Opportunity
Zones for Social
Impact and
Community
Benefit
Webinar
June 28, 2019

 Represent over 250,000 businesses in 40 states.
 Over 130 direct member businesses.
 Over 80 association members.
 Wide range of sustainability issues
 Advocate at federal level and in state capitals.
 Place Op-eds and Policy Statements in media.
 Have Biz leaders be spokes to media on issues.
 Bring Biz leaders to DC to testify & lobby Congress &
Administration.
ASBC’s Reach & Capabilities
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 States select OZs from their underdeveloped census tracts. Treasury must approve.
 OZs are designed to drive development and job creation in these poor communities.
 To encourage development, the TCJA cuts capital gains taxes on OZ investments
 TCJA creates Qualified Opportunity Funds (QOFs) to manage all OZ investments.
 Problem: OZs favor investments in real estate, not jobs and sustainable
development.
 Communities must require QOFs to assess, identify, and commit to meeting their
needs.
Opportunity Zones: Created by the 2017
Tax Cuts & Jobs Act (TCJA)
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 Ensure Community Engagement, from governments, NGOs, developers, etc.
 Ensure Equitable Benefits. OZs must meet community needs for jobs, housing, etc.
 Sustainable Practices. Manage an OZ’s broad impacts―livable wages to green
spaces.
 Ensure Transparency. QOFs must set metrics for their goals, report progress
publicly.
 Measure Outcomes. Know what you want. Define wealth. Develop scorecards.
For OZs to Succeed, Communities Must
Act On Five Core Principles.
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ECONOMIC INNOVATION GROUP / Washington, DC
Empowering Entrepreneurs and Investors to Forge a More Dynamic U.S. Economy
Rachel Reilly
Director of Impact Strategy
email: rachel@eig.org
twitter: @Rachel__Reilly

● Second Round of Proposed Regulations
○ Comments due July 1, Hearing scheduled for July 9
○ EIG synopsis for more information here
● RFI on Data Collection
● RFI from US Dept of Housing & Urban Development
● White House Opportunity and Revitalization Council Implementation Plan
○ Scott Turner named Executive Director, kicks off listening tour
○ White House Opportunity Conference
○ 100 actions taken thus far to align federal resources with Opportunity Zones
● Legislation introduced to reinstate reporting requirements and expand transparency
● Discussion of additional legislative fixes
Effective Implementation, Alignment, and Transparency

● Second Round of Proposed Regulations
○ Comments due July 1, Hearing scheduled for July 9
○ EIG synopsis for more information here
● RFI on Data Collection
● RFI from US Dept of Housing & Urban Development
● White House Opportunity and Revitalization Council Implementation Plan
○ Scott Turner named Executive Director, kicks off listening tour
○ White House Opportunity Conference
○ 100 actions taken thus far to align federal resources with Opportunity Zones
● Legislation introduced to reinstate reporting requirements and expand transparency
● Discussion of additional legislative fixes
Effective Implementation, Alignment, and Transparency

● Second Round of Proposed Regulations
○ Comments due July 1, Hearing scheduled for July 9
○ EIG synopsis for more information here
● RFI on Data Collection
● RFI from US Dept of Housing & Urban Development
● White House Opportunity and Revitalization Council Implementation Plan
○ Scott Turner named Executive Director, kicks off listening tour
○ White House Opportunity Conference
○ 100 actions taken thus far to align federal resources with Opportunity Zones
● Legislation introduced to reinstate reporting requirements and expand transparency
● Discussion of additional legislative fixes
Effective Implementation, Alignment, and Transparency

The success of this policy starts with a regulatory framework that facilitates investment into new and
growing operating businesses and improves the built environment in Opportunity Zones.
The second round of proposed rules addresses many key gating issues and provides clarity needed
for investors and fund managers to deploy capital.
Most notably the second round of proposed regulations:
● Provides clarity to investors on the timing requirements for capital deployment, reinvestment,
and exits
● Issues guidance on the applications of tests outlined in the statute for leased property
● Defines key terms such as original use, substantially all, and substantial improvement
● Provides additional flexibility for the working capital safe harbor and 50% gross income test
Takeaways: Second Round of Proposed Rules

The success of this policy starts with a regulatory framework that facilitates investment into new and
growing operating businesses and improves the built environment in Opportunity Zones.
The second round of proposed rules addresses many key gating issues and provides clarity needed
for investors and fund managers to deploy capital.
Most notably the second round of proposed regulations:
● Provides clarity to investors on the timing requirements for capital deployment, reinvestment,
and exits
● Issues guidance on the applications of tests outlined in the statute for leased property
● Defines key terms such as original use, substantially all, and substantial improvement
● Provides additional flexibility for the working capital safe harbor and 50% gross income test
Takeaways: Second Round of Proposed Rules

130+ Opportunity Funds raising $29 billion
Novogradac’s OZ Fund Listing and
National Council of State Housing Agencies’
OZ Directory
• 130+ funds seeking over $29 billion
Raises range from $800,000 - $3 billion
Specialized funds are forming:
• Rural CO Opportunity Fund
• Emergent Communities Fund
• HBCU Opportunity Fund
• Teacher’s Village Fund
States are creating platforms -“investor
exchanges” - to share information about
investment opportunities.
Cities are creating Opportunity Zone
investment prospectus documents.

Select Policies, Initiatives, and Impact Investments

Select Policies, Initiatives, and Impact Investments

Presented by
Valerie Red-Horse Mohl
June 28, 2019
Opportunity Zones with an
Impact Investing Lens:
Impact Led, Businesses,
and Financial Structuring

WHO WE ARE:
Investors’ Circle
& Social Venture
Network
2018 Merger
Social Venture Circle (SVC) is a membership network
that equips entrepreneurs, impact investors, and
capacity-builders with connections, money and
expertise in order to build businesses that drive the
NEXT economy: one that is regenerative, equitable and
prosperous for all.
Now in our fourth decade, Social Venture Circle was
founded by the originators and luminaries of socially
conscious businesses. The network continues to attract
and empower the leaders, enterprises and institutions
of a new economy that galvanize the business world to
create social, economic, and environmental change.

SVC- Impact Businesses and Opportunity Zones
● IRS Guidance light on impact guidelines (assumed all would
be impactful)
● US Impact Investing Alliance and SVC believe businesses are
more essential (than straight real estate) for local economic
development and social impact
● Restrictions from IRS (if within OZs borders) - basically no
toxic waste, no massage parlors
● SVC urges investors to utilize best practices around these
investments

SVC- Impact Businesses and Opportunity Zones
We believe must implement long term outcome metrics using
5 core principles:
1. Community Engagement (actual partners)
2. Equitable benefit (leverage other local programs,
responsible exits)
3. Transparency
4. Measurement (against key impact objectives)
5. Outcomes (track for real change)

OZs - Financial Structuring Considerations
● Opportunity Zone investments all equity
● Carefully consider and source remainder of
capital
● 10 year time horizon needs to be discussed
(exits)
● Owner purchase as a possible exit strategy

OZs - Financial Structuring Considerations
Val’s background-One Case Study
INTEGRATED CAPITAL!
Five Sources of Capital:
1) Traditional Equity
2) Tax Exempt Loan via Special Allocation from IRS
3) Tax Exempt Bonds
4) USDA Guaranteed Loan
5) New Market Tax Credits
______________________________________
● On the debt - saved 500 basis points in annual interest: 12% - to 7%
● Interacted with 7 Government Agencies and/or Municipalities
● Financing Businesses within Opportunity Zones will have similar structures and
we should embrace integrated capital!

OZs - Connect!
● Opportunity Zones Financing - not a DIY
strategy
● Connect with Impact and Mission-Aligned
Team Members
● National and Local
● Attornies, Accountants, Investment Bankers,
Fund Managers
● Websites State-By-State

Thank you
www.svcimpact.org
Val Red-Horse Mohl
valerie@svcimpact.org
Executive Director

INTERSECTION
The convergence of large
investment pools of capital with
economic development and city
building will require a new way of
thinking about neighborhood
economics based on community
wealth strategies
Traditional real estate developers
will need to align with hyperlocal
operators, and better understand
impact as a result of this new
intersectionality of inputs in
current real estate climate
Q’Oz’s enable the hyper local
market small businesses and
investors to intersect with a
traditional real estate investment
• QOZs
•Transformations in retail & SMEs
•Social Equity (empowering local operators to build long-term business models
•Funding Sources (Failure of traditional financing to meet community challenges

“ A Billionaire Ended Up Winning Big. “
An analysis by Zillow found that sale price gains in opportunity zones significantly outpaced gains in eligible
tracts that weren’t selected. Real Capital Analytics found that sales of developable sites in the zones rose
24% in the year after the law passed. (ProPublica 06.19.2019)
Cindy Ord/Getty Images North America

PROXIMITY
Most QOZs are not equal opportunities.
○ Most economically desirable zones have the highest risk of community displacement
○ Desirable zones inherit the features of a sound traditional real estate development
○ Have the best opportunity for market based returns(10 year cycle) and impact
We can aim to capture “impact value” by creating “Buffer Zones” to develop better strategies
for community wealth and social equity
PROXIMITY

CREATIVE PLACEMAKING
How are QOZs able to actually harness economic value from culture, community and public
art?
○ Longer-term value creation through alternative financing and civic-driven design process
○ Focus on affordable commercial development, not just affordable housing!

DESIGN COMMUNITY EQUITY
● Every development had a sub developer partner from
the neighborhood?
● Municipal policy required (x)% of QOZ investment had
a benchmark of local business and local capital?
■ Projects go through a fast track process
for city incentives(TIF) and building
permits?
■ Project are immediately eligible for City
and State grants?
● Micro-neighborhoods are the true catalysts for
innovation in the economic development of cities?
WHAT IF ???? …

PARTNERSHIP

Return to community investment
The greatest creation of city wealth in America was through community
banking and local syndication
(Chris Knapp, Collaboration Capital)

TIME HORIZON
Draft policy & submit to 3 cities: Chicago, Houston, and New York end of Summer 2019
● How soon should we implement these strategies?
○ Immediately - there are time limits on QOZ investments
● Exit strategy
○ Wait 10 years to receive full tax benefits(stabilize local communities)

WORKING FRAMEWORK
● Sharing Best Practices with other neighborhoods
● Aligning goals with leadership
● Increase Impact driven investments in QOZs
● Evolution to the new market and collaborative effort
● Buffer zone initiative in cities
● Showing developers and investors that this is the future
of connected cities

P3 MARKETS CASE STUDY:
BRONZEVILLE CHICAGO
Snapshot of project
● Transit- Oriented development in “transit
dessert”
● National brand(Choice Hotel)focused on
investing in African-American owner/operators
● Culturally relevant design in a historical area
● Large developer partnering with minority
developer
● Hyper-Local businesses signed 13 LOI’s
● 50% Affordable Housing Units
● City Grant Funds, and TIF earmarked for
project
● Choice hotels will match a % of grants
discount hotel fees

NEXTSEED CASE STUDY: THE PLANT
Snapshot of project
● Commitment to workforce training partners
● Hyper-local businesses with permanent
address in same zip code as Plant
● NextSeed partnership
● A block as a gateway to a corridor, and
bridge connecting neighborhoods, “Complete
Community”
● Located in a food and retail dessert
● Interconnected eco-system of neighborhood
businesses working together to foster
incubation
● P3 partnership with City on Complete Street,
Transit-oriented development

While a potentially massively impactful community economic &
revitalization tool, the Opportunity Zone program has obstacles
• Lagging Opportunity Zone energy and knowledge in the communities themselves
• Outside of large, urban-centric real estate pipeline, shovel-ready project demand is not prepared for Opportunity Zone capital
inflow
• Investors & business interests lack technical Opportunity Zone legal and tax expertise
• Rural Opportunity Zone tracts and non-real estate businesses getting relatively minimal attention
• Primary focus on financial returns rather than also community revitalization and wealth generation
• Established connections between community business interests and investors largely do not exist in the Opportunity Zones
• Unclear how to gather and combine additional Federal, State, and local incentives
Key Challenges

Virginia is addressing these challenges with the creation of an
Opportunity Zone Market
The case for the Opportunity Zone Market:
The Opportunity Zone program enables the goals outlined in the
Comprehensive Economic Development Policy for the Commonwealth.
As an equity-based program, stakeholders are rewarded for investing in
and maximizing Virginia’s assets. The program is flexible enough to
grow existing and new businesses across a range of industry. With
proper oversight and facilitation, the program offers access to economic
opportunity for citizens in traditionally underserved communities. Last,
the program can be matched with Federal, Commonwealth, and local
incentives to maximize the benefits for investors, communities and low-
income individuals.
Many States around the country have rallied around the Opportunity
Zone initiative, but there is no prescribed leadership model for success.
Like Virginia, many states have taken point by convening stakeholders,
educating the community, and attracting investors. However, there is a
unique opportunity for Virginia to be a beacon for the rest of the nation on
two fronts: 1) building a market-place for stakeholders to learn & engage,
to share project ideas & pipeline, and to link investors with business; and
2) making inclusive and equitable economic growth a priority alongside
the market-driven capital flows.

The Virginia Opportunity Zone Market is founded on equitable and
inclusive values
1. Encourage and enable positive community impact investments in conjunction with financial returns
2. Ensure fair and equitable access to Opportunity Zone resources, support, and guidance for all localities
and interests
3. Attract and match national capital and businesses with easily accessible and current information
4. Empower local business, government, and community leaders to take point in the Opportunity Zones
5. Leverage the full suite of Federal, Commonwealth, and local government programs & incentives in
partnership with philanthropic and non-profit institutions
6. Operated by a neutral and independent third party to manage and facilitate the inclusive market-place
with full transparency on process and participants
7. Seed the effort with one-time funding and become a self-sufficient operation over time
8. Track and measure socio-economic impact in Opportunity Zone communities
Guiding Principles

The Virginia Opportunity Zone Market will have three key features
Ongoing outreach and proactive
information sharing to local government,
community interests, businesses and
investors
Large national convening in Virginia to
build network of investors focused on
inclusive model, with Virginia seeking to
share best practices of inclusive
opportunity zone marketplace
Periodic convenings across state to
generate energy, educate, and help
build working relationships between
stakeholders
Tools and investment resources for local
community, business and economic
development leaders to encourage and
drive funding to Opportunity Zone
projects
Identification of community impact
investments and steering to additional
non-profit, philanthropic, and technical
assistance resources
Connections to Federal,
Commonwealth, local incentives and
complimentary programs
Inventorying of project pipeline and
investors with parameters to help
matching
Online place for stakeholders to learn,
interact and engage with projects
Tracking and reporting on Opportunity
Zone impact & trends to inform
additional market-making activities
Capital Attraction Pipeline Development Clearinghouse

Questions?
Outside Advocacy Techniques
asbcouncil.org/webinars

Outside Advocacy Techniques
asbcouncil.org/webinars
John O'Neill, Senior Tax Policy Analyst, ASBC: joneill@asbcouncil.org
Rachel Reilly, Director of Impact Strategy, Economic Innovation Group (EIG): rachel@eig.org
Val Red-Horse Mohl, Executive Director, Social Venture Circle: valerie@svcimpact.org
Juan Saldana III, Managing Principal, P3 Markets: j@p3markets.com
Adam Northrup, Financial Strategist, LOCUS: adam@locusimpactinvesting.org
Ali-Reza "A.R." Vahabzadeh, Vice President of Memberships & Chief of Staff to CEO, ASBC:
arv@asbcouncil.org