By Rachel Reilly
On March 30th, the Economic Innovation Group (EIG) hosted a webinar to discuss strategies for partnering with local governments, community groups, and nonprofit organizations in order to achieve a financial and social return on Opportunity Zones (OZ) investments. Guest speakers made the business case for engaging local leaders in OZ transactions, and provided examples of how OZ financing is being leveraged to build local wealth, help reduce recidivism, develop affordable homes, expand office space for non-profit organizations and government agencies, deliver neighborhood-serving retail, and more.
View presentation slides, a recording of the webinar, and EIG’s key takeaways for more information.
Key Takeaways
At the beginning of the webinar, Catherine Lyons from EIG announced the publication of two new Opportunity Zones Investment Profiles, including the San Bernardino Medical Center and The Phoenix Community. The Opportunity Fund managers that led these transactions provided more information about the projects during the webinar.
Rachel Reilly from Aces & Archers then framed the conversation by noting that the featured projects and initiatives served as models for addressing frequently cited concerns about development, asset building, and long-term ownership. Reilly said that these transactions provided replicable models for responsible exits, community investment programs, and public-private partnerships, and noted that a common thread was the engagement of Community Development Financial Institutions (CDFIs).
Leslie Smallwood-Lewis from Mosaic Development Partners (Mosaic) provided an overview of the Sharswood Ridge project in Philadelphia, PA.
- Mosaic is a minority-led real estate developer committed to sustainable development that creates positive change, and engages women and minority owned businesses during construction, leasing and operations.
- Sharswood Ridge is a 200,000 square foot mixed-use development located in a severely distressed USDA-designated Food Desert adjacent to the Philadelphia Housing Authority headquarters. Twenty of the 98 mixed-income apartments will be reserved for extremely low-income residents through Project-Based Vouchers issued by the Housing Authority. Mosaic has secured and is targeting commercial tenants that meet the needs of OZ residents, including a grocery store, urgent care provider, bank branch, and restaurant.
- Mosaic worked with crowdfunding platform Small Change to establish a side-car fund for local residents interested in making small dollar equity investments in the projects. While these investments are not eligible for the OZ benefit, it offers an opportunity for residents to earn a return as the asset appreciates.
Lisa Bhathal Merage shared information about the San Bernardino Medical Center in San Bernardino, CA.
- An Opportunity Zone FUSE Fellow worked with the local government to elevate this project as an eligible OZ investment. After being passed over by other equity investors, RevOZ Capital (RevOZ) was attracted to the opportunity to invest OZ capital and create a positive impact for the community while also delivering attractive returns to investors.
- RevOZ partnered with a local developer to finance and deliver a new office building, which San Bernardino County pre-leased for 15 years. The County’s Juvenile Justice Program (JJP) will relocate to the building once it is complete in 2021, and the additional space will allow the JJP to add up to ten staff members to their team.
- Through this public-private partnership, the County was able to defer upfront capital expenditures for a new office building. For more information, view the Investment Profile.
- In 2021, RevOZ launched a Social Impact Initiative to deploy additional OZ capital alongside local partners and fully integrate social impact and measurement into its investment strategy.
Graham Allison from Opportunity Zone Development Group (OZDG) provided an overview of The Phoenix Center in Columbus, OH.
- The Phoenix Community is a mixed-use project with housing and supportive services offered to formerly incarcerated individuals in an effort to reduce recidivism. For more information, view the Investment Profile.
- The first floor will be dedicated office space for Nothing Into Something Real Estate, Inc (NISRE), a faith-based nonprofit organization that partnered with OZDG to develop The Phoenix Community. The remainder of the building is a 50-bed residence that provides an affordable place to live following incarceration.
- NISRE has a contract with the State of Ohio to operate restorative, supportive housing programs such as this and will lease the property for 15 years at a predetermined rate. Once OZDG exits the investment in year-10, NISRE has first right of refusal to purchase the property.
Donna Gambrell from Appalachian Community Capital shared an overview of the organization’s OZ capacity building initiative, Opportunity Appalachia, which operates in collaboration with local and national partners in West Virginia, southeast Ohio, and southwest Virginia.
- A $1 million grant from the Appalachian Regional Commission was used to provide technical assistance (TA) to 16 project sponsors in the Opportunity Appalachia footprint. The TA is being used to get projects ready to receive OZ investment.
- Through this work, Opportunity Appalachia aims to create more than 1,800 jobs and attract $235 million in financing to develop manufacturing facilities, agricultural facilities, and hotels, as well as support downtown development, retail enterprises, tech businesses, and broadband deployment.
- In February 2021, Opportunity Appalachia held an Investor Symposium where project sponsors pitched investors. TA-recipient Micronic Technologies has already received OZ financing, and a number of other recipients were approached by investors following the symposium.
For more information and to see current OZ activities, visit EIG’s Opportunity Zones page and OZ Activity Map.
