn it back over to you for the last two point. Thank you.
Catherine: Yeah, sure. Of course. So the last two points are so establishment of a fund of fund structure. And so essentially what this does is modify the definition of a qualified opportunity fund to allow it to be a feeder fund. So essentially, an opportunity fund would be able to invest in another opportunity fund, although then that the opportunity fund that receives that capital would need to deploy it into qualifying property. So it wouldn’t be kind of an endless cycle of investing in funds and funds and funds of funds. It would really kind of have that be limited to sort of that one one transaction.
But what we generate, Rachel, will probably go into this but have generally heard really, really strong positive feedback on this provision especially and the fact that it would do what I think the co-sponsors were intending here, which is to just open up the opportunity for smaller funds, more regionally focused funds, funds that can maybe can’t take really large investments, but are generally pursuing very high impact projects that, again, are just kind of scaled to the community that they are working in. It’s often hard to attract kind of institutional investors for that type of a project. And so a fund of fund structure, the intent here is that a fund of fund structure would allow for more capital to be able to be deployed into funds that are pursuing projects like that. And luckily, the early kind of feedback we’ve received is that it would indeed kind of accomplish that goal. So Rachel, I know you’ve heard some of that as well, so I’ll turn it over to you to fill in some details.
Rachel: Yeah. As Catherine mentioned, as many of you all know, institutional capital needs to come in at high dollar investments and further, it often has requirements where it can only be 20% of any given fund. And so, you know, you have an institutional investor that can’t come in any lower than 20 million, then you have to lever that up by a factor of four or five. All of a sudden you’re looking at huge funds and it’s hard to deploy small dollar loans or small dollar investments through huge funds. So where I’m seeing this being a most applicable really is in trying to get small dollar investments to operating businesses as well as to do community revitalization work, specifically urban infill projects. So I’m looking forward to I’m looking forward to that. Catherine.
Catherine: Yes, I think me too. I think this will be ultimately be a really impactful part of the legislation if it were passed. And then last but not least, the legislation would establish a State and Community Dynamism Fund wouldn’t be appropriate, but appropriated $1,000,000,000 and this fund would actually not be specific to opportunity zones. So it would be used in kind of underserved underbanked, rural type communities. Not not only rural, I should say, but just generally kind of a broader bit of a broader aperture to kind of more underserved communities generally. But it would allow for technical assistance, work capacity building, rural best practices that we’ve seen kind of employed and when they’re employed has really been a successful for communities that have put, for example, an opportunity zones coordinator in place or generally been able to put a kind of technical assistance program for underserved communities in place to attract those capital. And so taking some. Of those examples and trying to scale those to to communities that need it. So that would be types of activities that would be allowed under the fund in addition to pre-development investments, investments into or risk mitigation into opportunity funds that are pursuing high impact projects in high need industries. So things like, of course, affordable housing, health clinics, grocery stores and food deserts, examples like that.
Rachel: Yeah. And nothing to add on that fund except for just to underscore the importance of its availability. And overall, just my take is that this is a pretty good package of proposals. I think there’s something for everyone in here.
Jimmy: Well, that’s great. And that’s a great breakdown of the Opportunity Zones Improvement, Transparency and Extension Act. Again, that was introduced earlier this month in both houses of Congress, both the House and the Senate. So to briefly recap those five points in case anyone joining us late: one, it would expand the reporting and transparency requirements from qualified opportunity funds. Two, this bill wants to disqualify or early sunset a very small amount of high income opportunity zones. Three, we’re talking about an extension of the policy by an additional two years, which would be really great, I think allow for a lot more people to use the program and a lot more capital to flow into it over over time. Four, allow for fund of funds concept. And five, finally, what you just discussed there, that State and Community Dynamism Fund.
By the way, in case you can’t get enough Ozone reform bill chatter, I recently released a podcast episode with Shay Hawkins where he and I broke down all of these major talking points. You can find that podcast at OpportunityDb Podcast. I’d be remiss if I didn’t mention that at least. And hi to Shay out there. I want to revisit the reform bill, why advocacy of it is crucial and how our viewers and listeners today can help. But we’ll get to that in a few minutes.
But first, I think it would be really useful to highlight a few community oriented opportunities on success stories. So with that, I want to turn it over to Chris Cooley of OZworks Group. He has four VIPs that he’s going to bring on stage who are driving some of these community driven efforts. Chris, take it away.
Chris: Yeah, thanks, Jimmy. Thanks, Rachel. And thanks, Catherine. Rachel and Catherine, we’re going to we’re going to shuffle you off stage and we’ll bring you back during the Q&A section of this. But yeah, I just want to kind of preface this by saying, you know, Jimmy and I had a conversation probably a few months ago now and we kind of said, hey, I think we can rally around the the communities that we’ve built and start to advocate for opportunity zones and extension and improvement. And we decided, hey, OC, well, let’s step up to the plate and if you don’t ever step up to the plate, there’s no chance of hitting a home run. Maybe we hit a single, but we had no idea that this new bill was going to be proposed. Right, Jimmy? It was sort of like, I don’t know, maybe we were looking into some kind of crystal ball.
But in our collaboration and communication with Catherine, we decided that we really wanted to step up and have this letter signed. So that’s what we’re going to ultimately do today. But what we have at OZworks Group is this incredibly connected community of OZ stakeholders and leaders that are doing the work, that are fulfilling the promise of the incentive. And it’s really important that we step up and start to highlight these incredible folks that you may be seeing on the screen right now.
But we wanted to make this platform available to be able to have them tell just really briefly their story and what they’re doing to to utilize OZs as community development tools. And so these these are people that, that weave a thread through the entire tapestry that is opportunity zones from, from, from raising money to technical assistance programs to support projects to be developed all the way right down to boots on the ground, hanging out with people in the community, listening to their needs, doing internship program. So I’m going to let all these folks explain what they’re doing.
But what we wanted to do is really be a voice rally around this incredible community, especially at OZworks Group. I know EIG has a community, Jimmy has a community like putting all of these folks and you all out there listening together to say, All right, let’s make some noise about how good this thing really is. Because the people who are doing the work very seldom have time to be able to go to announce what they’re doing because they’re doing the work. So I appreciate everybody who’s who’s who’s here and who’s going to talk and everybody for attending. But again, we really want to highlight the people who are fulfilling this true promise.
So before I go any further with that, I want to start by saying hi to Jose, good friend. And Jose, I’m going to kick off with you and hopefully folks out there. We’ll see how this whole sort of thing is weaving together in a storyline. But Jose, please, and everyone who’s a panelist introduced yourself and I’ll kind of call on you as we go. But Jose, you kick things off and tell us about yourself a little bit and what you’re doing down there in Puerto Rico.
Jose: Well, first, thank you, Chris and OZworks Group for the opportunity to be speaking here today. I’m Jose Torres, the managing partner and founder of Monllor Capital Partners. I actually relocated back to Puerto Rico three years ago and founded this company to be focused on investing in opportunity zones throughout Puerto Rico. It has been a challenge. It has been a learning experience and trying to educate the Puerto Rico community and also the US investors about Puerto Rico, on the other hand, is being thrilling and we’re very happy that we were able to organize the Puerto Rico Opportunity Zone Fund, which is an ESG fund focused on investing in opportunity zones in Puerto Rico. Our goal is really to show today is to show how investing in businesses is really a community tool, development tool that can help really the residents of a local community. And that’s our goal at the Puerto Rico Opportunity Fund.
Right now, we were able to make two investments. And what I want to show is how those two investments really have helped the quality of life of the Puerto Rico people. The first investment we made was actually in a company called Sun Beat Energy. And what they do is they develop and manufacture only one energy storage systems, mostly for commercial and residential usage. Puerto Rico has a very high power price, but worse than that, it has very unreliable energy. So people just are not able to work. People lose their food at night when the power goes out. So providing this product to everybody, to the masses, is going to really improve the quality of life.
But it also helps the environment by decreasing CO2 emissions, and ultimately it also stimulates the community. So that’s an example of how we’re looking at investing in companies. We’re really focused on how we can help the local community, how it can help the environment, and how it can also help the economy, which ultimately helps the communities. The second investment we made is in a company called Fusion Farms, and that’s an indoor vertical farming aquaponics operation in Puerto Rico. Over 85% of the food is actually imported. So things like shipping issues, weather issues actually can cause disruption and price fluctuation in the Puerto Rico food market.
So a company that’s actually at the forefront of doing indoor farming and vertical farming makes it more affordable. To provide those goods is actually providing not only resiliency for Puerto Rico on food security, but is actually providing fresh food on a weekly basis to the community of Puerto Rico. Just to close by, I would say that this legislation is going to really help what we’re trying to do for two reasons, not only all of the changes that were discussed earlier today, when people in Puerto Rico are just starting to really learn about opportunity zones and the ability for this extension. And also the final fund structure, I think would allow more people to actually have an opportunity to look at Puerto Rico and the Puerto Rican community to understand that. So thank you. I’m available to answer any questions later.
Chris: Jose, thanks so much. And feel free if you if it’s appropriate and you’d like to to put your contact information in the chat that goes for all the speakers. And so we’re going to go from someone who’s who’s distributing the funds to someone who’s operating a business and also who I have learned has moved into the opportunity zone where she’s making an impact. So, Sue, thank you for being here. And please tell us who you are and a little bit about your story, please.
Susan: My name is Susan Springsteen. I am the president of H2O Connected, which is the first QOZB in Chester County, Pennsylvania. We’re located in Coatesville, and that Coatesville itself has about 13,000 people, 31% poverty rate. There was basically one employer, the steel mill, when steel went bust, so did the town have 9% unemployment rate and the average median income is about 34,000 a year, which is less than half of what it takes to subsist in Chester County, Pennsylvania. So it’s a city with a lot of needs. My business is a technology company. We we developed and manufacture a wireless system that can detect every single way your toilet is wasting water and running up your water bill.
So it’s a green product or a we’re a woman owned business. And then we decided to collaborate. We teamed up with a developer to convert a 20 year vacant 1902 office building through adaptive reuse into an innovation center. And we added 20,000 square feet behind it. And so it’s now 30,000 square feet. It’s occupied. I’m doing this zoom from our building and we have we have a product development company there that basically takes innovations from concept on a napkin through development into commercialization. We have a manufacturing facility there. So there’s five different electronic products that are being made here at the moment. We are we also have four or five early stage technology companies that are either here or we have one that’s moving in in the next two weeks. So it’s just really it’s a it’s a project that’s that’s operated and working. And some of the things that I’ve found is that we are boots on the ground. We’re very much involved in the community.
I actually live here now, moved in about nine months ago. And because the OZ initiative requires a ten year involvement to get the full benefits, you really become part of the community when you’re directly involved. And so we’ve established a long term high school internship program. A lot of underserved school districts don’t have really strong STEM programs. So we have 15 students in here now. We expect to double that. We’re offering a marketing track so that kids that want to go directly into the workforce will have skill sets where they can actually make a livable wage. From the beginning, as we all know, we’re having trouble finding qualified employees, so we’re trying to solve that problem. We’re working with the city to offer entrepreneurship programs for people that have a side hustle that warrants being taken to the new the next level.
And we’re also working with groups providing first time homebuyer education and grants, because in Coatesville there’s this collective move to avoid the massive gentrification. And to do that, we’ve got to build the earning capacity of the community that’s here. They’re smart, they want to work. They don’t have a seat at the table. So through what we’re doing and working with others, we can give them a seat at the table and give them a chance to to make their lives better. And let me tell you, when you’re in these little towns that have been forgotten and dumped on for so long, when they start to see steel coming out of the ground for the first time in 50 years, it creates a hope and a buzz and it brings other investors into town. And it’s.
Just there’s a… There’s a there is a community, There’s a human being return on investment through OZs that I haven’t seen anywhere else. And you cannot you can’t quantify that rate of return. So we’re happy to be a part of it and I’m happy to talk to anybody about what we do.
Chris: Thank you, Sue. Definitely drop your contact information. Your story is incredible, and every time I talk to you, it’s inspiring because what you’re doing is you’re actually going to opportunity zones and stepping foot in them to feel and sense what the impact possibilities are. So thank you for that. So we’re going to roll now into Stacy out on the West Coast. And Stacy, thank you for joining us. It’s been a pleasure to get to know you over the last year. Plus, and you know, you have a slightly different experience, but very similar to others in a sense that there’s so much community development going on with what you do. So please tell everyone about yourself and what you’re up to.
Stacy: Thank you, Chris, and thank you for putting this together. Glad to be here. Stacy Cumberbatch I’m the managing director of Blended Impact. We’re an innovation lab, an emerging asset manager, and we’re based in Southern California. So we provide technical assistance to local government project sponsors and entrepreneurs in OZs.
We work extensively in Riverside County, which has the third highest amount of Aussies in the state of California. And we cover 14 cities. Our cities range anywhere from the university town over to, for example, lithium valley, which President Biden has declared as a national priority. So there’s a lot of potential here. Cities are anywhere from 18,000 in size to 330,000 people in size. So there’s a lot of range as well in terms of the programs that we have to create to be able to serve the different municipalities and the communities that we work with.
Now we work from the ground up. Initially, we were working within the EDA’s office and we were helping them create prospectuses, for example, to organize around their priorities, and to organize around the assets, really understand what the investment goals are for each and every community.
Then we started with rightsizing or creating capital attractions, strategies for each of these cities. And they all differ. Right? Now we’re focused on what the project underwriting and the project-based capital attraction strategies would be from the ground up. So this is all community economic development. This is projects that the community wants to see and have been supported either by nonprofits and or cities that are right here on the ground.
One project that we worked with, for example, with the City of Coachella was Opportunity Coachella, which we launched last year. It was a four-week business attraction and entrepreneurship initiative. It was the first of its kind for the city. Coachella has a very large name, but it’s a very small city, only about 40,000 people. It was primarily a rural and migrant farmworkers community, and the largest industry there is tourism, for example, from the Coachella Festival. Fun fact: the city actually does not host the festival. It’s hosted in the adjacent city. And they don’t even have a hotel to take advantage of the the transit occupancy. So we really wanted to focus on how can we bring businesses and development here.
We received a grant specifically for the opportunity zones and we were able to launch a program that awarded four entrepreneurs money, seed stage grants to start their businesses and grow it right here in the city, first of its kind. We even were able to catalyze a major economic development project out of that, which mayor from the city manager everyone is very excited about and we’re still working towards catalyzing that project. So really good outcomes from that.
Now, none of this work can continue without the proposed legislation. Local officials in each of our municipalities have been laying a lot of groundwork to prepare on catalyzing this OZ ecosystem, but the pandemic was a huge blow. So now to make up for this lost time, this legislation will be crucial, specifically because it provides some things that we need in terms of capacity at the local level, in addition to funding for these projects that are hard to fund. So very excited for the legislation and what it will do for the residents in our area.
Chris: Thank you, Stacy. I really appreciate what you’re doing. And so, you know, like I said, the whole point here was to kind of work through the tapestry of people that are involved in this stakeholder landscape. And what you’re doing and working with the cities is, is amazing. So thank you for being here and certainly put your contact info. We are running a little bit over time, but I want to highlight someone who I just recently met, Donna at Opportunity Appalachia. Donna, if I know you had a slide ready, but if you could, maybe we’ll we’ll nix that for now until next time. But I would love to hear about the successes that you all have seen and hear a little bit more about you. And then we’ll flip it into this conversation about the actual letter that we want everyone to get on board and sign today. So I’ll pitch it over to Jimmy in a sec. But Donna, if you could, 2 minutes or so, give us a little bit of background. Thanks.
Donna: Thanks, Kris. And thank you again for the invitation. And it’s great to hear all the wonderful work that my colleagues are doing out in the field so that, again, Donna Gambrell, president and CEO of Appalachian Community Capital, which is a community development financial institution, we also are leading an effort called Opportunity Appalachia. So in the Appalachian region, we are there are 13 states in the region, includes all of West Virginia and portions of 12 other states, clearly an area that has tremendous opportunities but also challenges.
And when the Opportunity Zone Tax Program was enacted in 2017, many people believe that the rural opportunity zones were at a distinct disadvantage in attracting investments because, number one, the rural communities have fewer resources to enable them to develop community strategies and package transactions to potential investors and to the investment opportunities often have low. A rates of financial return than do faster growing cities. We figured that there was going to be a way that we could actually be a player in this market.
And so Opportunity Appalachia was designed to bring investment to underserved coal communities in Appalachian Ohio, southwest Virginia and West Virginia by providing needed technical assistance and working closely with private investors and public agencies that have prioritized support for opportunities on communities. This effort also became an essential component of economic recovery from the COVID downturn in the region.
So in the first phase, which was conducted in 2020, 2021, the Opportunity Appalachia Project supported 17 development projects in opportunity zones in those three states I just mentioned Ohio, Virginia and West Virginia that seeks to raise over $250 million in financing. And to date, five projects have been identified and have identified financing. Sources either have closed on their financing or are anticipated to close on $42 Million in 2022, creating more than 170 jobs in coal impacted communities. And additional four projects are likely to be financed later in 2023 at $140 Million or more resulting in the creation of over 1000 additional quality jobs.
So the cumulative impact of first round of the first round of opportunity Appalachia is projected at nine projects, receiving about $182 million in financing and creating over 100 jobs from the 2021 project portfolio of 17 projects. We view opportunity zones as one of the tools and a toolbox that can be used to foster community and economic opportunity and revitalize low wealth communities. And we certainly see that there’s proof in the pudding and what we’re doing with Opportunity Appalachia. So I think you can look no further than three projects that we were going to highlight in the slide, but I’ll just mention them very, very quickly, Chris.
Micronic Technologies, which is in Bristol, Virginia, was a $3 million investment in high growth, award winning water technology. They received $3 million. 100% of that came from the Pearl Fund Quality Opportunity Fund.
Hotel Swisher, which is in Somerset, Ohio, is a $3.2 million historic boutique hotel, 15 rooms in downtown Somerset, locally owned supporting tourism and outdoor recreation. $5 Million was raised for multistate for this multistate project, which included the hotel with a local Aussie investor and a historic tax credit equity investment.
And then the Cohen Building in Grafton, West Virginia, is a $10 million redevelopment of historic downtown building for use by identified for profit and nonprofit tenants. We just received word yesterday that they’re going to closing in a few weeks. And so when we look at these projects, we know that the projects that are being developed, redeveloped in opportunity zones are having true impact. They are getting to the heart of what community economic development is all about. And we look forward to continuing working with these states and others and making sure that these projects are in place for the community so that those communities can continue to grow and thrive. Thank you.
Chris: Donna, thank you so much and thank you for everything you do. And I really wanted to be able to tell, at least in a short amount of time, a somewhat complete story of what’s happening out there. One of the things that we’ll be doing is I want to be able to highlight more of the stories that are coming out of the community and OZworks Group, there’s just incredible people doing incredible things. So I’m going to drop our YouTube link because we do plan to shoot more of these and so go there, subscribe and follow.
The one thing I do want to say is that nothing has been done or is guaranteed. And this bill that’s being proposed is being proposed and it’s not done. And there’s a lot of questions coming up. What if? What will what may happen? But without a collective voice and politicians hearing what is being successfully executed through this incentive, there’s no reason to pay any attention to it. So this is my rallying cry. Right. And I know Jimmy is going to lead into this letter in a second, but one of the reasons that we came together to do this is that we can be louder collectively. And so that’s the point of initiating this dialogue and having this conversation and making sure that as a as a as an ecosystem, that us as representatives of these communities can do something to to put a voice in front of in front of politicians. So that’s going to be.
My my parting word here. I’ll put a link to our YouTube channel. And Jimmy, if you want to introduce the letter, I just want to say again, I appreciate everyone making time to tell their stories a little bit and to be here today to listen to this. So thanks again.
Jimmy: Yeah, that was incredible. Thanks, Chris, for bringing those speakers on. And thank you again to Jose, Susan, Stacy and Donna for sharing your opportunities on success stories. This ozone reform bill would help advance more projects like the ones you just heard from today. But now we need your help. And to that end, as we’ve been alluding to throughout the course of today’s webinar, we’ve drafted a letter to congressional leadership that we’re going to send off next week, and we’re asking you to add your name to it.
The more names we get, the more impactful our letter will be. We’re going to ask you to sign it right now, but the deadline to sign is one week from today. So if you’re not ready to sign it right now, if you want to read it, mull it over. You don’t have to sign it right now. But of course, we’d love it if you could sign it right now.
So to read the letter and sign your name to it, you can visit opportunitydb.com/letter. And I’ve also dropped a link in the chat just a minute ago. It’s right there if you just want to click that link as well. We have a ton of great questions, by the way. I’m going to bring in Ashley Tison to help us answer those questions in a couple more minutes.
But first, actually, I want to see if if Catherine and Rachel are still here. I wanted to bring them back in and get their thoughts. I guess the first question to to start us off on the Q&A portion is, is from me kind of a leading question. Why is this type of advocacy so important? Why does it matter? Why is it crucial that we all, as opportunities and stakeholders, reach out to Congress in this fashion?
Catherine: Yeah. I’ll go ahead and start. I mean, it’s it’s just imperative that members of Congress hear from their constituents or about activity that is happening in their districts and states. And that is what drives and motivates their work, essentially. And so the stories like we just heard just incredible stories of how this is working in the communities in which those leaders are working. Those are the stories that members of Congress and their staff really want to hear. We were just at the conference last week and spoke about this legislation on a panel and was joined by the Ways and Means Committee staffer as well as the staffer from Senator Scott’s office, both of whom reiterated how important this is, and especially, I think, the Ways and Means Committee member or staffer rather.
I mean, what he basically said is he has 30 or so members that he’s that he works with and works for directly in the House. And what he observes in that role and from that vantage point is that they all need to know more about what’s going on in their districts. And they want to know they they look at this policy and that maybe they don’t they’re not fully aware of all of the activity that it’s catalyzing. Where are and the good potential good it’s happening for their constituents. Those are all stories that need to be communicated directly to those offices. So they are aware. And then when they are approached with legislation like the one that we’ve been talking about today, they can have a fuller picture of what’s going on with the policy and that will help them assess whether or not they feel like they can support this legislation. And so having that context, context, having that background is really critical for them to make an informed decision about their support for policies like the ones we’ve been talking about today. So I’ll leave it there.
Rachel: Yeah. And just to add on to that, what they’re going to want to hear about is the level of impact. So is this a project that was on the books for a while but couldn’t secure financing and financing came in and filled a gap or accelerated development? How many jobs are anticipated? So you can use projections, you don’t have to use actual jobs. How is this contributing to the local tax base? How how is it generating additional revenue for the community? And also, how is it filling a need that the community has identified, whether it’s workforce, housing, you know, a new grocery store, whatever it is, I’m sure that it’s filling some need. So those are the types of things to communicate if you’re going to send or do individual outreach outside of this template document.
Jimmy: Yeah. Fantastic. Thank you both for for responding to that. I just brought in Ashley Tison because we do have a few rather technical questions that I think Ashley has an opportunity as an attorney would be well suited to help us address today. Really quick, I just got reminded that or I just I just got a request that, hey, wait a second, this is great. Sending this letter to congressional leadership. What if I wanted to contact my member of Congress, whether that’s my two senators or my representative in the US House of Representatives? We have also drafted template letters that you can use. I’ve just dropped a link in the chat to our advocacy toolkit. You can find that at opportunitydb.com/advocacy-toolkit, the links there in the chat right now if you go there, I’ve got links to three letters if you really want to get carried away. One is the sign on letter that we’d really like everyone to sign on to. And by the way, I see that we already have 19 people who have signed it. So thank you for. That’s a quick. You read fast and you sign quickly. So thank you for that. That’s incredible.
Beyond that, though, if you also want to address a letter to your members of Congress, we have a template on that advocacy toolkit link that I just referred to. And then another thing is, if you’re a capital allocator, if you have a project or a fund that you have deployed capital into another opportunity zone, and you’d like to write to the members of Congress that represent that zone, even though it may be outside of where you live, that would be very powerful as well. So to that end, we also have a third letter that you can download at that link that I just link to and I’ll drop it in the chat again here in another minute in case anybody missed it. But let’s let’s get going with some of the questions here today. We’ve got a lot of good ones. Stewart asks, How about adding new ozone properties such as areas suffering from disasters, fires and drought, and expanding OZs within tribal lands? Is does this build do that at all? Is there potential to add new opportunity zones? I might look to to to Catherine to to address that.
Catherine: Yeah, sure. So this bill does not expand opportunity zones or the map to include those places. I know that there has been. Nation proposed in the past to do that specifically for or in the wake of natural disasters. But this bill does not incorporate those provisions.
Ashley: I think that one of the ways that that that could happen, though, is to the extent that there’s going to be some of those higher income tracks removed, that those tracks could be one of the ones identified to be replaced.
Catherine: That’s true. Right. So, yeah, if that’s a stated priority of the state executives, they could think about high, higher need places perhaps affected by those disasters to be eligible as replacement tracks.
Ashley: So along those lines and one of the things that that the legislative aides mentioned at the Novogradac Conference was get involved with your grassroots groups. So really kind of explore your local community about different groups that are out there, educate them about opportunity zones, but then also really look to how your state’s going to handle that process. So get involved, right? So reach out to your governor and reach out to the governor’s office to find out what the process is going to be for them to be replacing this tracks so that you can be a part of the conversation relative to that happening.
Jimmy: Yeah, I think that’s really important because there’s going to be some new tracks designated if this legislation were to pass as it is currently written. I just dropped in some links again in case anybody missed them. Earlier in the chat there, Mitchell asks If legislation extends this policy out two years. I assume that means those putting capital gains into an ozone fund this year, 2022, would then be able to go at least five years to get the 10%. Or is that gone and being replaced by your six years? And what is that incentive percentage? So maybe maybe Ashley and Catherine, you can you can break down what is happening with that step up in basis should this reform legislation get get pushed through those those benefits there.
Ashley: Catherine. You want to take a shot at that and then I can follow on?
Catherine: Yeah, sure. So, as I mentioned, if this were to pass before the end of this year, then investors would have till the end of this year to take advantage of that 15% step up in basis, because you would be able to hold for six years until the end of that 2028 date. The five year benefit, though, still remains as well. So the six year benefit does not replace it. It just, again, kind of changes that seven year requirement to six years for the 15% step up in basis or for the additional 5%, the 10% remains the same. So again, if this were to pass before the end of this year, investors would have before the end of 2023 to invest and receive the 10% step up in basis.
Ashley: Interestingly enough as well, is that it would also make it so that that anybody that got in, I think what would that be prior to 2020 would would also then get the 15% because you’d be in six years. Well, I just have to well know because you would you would have it through the end of this year. I was thinking about that that might that that might be significant as well. But everybody that would be in before before 2022 would get the full 15%.
Catherine: That’s right, yeah.
Jimmy: Someone get actually a calculator.
Ashley: I’ll tell you what! Or a calendar. Right?
Jimmy: Or a calendar. Yeah. Hey, a question here from Andy. He he mentions that the president’s approval ratings have been really low for many months now, stuck below 39 to 40%. Is there a concern that his widespread unpopularity will actually harm the chances that this bill is passed in Congress? And I guess to that end, you know, I might even add on when could we expect this bill to get passed in Congress? Do you think it would be passed prior to the midterm elections or would it be in a lame duck session? I know I’m asking everyone to gaze into their crystal ball here. But Rachel, why don’t why don’t I pose that one to you first and then we can hear from Catherine and Ashley.
Rachel: Yeah. I think what we’ve heard and I’ll defer to Catherine because she’s been on the hill with this mostly is that this looks like it could be something that could be passed through a tax extenders vehicle. You know, crystal ball, I do not have. So I’m going to deflect on a Catherine to provide any additional information on that.
Catherine: Yeah. I mean, typically an extenders package usually comes together towards the end of the year. That’s when a lot of tax provisions typically expire. And so that’s a lot of times the point at which Congress can turn their attention to that. So I think that’s probably the most likely vehicle that that could be a vehicle in which this could be included. So end of the year, sort of the very, very rough estimate. Again, you know, very hard to predict. But and just on the kind of earlier point about the politics of this, I mean, I think this is a bipartisan piece of legislation and it has really strong bipartisan champions in both houses or in both chambers in the House and the Senate. So I think that that goes a long way to showing that this has strong support across the range of kind of political spectrum. And and hopefully that lends itself well toward getting included and getting the attention and support of leadership. So that’s what certainly we’ll be working toward.
Ashley: And I’m going to find this. I’m going to I don’t really have anything extra add other than you no crystal balls inside of this. But I think it is an opportunity and I think that opportunity zones are kind of one topic that everybody can agree on that’s actually overall a good thing, particularly if we’re adding some of the reporting requirements and impact things necessary to to really give us some information about it. So, you know, regardless of when it gets through, I just hope that it does. And that’s what we’re all here on this call to do, is to make sure that we’re spreading the word to try to make that happen.
Jimmy: Right on. So, by the way, we are at the top of the hour. So if anybody had only blocked off an hour for this need to hop, I won’t hold it against you. I just wanted to be respectful of everybody’s time here today. But if you can stick around a little while longer, I know we’ve got plenty of questions to keep answering here, so I’m going to keep going. But if you have to slip off anybody, please feel free to do so. We won’t hold it against you. Jamie pushes back a little bit against the legislation. He asks. Private investors, not funds, are very sensitive to increased federal regulation. Why ask for additional reporting, such as how many jobs are created unless future regulation is anticipated? The number one reason private investors are not doing projects is the lack of faith that the favorable current Aussie legislation and rules will hold over time. So Jamie kind of pushes back against this bill a little bit. What are your thoughts there? Rachel, I might start with you.
Rachel: Yeah, I actually I’ll push back on Jamie a little bit because investors are not the ones. Basically, no investor information is being collected or reported out. And so any sort of personal identifying information that investors hold dear will not be provided to the public going to the on the jobs created piece of it with funds. I’m not sure, Catherine, you may need to correct me. I’m not sure if jobs created is part of the Impact Act. I thought it was really just high level factors around the number of qualified opportunity funds, where funds are investing, how much investment is being invested in opportunity zones. So maybe jobs created is a piece of it, but at the end of the day, I think that the funds are on the hook for for reporting out that information. And so really, this should not have any impact on investors at all, whether it’s regulatory burden or reporting to the IRS. Yeah. Unless they manage their own fund.
Ashley: I was just going to say and to that end. Right, I mean, even on the captive funds, I don’t necessarily know that it’s going to be that much more onerous. And to that end, I think that this is this actually, you know, provides an opportunity for those captive funds to, you know, to get their numbers behind their impact. You know, one of the things that I continue to talk to people about whenever I’m on a strategy call or is we’re setting up a captive fund, is what’s your impact story? How are you actually making a positive impact in the zone? And that this isn’t just a racket to try and say do taxes. Obviously, we want to save your taxes and that’s one of the value benefits of the program. But, you know, you as doing this and as part of this and as part of a leader in this program, you know, need to be thinking about that. And so this actually allows you to quantify that impact story. And I think that there’s going to be a bunch of providers and third party providers that are going to jump in to assist on doing that. We’re certainly working on that on our end relative to helping folks that are trying to democratize this this program to come up with a simple way to try to do that.
Rachel: Yeah. And just on the jobs created piece, it feels like a sticking point to me that it’s very easy to do projections around jobs created. There’s a multiplier that you can use, and so it’s not necessarily a head count, especially on large projects. So it shouldn’t be too onerous, as I mentioned.
Jimmy: Good. Well, let’s move along to the next question then David asks for, and I guess I’ve got a couple of related questions here surrounding the dates. And I might I might have Ashley get his calendar and his calculator out to see if he can answer these.
Ashley: So I remember I remember what my point was about the dates is that it’s basically going to get the people that thought they were only going to get 10% by investing into 2021. It’s going to get all of them the 15, which is going to be great.
Jimmy: So it would be retroactive then?
Ashley: Yeah, absolutely.
Rachel: OK. That’s a point of clarification. I don’t know if it’s going to be retroactive. Is it forward looking only, Catherine, or is it retroactive?
Catherine: Well, I mean. So it is applicable to all investors. So, yes, it’s not a it’s not only for new investors, but it would be I mean, you would have to yeah, you would have to invest before the end of 2022 in order to receive the 15% step-up.
Jimmy: Yeah. So Tim specifically asks, we do get 15% if we invest before the end of 2022? The answer to that is yes then?
Catherine: Right. And obviously that’s contingent on the policy passing.
Jimmy: And passing as it is currently written also, which could change over time.
Catherine: Correct. So the policy would need to pass this year and then if it were to and again, I know we just talked about an end of the year package, so potentially there would be a short window of time there to take to invest and receive that benefit.
Jimmy: Right. So here’s a related question from David. The the the Aussie incentive has written Section 1402 allows you to defer your capital gain recognition until the end of 2026. Right. If you’ve already made investments into Aussie funds. Would your tax due date be pushed back to 2028?
Ashley: That’s correct, yeah.
Jimmy: So it does affect even if you’ve already made that, it would be retroactive. OK.
Ashley: Well, that’s why you’d be able to pick up the full 15% if you were in by, you know, in 2020. Right.
Jimmy: So that’s not only for new investors then?
Ashley: Correct. And so it gives people an extra two years to to continue to make it return on their money and and also to figure out other tax strategies relative to what they’re going to do with that tax bill when it comes due in, now 2028.
Jimmy: Right. Gotcha. Okay.
Ashley: So I wish I wish we could get an ad on in here to lock them in at their then current capital gains rate. But, you know, that’s not part of the bill. I don’t think that’s going to happen.
Catherine: That is not. You can’t bind a future Congress.
Jimmy: Right, right, right. Alright, well, another question on zones. This one is from an anonymous attendee. This person asks, There are some early criticisms of opportunity zones located near universities where the students bring down the median income. Right? Are there any changes in vision there? Does this bill address that concern at all?
Ashley: I think that it actually does, and I think that it specifically says that it’s going to apply to those that they don’t hit the low income basis without the student population.
Catherine: Yeah. So there’s an exception if zones have a are at or exceed 100% or 130%, rather, of the median family income there. If zones that exceed that median family income also have a poverty rate, a non student poverty rate of 30% or higher, then they would be accepted. Essentially they would be allowed to continue to be zones. There are there are zones that have a high median family income, but still also a high poverty rate. And so those those would be accepted. And again, that’s based on non-student populations. So yeah, but it doesn’t necessarily it doesn’t have a direct kind of directly address tracks with higher student populations necessarily.
Ashley: So it’s not going to eliminate the zones that are that got in based upon the student population. What you’re saying is, is that that’s relative to if it gets eliminated based on that’s that’s interesting.
Catherine: Right. Yeah.
Rachel: Yeah. I will say a lot of those zones were chosen because of the proximity to universities and the potential for tech transfer commercialization coming out of those universities. So.
Catherine: Yeah, a lot of them were very strategically chosen.
Jimmy: Good. Well, let’s get to Leonard’s question and Leonard asks, I understand that expected jobs created may be part of the reporting requirements, although I think we’ve said that they’re not. Is that right?
Rachel: I don’t know. Let me go back and look.
Jimmy: Well, if so, would a business that later hires some people, but less than expected, would that be viewed as a success or failure by congressional representatives? I don’t know if you have any insights on that question from Len. Anybody?
Ashley: Well, I think that, you know. Go ahead. Go ahead, Rachel.
Rachel: Oh, no. I was just going to say, I don’t think that they’re going to view I think they want to see jobs created, period. And I don’t think a projection versus actual is going to ultimately matter. And so I think you’re just reporting one number ultimately. And so they’re not going to hold you to a projection.
Ashley: Correct. And I think that that’s the key is what you actually created. And if some of those jobs ultimately end up going away, I mean, that’s the that’s the way of economics.
Jimmy: Excellent. Well, I know we’re we’re running over. I do want to go I want to see if we can go for five more minutes. We’re not going to get to all the questions. We have too many. And I apologize if we don’t get to your question, but we’ll try to address it via email offline a little bit later today. I’ll try to pass along all the questions that I can. We did get a question in here from Maria. She says, Thanks for a great session. She asks about the possibility of assigning funds to local governments for education, pre development, etc. She says it’s great and needed. Do you have any insights on whether this special fund will be approved? I think she’s referring to the State and Community Dynamism Fund. What are your thoughts on whether that fund will be approved?
Catherine: Yes. I mean, it is part of it’s part of the legislation. But as I as I mentioned, it would need to go through the appropriations process in order to appropriate be appropriated that $1 billion. So again, that would require a bit of a crystal ball. But I think that’s sort of a that would be a future step once hopefully this passes. But yeah, I mean, I think that that would be a required step though in the process is to also go through the Appropriations Committee and get that fund appropriated $1,000,000,000 at the that the legislation asks for.
Jimmy: And I think… I don’t know if you have anything else to add there. Go ahead, Ashley.
Ashley: Well, I think it’s going to be really interesting to see how they actually administer the Dynamism Fund and how they actually roll that out. And once again, I think that each one of us needs to really pay attention to that and we need to get involved in the conversation and and keep our finger on the pulse of how that’s happening. And then that’s going to allow us to give a roadmap to folks about how they can apply and how we can scale that relative to getting access to it. And so, Maria, I think that that’s going to be one of the important things that we all need to do is to figure out, okay, how is this getting administered and how can we really position governments and that kind of thing that are really doing good stuff to be able to go and grab that.
Rachel: Yeah. And to Ashley’s point, I think communicating early is really important, especially for folks who have been involved with opportunity zones at the ground level for a few years now. At this point, being able to communicate to your governor what is needed in the field in order to deliver high impact projects, whether that is actually pre-development credit enhancement, whatever that is, or if there’s a new initiative or an initiative, you want to scale through technical assistance, capacity, building money, just communicating that now, I think is important so that it’s not an afterthought should the funds get passed.
Ashley: You know, so to that to that point. Right. So Ed Knight has a question about how he gets how he finds, how he can get his project out to a fund. That should specifically be one of the things that gets dialed in relative to a process here. Right, with technical assistance and guidance and that kind of thing to facilitate those kind of interactions. And I think that we’ve got a real big opportunity there to do so.
Jimmy: Yeah, let’s have Ashley connect with Ed offline after the after the show today. I think we have time for two more questions. So question here from Clay he asked to the point concerning incentivizing investments into rural opportunity zones, what are the panel’s thoughts on how the bill can be amended? I don’t think we’re going to amend the bill, but what are your thoughts generally on providing additional tax incentives for rural zones?
Rachel: Yeah, I think this is where that state and Local Dynamism Fund really comes in and having governor’s target, whether it’s through potentially funding, financing that helps drive investors to those places, to rural communities, that’s, I think, the quickest point from A to B in getting more money to rural places.
Catherine: I was just going to say that rural is actually called out as the kind of prioritize as one of the criteria for a prioritized place for the fund to be allocated to.
Ashley: So so as part of what we’re doing here and we’re getting involved in the grassroots, we’re going to political meetings and we’re working with our respective elected officials. We need to be communicating with them, the value of them getting involved at a state level relative to additional incentives. So the states that have done that have been extremely successful. So like Ohio passing the extra 10% and if you can effectively lobby for that as it relates to the rural aspects of your state, I think that that’s going to be one of the things that can further set you apart and specifically getting them to tap that dynamism fund so that that way they can marshal the resources of all of the collective agencies that are out there. So get people working as a team, tap all of the available resources, bring those to bear, and then that’s going to make the rural deals way more attractive.
Jimmy: Fantastic. Let’s do one more question here. It’s from Charles. He asks, I assume that you would like us to push others to sign this letter? Yes. Who else would you like to sign it? Municipal officials, community leaders, financial lenders and developers. Who should we try to get to sign this letter? Rachel, Catherine, Ashley, what are your thoughts on on who we should reach out to?
Rachel: Yeah. I’ll turn that over to Catherine just on advocacy strategy.
Catherine: Yeah. I mean, I think if the if the congressional staffers were here today, I think what they would tell you is just hearing from a real diversity of stakeholders in the market, from community leaders, from folks who are actually actively pursuing opportunity zones, deals in these communities, you know, and other other people involved in making the market work. I mean, those are all important voices that I think congressional leadership, the the champions of this legislation, that’s all voices that they are eager to hear from.
So, again, not to not to speak for them directly, but I think I think I can say that on their behalf is that, again, hearing how this policy would impact your work, again, the types of stories that we heard sort of in the middle of this webinar about how this legislation has the potential to kind of further make this work even more effective. Those are the kinds of stories that I think are important and for congressional leadership and champions to hear from.
And that’s the kind of that that’s definitely really helpful for them to hear as well, as well as how it could potentially be even further refined. Again, I think we have to be somewhat mindful of the scope of the legislation. This is the provisions that were included, you know, is what has bipartisan support. But if you take a look, for example, the conversation about how the fund is going to be operationalized if you have ideas about that. I think that the congressional co-sponsors here are very open to additional feedback as well.
So, again, I think if they were here, they would they would say that. So I’ll sort of be a be there be their voice on that a little bit if I if I can stand in. But I do think that they’re they’re eager to hear from, again, market stakeholders, not only about support for this, but also if you have ideas for how it can be further refined to hear that as well.
Ashley: I’m going to round that out, Jimmy, and I’m going to say that the greatest thing about America is that everybody has a voice, right? So literally, this is everybody that can vote, right? I mean, that’s who we need to sign the letter because that’s who this affects. And I think that that’s the greatest thing about this country that we live in.
Jimmy: Hard to disagree with that, Ashley. Well, I think we’ll I think we’ll cut everybody loose there. We went 18 minutes over. Sorry for keeping you so long, but there was a lot of great discussion here today. Again, if you want to view the letter that we’re going to send a congressional leadership, you can find that at opportunitydb.com/letter. We also have an advocacy toolkit with links to more letters that you can sign to your members of Congress. You can find that link in the chat. I’m going to email everybody a recap of this webinar in the next day or two here, and we’ll have the recording available as well.
So for Chris and Rachel and Catherine and Ashley, I’m Jimmy Atkinson. Thanks for joining me today and and being a part of today’s webinar. Thanks, everybody.
Ashley: Thanks, everyone. Thank you. Cheers.