OZ Pitch Day - March 7, 2024
Opportunity Zones have raised over $100 billion of capital. But what good is the tax policy doing?
Blake Christian, CPA and tax partner at HCVT, joins the show to discuss the importance of advocacy on behalf of the Opportunity Zones policy.
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- The services that Holthouse Carlin Van Tright (HCVT) provides to their Opportunity Zone stakeholder clients.
- A recap of Blake’s OZ Expo panel that focused on foot faults with respect to QOFs and QOZBs, and how to address those problems.
- The debate that emerged in the OZ Expo auditorium with respect to the OZ legislation, and when it may likely pass.
- Items on Blake’s wish list for OZ reform, including penalty relief and election relief.
- What the industry needs right now, to ensure that the program gets extended. And why certainty is the number one issue.
- Why it’s crucial that OZ stakeholders educate and advocate their elected officials about the impact that OZs are having on local communities, in order to ensure that the industry can move forward.
- How several of Blake’s clients are investing in areas that they would not have touched, but for the Opportunity Zones incentive.
- A characterization of the energy and optimism in the room at OZ Expo, despite economic headwinds.
Featured On This Episode
- OZ Expo 2022
- Roi Maufas on the Opportunity Zones Podcast (Episode 223)
- MIT Modular QOF on OZ Pitch Day Summer 2022
- Global Penalty Relief: IRS Notice 2022-36
- OpportunityDb Advocacy Toolkit
Today’s Guest: Blake Christian, HCVT
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 Jimmy Atkinson. We’re coming to you live on site from the OZ Expo in downtown Phoenix, Arizona. I’m joined today by Blake Christian, tax partner and CPA at HCVT and a distinguished panelist at today’s event. Blake, how are you doing?
Blake: I’m doing great. Great event today.
Jimmy: It is. And I just had your partner at MIT Modular, Roi Maufas, on the show. I’m not sure which order we’re gonna air the episodes in, but Roi’s either coming right before this or right after this if you’re watching or listening at home. And he gave me the rundown on MIT Modular. So today, I really want to talk with you about Opportunity Zone industry and your work at HCVT and your takeaways from the expo so far. So, first of all, like I mentioned at the top, you’re tax partner at HCVT. Can you tell us what HCVT specializes in and the types of clients that you serve in the industry?
Blake: Right. So we’re a top 30 national CPA firm, headquartered in West LA. I work out of the Park City, Utah office primarily. I also spend some time in our Long Beach, California office. And we are a full service CPA firm, over 700 people in 13 offices, mainly in the West. And I specialize in OZ funds. We’ve set up 200 plus OZ funds and we help our, you know, fund managers comply with all the tax law, all the filing requirements, etc.
Jimmy: Excellent. And in addition to that, like I mentioned, you’re also a partner in MIT Modular, which is a QOF headquartered in Provo, Utah. You and my former guest on a previous episode, or maybe it’s an episode coming up, I haven’t sorted out the order yet, is the other partner there who you guys are doing modular housing manufacturing out of shipping containers in Provo. And you were the guest of mine on OZ Pitch Day not too long ago. I’ll make sure to link to all this in the show notes episode for today’s episode. So if you’re interested in learning more about Blake’s other endeavor and his QOF, you can do so. But let’s talk about your panel.
Jimmy: What was your panel? Tell our audience. And what did you guys discuss on it?
Blake: So, we were focused on best practices as well as some of the footfalls that are happening out there in formation and operation of QOFs and QOZBs, and got in a little bit on how to fix those problems. And then we also touched on some of, you know, the pending legislation and how that would be good for the industry.
Jimmy: Any sticking points with the legislation? That was actually the subject of my panel earlier this morning. We covered that extensively in a 45 minute session with a few of us up there. But your panel, or just asking you personally right now, Blake, are there any sticking points with the legislation and when do you think it may or may not come to fruition and become law?
Blake: Yeah. Well, that was a little bit of a debate in the room. Dan Kowalski, who I have a lot of respect for, feels that it may not come till 2023, just because we’ll have, you know, potentially a lame duck congress. But, you know, we’re hopeful that maybe it’ll push through in 2022. You know, my hope is that we’ll add some other corrective measures, maybe some penalty relief, election relief, those types of things. Not really gonna cost the government anything, but kind of streamline some of treasury and IRS’s time and the disruption to the fund managers and things. It’s a new program. Some people didn’t do everything quite right and it’s a little complicated to fix things. Be nice if the administratively, they would put some things in there to help fix it.
Jimmy: What are some items on your wish-list if we can get specific? If you had a magic wand, what would you like to do administratively?
Blake: Yeah. First and foremost, and they could add this to the global penalty relief that just came out last month, and right now they’re essentially waiving almost all financial penalties, interest and penalties for certain late filings, etc, because of COVID disruption. And so I’ve written to the AICPA and the treasury and asked them to… You know, it’s nice that they’re waving, but why don’t they just treat them as timely filed? And that way, you know, because if you make a late election, you’re not really a qualified opportunity fund. And so everybody that put money in there now doesn’t have any of the tax benefits. It kind of blows the whole thing up. You know, and you can get private letter ruling relief, but it’s about a $30,000 process to go through all those hoops. So this cuts down on the financial burden, on the fund manager, and it also gives relief to the IRS, who’s pretty darn busy.
Jimmy: Yeah, they are busy. Well, maybe that’s why they hired so many new IRS agents, Right? Or they’re about to. What about the industry though? In your mind, what does the industry need right now more than ever? What would make the industry hum along more or help ensure the continuation of the Opportunity Zone policy long after the current sunset date of 2026?
Blake: Right. Well, right now we need certainty. And so we have the Transparency Act out there, which will, you know, it has some fantastic provisions in there. It extends, you know, some of the time to make investments and to comply. There’ll be some reporting, which all of us in the industry have been comfortable with that. It was in the original legislation. It should be in there. You know, we should have transparency. But again, you know, I touched on some of the things that could be added. The fund-to-fund investment flexibility is huge. And you know, we heard in the session, you know, everybody was really excited about that. So, it’s all really good. But if we could get this to pass early, you know, because people, when there’s uncertainty, they don’t act and we’re in a financial crisis at the moment. And to have the tax uncertainty is just gonna compound problems.
Jimmy: Yeah. So what can all the folks in this room do and the folks in the hall in the next room over and everybody listening and watching out there today, what can they do to help enact some of these changes and make sure that we press forward as an industry?
Blake: I’m glad you asked, Jimmy. And you know, part of the battle is, you know, everybody in the industry’s just been busy the last three-and-a-half years in just, you know, handling projects, and, you know, there’s just been a lot of activity. And we haven’t as an OZ industry been as proactive in communicating to the press, communicating to legislators. And so I would encourage everybody in the OZ space to write congressmen and women, and as well as local politicians, economic development people, educate them, let them know the projects. And everything is not real estate. You know, there’s healthcare related, there’s child education projects out there. Again, we’re dealing with, you know, homeless shelters. There’s just a lot of good things going on out there. And the press though, has kind of focused on, “There’s a luxury high rise going in, you know, an opportunity zone.” That’s terrible. Well, you know, they’re gonna hire from the local community. They’re increasing values in that community. It’s not all bad.
Jimmy: Increasing the tax base for the local government, too. Right?
Blake: Right. And so you know, this is exactly what the program is all about, you know, to get these depressed areas funds in there and make them come back. And a lot of that is going on. I can tell you, my clients are investing in areas that they wouldn’t have touched four years ago just because of this program.
Jimmy: Areas that wouldn’t have received private capital, now they are receiving private capital. Now jobs are being created in those areas. And now it’s important for those listening and watching and those in the room here today with us at the OZ Expo in Phoenix, to tell those stories.
Jimmy: To get those stories out there so that we can go to Congress, we can go to the constituents all around this country and show them that the Opportunity Zone program is working as intended. And it’s my hope that this podcast, and this episode in particular, is doing a small part, playing a small role in doing just that. So, Blake, thanks for sharing your thoughts. I mean, are there any other takeaways from the OZ Expo that have kind of caught your ear or caught your attention today?
Blake: Well, this is the first OZ Expo in probably 18 months where we’re not in the middle of COVID. And so, I mean, it’s really a lot of fun to see a lot of the people that we talk to on the phone daily. And there’s a lot of good energy in the room and there’s a lot of optimism on the program despite, you know, the economic downturn we have right now. This is still a bright spot and we’re hearing every panel is focused on the social issues that are being addressed by the OZ program and a lot of these funds. And it’s really exciting, really exciting to hear this. And you know, the ESG, you’re clicking all those boxes and exciting time to be in the business.
Jimmy: It is indeed. It’s still early, although it seems like it’s getting later and later. We’re getting closer and closer to that 2026 end date. And I think I speak, for myself certainly, but I think I speak for everybody in the room wanting that legislation to get passed ultimately, and hopefully it does so sooner rather than later so we can have more certainty with the funds and with the investors. Well, Blake, it’s been a pleasure speaking with you today at the OZ Expo. Before we go, can you tell our listeners and viewers where they can go if they wanna learn more about you and the services that you provide at HCVT?
Blake: Right. Easiest thing is just google, “Blake Christian HCVT, Blake Christian CPA.” My articles and my firm affiliations will come up there.
Jimmy: And I’ll be sure to have show notes page on Opportunity DB for today’s episode. You can find those show notes by heading over to opportunitydb.com/podcast. And there you’ll find links to all of the resources that Blake and I discussed on today’s episode, and I’ll be sure to link to Blake’s contact information so you can reach out. And please be sure to also subscribe to us on YouTube or your favorite podcast listening platform to always get the latest episodes. Blake, thanks so much for joining me today. I appreciate it.
Blake: Thank you. And thanks for your leadership in the industry.
Jimmy: It’s a pleasure. Thank you.