We were tied but poised to go on a 20-2 run of pure domination to start the second half. Then COVID killed the power. The game clock kept ticking but game play froze…
If the Opportunity Zone (“OZ”) investment game were like a basketball game, that’s how things felt in early 2020. When COVID hit, player confidence and purpose gave way to fear and apprehension: It can’t stay dark forever can it? Have the rules changed? Today, savvy players are still moving slowly around the dimly-lit floor getting in position for easy baskets once the lights come back. Are you still frozen at half court or are you getting to the hoop for an easy layup? Are you in the game?
Some OZ basics:
What are they? [Think tax–advantaged investment incentives on PEDs]
- Who do they help? [Imagine a barbell with the wealthy and not-so-wealthy]
- How do they work? [Simple concepts, devilish details]
- Where are they? [Every city, just about]
- When are they? [Now, but not forever]
- Why do they exit? [Good question!]
Opportunity Zones were created to encourage (read: entice) the holders of the trillions of dollars of generational wealth to put some of that money to work in the US economy through investment in our nation’s marginalized communities. It offers the potential for great tangible and intangible reward.
COVID has been a disruptor (understatement) and an accelerant. Essentially by definition, OZ communities were struggling pre-COVID. Now and going forward, the need for OZ investment is as critical as ever. The investment risk/reward may now be as compelling as ever.
The next 12 to 24 months may offer a window of time to make an impact.
Help solve the Bay Area affordable housing crisis – build in San Jose. Near Google.
- Build the next SoHo – renovate buildings in gritty neighborhoods
- Create jobs, change lives – invest in new businesses that bring life to these communities
If you have questions about OZ and how they could work for you or vice versa, a good place to start would be with your trusted accounting advisor. Whether OZ will meet your needs is a personal decision based on your financial obligations and goals.
This column will occasionally present Opportunity Zones from various angles with the goal of being informative, easy to read and perhaps inspire the reader to delve deeper. It is not a definitive resource, nor an opinion editorial, nor a promotional platform. If you have any comments or questions, please feel free to contact the writer.