OZ Pitch Day - July 20, 2023
Community Activation In Opportunity Zones, With Chris Cooley
Community activation may be the key to long-term success of Opportunity Zones.
Chris Cooley, CEO of OZworks Group, joins episode #200 of the Opportunity Zones Podcast to discuss OZ advocacy, why community-led OZ projects are crucial to the long-term success of the initiative, and updates on the progress of OZworks Group’s online community.
Watch On YouTube
- What OZworks Group is, and how it has grown since its launch last year.
- The value in bringing together all of the different types of Opportunity Zone stakeholders in one central community.
- Why advocacy of Opportunity Zone reform is crucially important to ensure that the spirit of the tax policy is fulfilled for the long term.
- Why telling positive OZ success stories around job creation and tax base increase is sorely needed.
Featured On This Episode
- OZworks Group, a Community for OZ Stakeholders, with Chris Cooley (Episode #129) (OpportunityDb)
- New Legislation Would Extend and Improve Opportunity Zones (OpportunityDb)
- OZ Enhancement Advocacy Toolkit (OpportunityDb)
- Webinar Replay: How To Advocate For Opportunity Zone Improvements (YouTube)
Today’s Guest: Chris Cooley, OZworks Group
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, here with episode number 200. We made it. Today we’re talking about community activation and why it may be the key to long-term success of opportunity zones. And here to discuss this concept with me today is Chris Cooley, CEO of OZworks Group.
Chris joins us today from Rochester, New York. Chris, welcome back to the show. How’s it going, buddy?
Chris: It’s going good, man. It’s good to be back on, I guess, maybe like a year later or something like that, but here we are. Lots to fill you in on.
Jimmy: Yeah, it’s been some time since you were last on the show. I can’t remember when it was exactly. I think it was last year or maybe the year before that. I’m not sure, but…
Jimmy: Last time you were here, I think OZworks Group was just kind of getting off the ground. And, you know, full disclosure, I’m a co-owner in OZworks Group. It’s a community network of opportunity zones stakeholders that has grown by leaps and bounds over the last couple of years since we launched it, Chris, alongside our third partner on the team, Ashley Tison, who was on the podcast just a few weeks ago.
I’ll be sure to link to that previous episode that you and I did, Chris, in the show notes for today’s episode at opportunitydb.com/podcast. Before we dive into community activation and opportunity zones success and all of the efforts you’re leading there and your big thinking on why community activation is so important, could you tell us a little bit about OZworks Group, for those who may have missed that initial episode, maybe people who haven’t heard what OZworks Group is?
What do you guys do exactly? And maybe you can give us the update on progress so far since the launch.
Chris: Yeah, for sure. So, we launched in January of 2021. And so I think we did the first podcast pretty soon after that. But we are an online community, think of it like an online co-working space, right? So, it’s like month-to-month memberships, multiple tiers for participation. We’ve got all kinds of resources within that, right, to be able to connect to.
So, the big thing that we’ve made a push toward is creating solutions, and so being really action-oriented. So, when people come in, if they want to just learn about OZs, they listen to your podcast, obviously, and pick up a few nuances and then want to get more immersed, there is a network that we have now created, well, that we created a year-plus ago, but of service providers, of developers, of investors, project issuers, people who are really going through the process of connecting with others to make sure that they are successful in opportunity zones.
And so, you know, we’ve affiliated with you, Jimmy, to do some advocacy stuff. We’ve done… We’ve got a boot camp now inside of the community that is for, like, really deep dives with Ashley Tison. So, you know, there’s really something for everyone. What I would say is that there’s two main components of the value system that we operate within, right? It is lead with a giving hand, as you and Ashley talked about when you first kind of, like, pulled me into this.
It’s like, how can we democratize access to this knowledge, right? There’s a lot of people that want to know more and, like, you know, it’s… Let’s just be honest, it’s still a young industry, right? And so there’s a handful of people that really know what they’re doing, a growing population of those people, but we just wanted to make sure that we had a concentrated place where people were giving their time and we’ve got all kinds of different moderated group discussions and Zooms that happen inside of that network.
The other thing is participate. If you’re the type of person that wants a lot of hand-holding, you know, like, we can provide those services, but we want people to engage, come to things. It’s the whole mantra of you get out what you put in, right? And so this is a place where you can get your hands into it all. And let’s see.
We started…I think when we had the last podcast, this was all mostly conceptual. We had probably…I want to say, at the time, I’m just kind of pulling it out of a hat here, but maybe 60 members were…
Jimmy: And I was going to say, even before that, Chris, when we first soft-launched it, maybe there were about a dozen or two dozen people in there that we kind of invited to the pre-launch or soft launch, but then, yeah, you got on with me a little ways in after we had done the grand opening, we got 60 members.
So, how many members are we up to now?
Chris: That’s right. That’s right.
Jimmy: How has it grown since then?
Chris: Yeah, so, right around 270 members. And, you know, that’s…it’s amazing and really cool. I even see people who leave and then come back because we have that option, right? It’s sort of like, “All right. I got some things that I need. I want to go refine my vision, my concept,” and then come back to be able to pitch and present. So, that’s another cool thing.
A feature is every Friday, we have a weekly member Zoom session. And members can pitch their ideas and we record them and we post them and we email them out to our list. So, there’s a privilege in being a member, getting access to some of those video recordings. We bring in content experts like we just did a conversation around E-Pace financing. And so there’s a lot of really cool stuff.
We’re having experts on this to just, you know, talk about the advocacy, the bill extension and improvements. There’s just a lot of really amazing people inside of this network and they’re coming together to form side groups and side committees and we’re doing a marketing push to, you know, be able to educate more people through social media.
It’s amazing. It’s like, Jimmy, I try to get out of the way, man. And that is the community element and component that I think is so incredible. It’s like, you know, if you want to see things happen and get done with your projects, with your investments around OZs, this is the place to make it happen. And it’s been an honor to be part of it.
Jimmy: Yeah. No, I think that’s great that you get out of the way because you’re the moderator and the facilitator, but at the end of the day, I think it’s really about the community of different OZ stakeholders coming together. And if I can just kind of reiterate what you said or restate what you said, you know, the reason for this, the need for this network, this community is exactly what you said before, Chris, it’s a relatively new industry.
And, you know, if you’re a developer somewhere in the country or you’re an investor somewhere else in the country and you’re kind of looking around to your own local network or friends or colleagues that you may know for opportunity zone expertise, you may not find it. You can typically go to your local accountant or your local tax attorney or other lawyer that you may have and ask him questions about all sorts of other types of investment products, especially like a Section 1031 exchange or if you want to do historic housing or historic tax credits, I mean, there’s groups that are experts in that and your accountant or your attorney or your other network can kind of plug you in with those types of people.
OZs are so new, you know, you go to your local CPA and he may never have heard of it before. If he has, it’s only, like, very rough surface knowledge. And so what we’ve done is, you know, just to kind of, as a grassroots effort, I guess, you can use it as that, coalesce all of these different stakeholders from all over the country into one central location.
So, it does really create a great knowledge base in a different way than OpportunityDB does. It creates a really cohesive network. I was wondering, Chris, do you have a concrete example or two of somebody who’s come into the network looking for help in one fashion or another and comes out of it, you know, a week or two weeks or sometime down the road later with a success story like, “Oh, OZworks Group helped me connect to X, Y, and Z and get this done.”
Are there any examples, one or two examples you can give?
Chris: Yeah, man. I gotta weed through a big Rolodex, right? But I also want to make a comment about the local attorneys, CPAs, you know, things like that. I mean, I’m privy to a lot of conversations on a daily basis, as you are as well, and especially and particularly around strategy, OZ strategy. So, these are people who are investors or have heard about launching businesses or they sold a business and they got capital gains and they want to roll it into real estate.
And, you know, a lot of people are just learning like, “Oh, you can start a new company.” It doesn’t have to be real estate. So, even just that element of this, that is like when you talk about a new industry, like, that design has been around from day one, right? It’s just that people are now starting to pick up on it. But I’m an example of someone who went to my CPA and said, “Hey, I want to do this thing.” And they said, “You want to… No, you don’t want to create a capital gain.”
I wanted to actually go make one happen, right, so that we could start up… I mean, OZworks Group is a qualified opportunity zone business and we practice what we preach, right?
Jimmy: Right, and you and I are actually investors in the qualified opportunity fund that holds that business. So, we’re actually practicing what we preach.
Chris: Yeah, right. And also…
Jimmy: And your office is located in an opportunity zone in downtown Rochester.
Chris: Exactly, exactly. And so that gives us also a really unique working perspective on what best practices are and how it should flow and, you know, being able to introduce others to that as well. Now, I ended up going to my CPA and I got lucky because she said, “I don’t do this. I can’t handle this. You need to go find someone else.”
And I did, right? However, I am bumping into people who say, “I got a lot of misinformation,” and things were structured improperly because of that. So, there are…just to be aware and be conscious of asking deeper questions to your service providers to really find out if they know the knowledge.
I mean, one of our members came to us and said that their attorney told them that you didn’t have to use capital gains to go into an OZ fund. And he had a bet with his attorney that if he was right and that you had to use capital gains, that he would get all of his cost waived. And someone said to me, “Yeah, and you might want to find another attorney.” Right? Because…
Jimmy: Yeah, no kidding.
So, just to clarify, you can use non-capital gains money in an OZ fund, but it’s not subject to any of the tax advantages.
Chris: And that was the point, right?
Jimmy: That’s the whole point. Right, yeah.
Chris: Right, right. So, yeah. And to use a couple of examples. I was just talking with a woman yesterday who represents a opportunity zone community out in Los Angeles. And she has been part of OZworks Group. We did a DEI scholarship initiative back from middle of last year. She received a scholarship because she represents an OZ community.
And we worked with CRE Development Capital, they actually funded a handful of prepaid scholarships, right? And so this woman came in through the scholarship initiative and she is a real estate professional and a broker in Los Angeles and represents opportunity zone communities. She had been preaching opportunity zones to her communities for two years and just recently was able to do an event and a workshop and same people kind of brushing it off.
And someone stood up in the audience, a younger real estate investor and developer, and said, “I launched a fund and we bought a property, you know, for $150,000, and now, because of the opportunity zones and everything that we’ve done, it’s worth $3.1 million.” And everybody perked up.
And now, you know, this person has introduced all of this network to OZworks Group because she learned enough to develop her workshop through the community, right? And it’s just been amazing to see now how that interest has generated, you know, the input and community gravity that will ultimately help instill this knowledge into that network. And that’s just one example of community building that happens because of this.
But, you know, project-wise, there’s a whole group of members that formed their own sort of side group about crypto, you know, developing opportunity zones around crypto. We’ve got investments that happened simply through relationships, right? We did our event in Puerto Rico.
We’re doing another one coming up here. We did an event in Atlanta. And these are places where every OZ stakeholder is represented and welcomed. And so, the incredible nature of that information that’s shared is progressive and innovative. It’s not just one group of OZ stakeholders sort of exchanging the standard dialog, right? It’s like, “Hey, I have this business idea that I want to do in a zone. I want to scale to a franchise.”
And the IP lawyer who happened to be there overhears it. And then there’s an investor next to the IP lawyer that says, “Oh, that’s a really good idea.” “And that could fit in my multi-use building,” says the developer that’s standing there. And that’s a real scenario that happened when we went down to Atlanta in person. And those people showed up at that event because they had known each other through this virtual, well, online network, right?
I hesitate to say virtual because of the conversation we had a year ago.
Chris: Because it’s real, right? But making those relationships happen and then seeing how people come together in person after meeting online, it’s just…man, it’s special.
Jimmy: Yeah, a lot of great work that you have done building up that community over the past… What has it been, a year and a half, two years?
Chris: Yeah, it’s going over a year and a half now.
Jimmy: Yeah, a year and a half about. Well, let’s shift gears a little bit and talk about advocacy. As our listeners and viewers likely know by now, back in April, early April of this year, 2022, some new opportunity zone reform legislation was introduced into both the House of Representatives and the U.S.
Senate in a bipartisan fashion. I’ve created a lot of content already around this legislation so we don’t have to go too deep on what it is. I’ll make sure we have links in the show notes. But it’s essentially going to reform opportunity zones and extend the tax policy by an additional two years, if it eventually gets passed, and I’m hopeful that it does get passed later this year, if not early next year.
Chris, you and I teamed up, OpportunityDB along with OZworks Group, to co-author a letter to congressional leadership, which we’ve just sent out a few weeks ago in May. We did a webinar together. And I think it was really important that we did that.
Essentially, what we’re doing is we’re advocating for the renewal of opportunity zones, the reform of opportunity zones, because we are opportunity zone stakeholders and we want to see the program succeed. We think this legislation is the best chance we’re going to get to make sure that the OZs do get reformed and reformed in the right way and extended for an additional period of time.
Why was that important to you and why is it important for all OZ stakeholders to become involved with advocacy, to a certain extent, whether it’s through signing our letter or talking to their own representatives? What is the importance there, Chris, in your words?
Chris: Yeah. I mean, you and I talked a lot about this. I mean, it’s pretty obvious for the investor, right? It’s like, I want it to be extended. It gives me more time.
Jimmy: Yeah. Yeah, for the investor, it’s really easy. It’s like, “Hey, I’ve got this great tax benefit. I’m going to…”
Chris: Why would I not want that?
Jimmy: “I’m going to keep accruing capital gains over the next few years. I want to put as much money as I possibly can into this tax-free growth vehicle,” this is what Ashley Tison and I like to term a super Roth IRA, essentially, “and, you know, ride out opportunity zones for a long time because it’s an incredible tax advantage.” Yeah, go on.
Chris: Yeah, I mean, but that’s fairly obvious, right? So, the thing that we had talked a lot about was what can we advocate for that really fulfills the spirit of the incentive? The idea that we’re pumping economic flow into these communities that were designated. And I think one of the big reasons that the advocacy is really important is that it gives a voice to the communities to be able to stand up.
And that was one of the platforms that we wanted to deliver on our webinar was a place to highlight the stories that are really happening on the ground because oftentimes, there’s so much positive momentum happening, but, you know, it takes a long time to tell a positive story, it takes an instant to tell a negative one, right? So, we’re looking at how these communities are being positively impacted and why community leadership is supportive of those.
And this is an opportunity for people to stand up and say, “Yes, this does help me out.” So, one of the things that, you know, we did on our YouTube channel, we highlighted those clips from those storylines. So, if anybody ever wanted to go and watch some of the two to three-minute clips that we put together or that people talked about on our webinar, please feel free.
Jimmy: That’s on YouTube. Just search for OZworks Group?
Chris: Yeah, OZworks Group on YouTube. And we created these playlists, so it’s on a playlist in there. But, you know, I think one of the most important things is that, you know, we’ve got this community and we have everyone’s attention. And we also, you know… there’s that lead with a giving hand, right, and there’s also participate. And so I think what was really interesting, we have been hyping this up, right, this letter up for a couple of weeks before we did the webinar.
And you and I discussed this and kind of laughed about it that as soon as you put the link in the chat on the webinar, 30 people signed it, right? So, they already knew what was coming. And there’s a trust and a relationship that this community has built together. And I think that that’s where it runs really deep inside of opportunity zones. I meet incredible people that care. And, you know, this advocacy is a way to make that voice heard.
And it’s important because policymakers need to hear that there are positive things happening and that people who are community leaders and that represent the communities themselves do want to see this thing extended, right? So, when we talked with, you know, EIG and Catherine Lyons over there, Rachel Riley, some of our other contacts, you know, that was a big element that we felt that we could support through OZworks Group and OpportunityDB was highlighting the stories and making it known that there are good things happening, really positive things happening beyond, you know, the benefit for the investor, which is pretty straightforward, right?
Jimmy: Yeah. Yeah, absolutely. I think that’s exactly right, Chris. We basically need to highlight… I think the starting point is, like you and I believe, as do a lot of other opportunity zones stakeholders, that opportunity zones are absolutely doing the good that they were intended to do when the policy was first initiated.
They are living up to congressional intent, to the intent of the policy. Now, the trouble is we need to prove that, right? I guess, well, what is it? Missouri is the show me state, right? And I guess that’s kind of how Congress and the constituents of this country operate is like, “Is it working? Show me. Prove me. Prove me wrong. Go ahead and prove it. Prove it to us that it is actually working because we don’t buy it because we’re reading all this negative publicity in New York Times and elsewhere.”
So, it’s incumbent upon us to find those stories about here’s why it’s working. And I think we did a fairly nice job of that in our webinar. And we’ll link to that webinar in the show notes for today’s episode as well. And we’ll also link to your YouTube channel there so our viewers and listeners can read more and watch more about that.
But I think that’s really the reason why this is super important, the advocacy effort, not just to say, “Hey, we want this to pass because we’re greedy and we want more tax benefits, but no, we want this to pass for that reason, of course, too. We do want to create some additional tax-free growth, tax-free returns, but we also… This thing actually is working. This thing is driving much-needed capital into these communities that desperately need it, creating jobs, increasing the local tax base, all those good things that go along with opportunity zone development.”
So, Chris, now, I’m turning to you again. Can you kind of tie that back in with the theme of today’s episode, community activation? What does that mean exactly? How are you spearheading that effort? Maybe you can cite an example of what community-led activation is or community-led development is and why it’s so crucial for the success of opportunity zones.
Chris: Yeah. I think there’s a lot to unpack there, but in general, right, from a community-building standpoint, you know, operating in a silo is just incredibly challenging, right? I mean, ask any entrepreneur, ask any investor out there.
People want to follow success, and I think that’s one of the other reasons that the, you know, potential extension is important because this is a bell curve, right? You’ve got early adopters that are just starting to introduce some of the people that are further along the curve to what opportunity zones can be and are. And so, you know, I think by sharing knowledge through communities that trust each other, that form relationships, that really have bonded, that you can activate a lot of potential and innovation and faster success, right?
So, if I’m here and I can tell you where I went wrong, Jimmy, then you don’t have to fail in that same way. Right? And so things can happen much more quickly when we’re able to come together and, you know, look at things from a mindset of abundance rather than scarcity. And, you know, I mean, the first thing that service providers inside of our community… because we have multiple lawyers, we have multiple CPAs, and they’re all working together.
They’re on panels and they co-moderate, you know, monthly sessions so that we can answer questions for our members that come up. And it’s also 24/7 and a live forum. So, that idea that, “Hey, we can all be supportive together,” every one of those service providers will tell you they have more work than they can stand, right? So, they just want to be able to share knowledge between each other.
They might have a question that comes up. I mean, this is new-ish stuff, right? So, they might have a question that comes up. And I know there’s other, you know, groups out there that are specifically for service providers. We want everybody in one place. And it’s amazing to see that. And I think, from my perspective, that’s community activation, right?
It’s progress. And, you know, it’s not for everybody, that’s okay. We just want to make space available for people who do want to collaborate and make things happen faster together.
Jimmy: Right on. More specifically, what about community-led opportunity zone development? Because I think oftentimes… I guess one of the knocks on opportunity zones or one of the myths of opportunity zones is that it’s, you know, creating these incentives for developers to come in and knock down stuff in a community and build something that the existing residents of the community don’t really need.
Have you seen any examples of the opposite of that where a community, like a community development intermediary or some other community leader sees opportunity zones as a valuable tool, and then, instead of waiting for the developer to come to them, they actually lead the effort from the community?
Chris: Yeah. I see that becoming more of interest to, like, economic development, you know, organizations. Two, three years ago, when this thing got kicked off there was a big push, and you’ll remember all this, to create prospectus for cities. And, you know, it was like… I think, in a lot of cases, a lot of those were dubbed failures for a lot of different reasons, but one that I see is, you know, they’re putting together a bunch of properties that were kind of not worth anything, with no plan involved, and just saying, “Come buy all these, you know, properties in opportunity zones. Here’s the price tag.”
And that didn’t quite land. But now, there are enough success stories, right, of private investors and private projects within communities making positive change happen that the EDAs and the EDCs are coming back around and saying, “You know what? Maybe we should think about that again, right, because we could really work together again, right, with community leadership.”
And so I think that we’re still kind of on the early part of that, Jimmy, to be honest with you. But what I’m seeing is investors and developers and business owners inside of the communities quietly and sort of silently doing these projects with great success. And, you know, getting those individuals to be able to share and then work with the economic development groups is where I see the next step happening.
It’s one of the things that we want to facilitate and make happen more often is this conversation between different private, public sector groups, right, because people need to be educated. But it’s a big nut to crack, man, but we’re working on it. And, you know, as far as that goes, the economic development groups, there’s interest in attracting not just capital, but then what I would say is people need to step foot in these communities, like, you need to ask people what they’re looking for.
And, you know, that’s always one of the challenges. That’s one of the things that I believe and one of the purposes, you know this, in launching OZworks Group was to have conversations start to happen and relationships being built between both ends of the spectrum. So, I mean, we have investors, you know, high net worth investors in our community and we have local community projects with an idea.
And you’d be amazed how often they’re in a breakout room on a Zoom because there’s no barrier, right? It’s just like when we do speed-dating Zooms, like, it’s rapid-fire. It’s whoever shows up. And so I really find it amazing, once when we get people from both ends of the spectrum in the same conversation together and you go, “Oh, we’re not so different after all.”
But you have to make that openness available, right, to be able to be introduced to capital on one end and to people on the other end. And so, I see it all coming together in a really positive, exciting way. It just takes time. Community building takes time. People connecting takes time.
But here we are a year and a half later and I’d say it’s really great to see how it’s all coming to fruition.
Jimmy: Right. And that’s part of what OZworks Group helps to facilitate and accelerate. Chris, it’s been great speaking with you today. But before we go, where can our listeners go if they want to learn more about you and OZworks Group?
Chris: Yeah. So, I would encourage everybody to go to ozworksgroup.org. That’s where you can learn a lot about us and just what we’re doing. And ozworksgroup.com is a landing page that will get you right into our network. So, there’s multiple tiers there. We do a light membership, three days trial.
So, I tell everyone to come in on Friday, activate your trial on a Friday morning because we do member Zoom sessions at noon Eastern time. And then, you have the whole weekend to explore. We have searchable libraries inside of the platform and video content and… There’s a lot there. But then, you can graduate up and upgrade, just like any sort of membership platform.
So, yeah, I would encourage anyone to visit that. We have a YouTube channel and a LinkedIn page and just Google search Ozworks Group and I think all the stuff will probably come up.
Jimmy: Terrific. And for our listeners and viewers out there, we will have show notes as always available for today’s episode at opportunitydb.com/podcast. There, we’ll have links to all of the resources that Chris and I discussed on today’s show. And please be sure to also subscribe to us on YouTube or your favorite podcast listening platform to always get the latest episodes. Chris, episode number 200, it’s in the can. Thanks for joining me today.
I appreciate it, man.
Chris: It’s an honor. Yeah, thanks, Jimmy. Always good to catch up with you.