1.24.23 Webinar
Opportunity Zones tips for community-based developers
Opportunity Zones Tips for Community-Based Developers
Recording & Highlights
On January 24, 2023, the Chicagoland Opportunity Zones Consortium (COZC) hosted its fourth Opportunity Zones (OZ) webinar to discuss how community-based developers are raising OZ equity to finance high-impact real estate projects in Chicagoland.
Speakers:
● Nancy Hughes, Volunteers of America Illinois
● Glenn A. Graff, Applegate & Thorne-Thomsen
● Alex Sparhawk, DL3 Realty
● Robin Schabes, COZC
● Rachel Reilly, Aces & Archers
Webinar Highlights
The webinar began with an overview of example instances in which OZ financing has been utilized to finance high-impact real estate projects in Chicagoland, including the Chatham Education and Workforce Center and The Terminal. Speakers then shared their insights on pursuing OZ investments for projects in Chicago’s South Side neighborhoods.
Nancy Hughes of Volunteers of America (VOA) Illinois shared details about Hope Manor Village, a development of 36 affordable homes and the latest addition to the Hope Manor campus of affordable homes and support services. Located in the Englewood community, the new homes are dedicated to low-income residents earning between 15 - 60 percent of Area Median Income, with a focus on supporting Veterans and their families. A $3.3 million OZ investment was provided mid-way through construction by the NEF Fifth Third Opportunity Zone Fund 1. VOA Illinois utilized the investment to cover a portion of construction costs, allowing them to reduce their construction loan and realize interest savings for the project. Glenn A. Graff from Applegate & Thorne-Thomsen provided insights on how the deal was structured alongside the Low Income Housing Tax Credit and other community and economic development programs.
Alex Sparhawk from DL3 Realty shared details on the Washington Park National Bank Building, and efforts to raise OZ equity to support the rehabilitation and reuse of the historic property located in Chicago’s Woodlawn community. The development will be home to community nonprofits and social enterprises that are an integral part of the fabric of the surrounding neighborhoods. The building will include co-working space and a restaurant/food hall which could lower the upfront capital costs for aspiring entrepreneurs and create an environment conducive to networking, collaboration, and sharing.
12.13.22 Webinar
Catalyzing Opportunity Zones investments in commercial corridors
Catalyzing Opportunity Zones Investments in Commercial Corridors
Recording & Highlights
On December 13, 2022, the Chicagoland Opportunity Zones Consortium (COZC) hosted its third Opportunity Zones (OZ) webinar to discuss how OZs have been leveraged to spark investment in commercial corridors through infill projects and new-starts.
Speakers:
● Brian Burke, Menkiti Group
● Anthony Miles, TPP Capital Holdings
● Robin Schabes, COZC
● Rachel Reilly, Aces & Archers
Webinar Highlights
The webinar began with an overview of commercial corridors in Chicago, their overlap with OZs, and efforts, such as the community development INVEST South/West initiative. Speakers then shared lessons learned from OZ strategies to invest in similarly positioned communities in Washington, D.C. and Philadelphia. Throughout the webinar, speakers underscored the importance of community engagement, working with local governments, and investment strategies that meet the needs of current residents and businesses.
Brian Burke of the Menkiti Group discussed his organization’s strategy to leverage OZ investment to bring community-serving retail, new jobs, and job training to the Anacostia neighborhood in Washington, D.C. The minority-led development firm completed MLK Gateway I in October 2021 using a mix of bank debt, New Markets Tax Credit equity, OZ equity, and grants to support the project. The next phase, MLK Gateway II, is substantially larger, but will leverage a similar capital stack. For both projects, the Menkiti Group has prioritized local hiring as well as working with local and women and minority-owned businesses and contractors.
In Philadelphia’s Tioga District, Anthony Miles of TPP Capital Holdings is working on a multi-phase, multi-block redevelopment effort adjacent to the Temple University Health Sciences Campus and Temple University Hospital. TPP, a Philadelphia-based, Black-led social impact private equity fund manager and healthcare real estate development firm, has been engaging OZ investors in efforts to raise $300 million for the Tioga District Preventative Health Hub. The hub will break ground in 2023; initial investments are oriented toward improving health outcomes for seniors and area residents, creating housing that is affordable for healthcare workers, as well as creating retail and office space for Black-owned businesses.
11.15.22 Webinar
Opportunity Zones strategies for small businesses
Opportunity Zones Strategies for Small Businesses
Recording & Highlights
On November 15, 2022, the Chicagoland Opportunity Zones Consortium’s (COZC) hosted a discussion on Opportunity Zones (OZ) strategies for small businesses to share expert insights on the types of businesses well-positioned to receive OZ investment, how investments support business growth, and strategies for engaging investors.
Speakers:
● Vanessa Huerta, gener8tor
● Matt Strauss, Rise Kit
● Jeff Goldman, Polsinelli
● Robin Schabes, COZC
● Rachel Reilly, Aces & Archers
Webinar Highlights
Operating businesses continue to represent a small share of total OZ investment activity per Novogradac’s ongoing survey of Qualified Opportunity Funds (QOFs). However, business owners have found creative ways to tap into OZ capital to support growth and expansion. In Washington, D.C., City-State Brewing established its own QOF to source small-dollar OZ investments, as opposed to working with a third-party fund manager. Outlook Company in Baltimore, MD, Calypso Continuing Education in Randolph, VT, and Micronic Technologies secured OZ investments from QOFs investing solely in operating businesses (Verte OZ Fund, CORI Innovation Fund, and The Pearl Fund respectively).
There is flexibility in how OZ investments in operating businesses are sourced and structured. Jeff Goldman of Polsinelli provided sample fund structures for businesses establishing their own QOF, as well as the general QOF structure.
Goldman also reviewed the statutory and regulatory requirements that govern whether a business can be a Qualified Opportunity Zone Business (QOZB) and whether an investment in a QOZB qualifies to receive OZ tax benefits. Certain “tests'' can be used to determine eligibility including the:
● 70% Tangible Qualifying Asset Test
● Intangible Property Test
● Gross Income Test
● 5% Non-qualifed Financial Property Test
● Sin Business Test
Vanessa Huerta of gener8tor provided advice for businesses seeking capital from OZ investors, based on her experience running the gBeta Opportunity Zone Capital Accelerator Program in partnership with the Colorado Office of Economic Development & International Trade.
Matt Strauss of RiseKit, a young tech-firm based in Chicago, also shared insights on his experience raising capital from OZ investors and offered advice for similarly-positioned businesses looking to do the same. Strauss underscored the importance of finding a law firm with an OZ practice to guide you through the process. He also provided tips for identifying and pitching investors, creating a pitch deck, and finding office space located within a Qualified Opportunity Zone (QOZ).
Businesses must be located within a QOZ and/or operating within a QOZ in order to receive OZ investment. There are opportunities to support businesses through OZ investments in real estate, such as The Terminal in Chicagoland. Expanding the supply of available office or commercial space provides increased optionality for businesses to locate within QOZs, and potentially receive OZ investment.
10.25.22 Webinar
How to engage investors, funds and foundations
Engaging Investors, Funds and Foundations
Recording & Highlights
Chicagoland Opportunity Zones Consortium kicked-off its new Opportunity Zones (OZ) webinar series on October 25, 2022 with a discussion on the state of the OZ marketplace, an update on proposed policy changes, and insights on how to identify and engage local and national capital providers to support OZ transactions.
Speakers:
● Catherine Lyons, Economic Innovation Group
● Kunal Merchant, Revitate
● William W. Towns, Kellogg School of Management at Northwestern University
● Robin Schabes, COZC
● Rachel Reilly, Aces & Archers
Webinar Highlights
The bipartisan, bicameral OZ legislation introduced in the 117th Congress, the Opportunity Zones Transparency, Extension, and Improvement Act, included proposals to refine the policy, such as:
● Enhanced requirements for reporting and measuring community impact
● Sunsetting Opportunity Zones with high median family income
● Extending the investment deadline
● Allowing for fund-of-fund investments
● OZ designation of certain industrial brownfield tracts
● Creation of a federal fund for state and local community resources
View the Economic Innovation Group’s website for more information including an overview of the bill.
Alternative investment management platform, Revitate, relies on data, reporting, and authentic collaboration with local leaders and project sponsors to achieve its Revitate Impact Opportunity Zone real estate strategy.
Opportunity Funds are actively raising capital from various sources, including: high net worth individuals, family offices, Registered Investment Advisors, and institutional investors. Investors consider multiple factors when contemplating OZ investment opportunities. These range from tax considerations, investment goals and philosophy, whether to play an active or passive role, geographic preferences, and the type of environmental or social impact to achieve.
There are examples of philanthropy supporting high-impact OZ activities, such as initiatives led by Arctaris Impact Investors to engage the Colorado Health Foundation, Richard King Mellon Foundation, and The Erie Community Foundation. In this circumstance, foundations contributed risk-capital alongside private investors for place-based investment initiatives in the communities they serve.
In Philadelphia, a community-based developer, Mosaic Development Partners, has engaged local residents and businesses in OZ deals by utilizing a tech-platform, Small Change, to crowdsource small-dollar equity investments. These investments are not eligible to receive the OZ tax benefits, but will appreciate alongside the OZ investment. This provides a means for local investors to benefit from OZ investments occurring in their community. Learn more.
EIG has repository of OZ resources on its website, including: