Opportunity Zone Magazine Volume 1, Issue 3 | Page 29

SCALING OPPORTUNITY ZONE INVESTMENTS
29
INTERMEDIATE STAGE 2020-2022: SCALING UP OZ
INVESTMENTS
As we move from early to intermediate stage OZ investments,
investors will rely on municipalities moving conceptual,
larger scale projects to investment ready status to generate a
pipeline of investable assets. The most compelling projects
will combine three elements to optimize potential OZ deal
offerings: 1) identify specific investment strategies related
to the targeted projects; 2) commit to completing predevelopment
activities that either support targeted projects
such as infrastructure improvements and/ or build capacity to
complete transactions such as technical assistance and training
and; 3) clearly outline incentives in exchange for municipal
deal requirements. The financial calculus that makes a project
“fundable” will usually require some incentive in addition to
the opportunity zone benefit.
Cities hoping to attract
OZ capital will need to
create a plan to secure predevelopment
funding activity
from county, state, federal
and/or philanthropic sources.
Cities hoping to attract OZ capital will need to create a plan
to secure pre-development funding activity from county, state,
federal and/or philanthropic sources. Despite a municipality’s
limited funding ability, many pre-development activities have
a double benefit. First, this form of public investment can
serve as an OZ investment in and of itself as long as it has an
associated revenue source such as a fee, toll or public lease.
Secondly, the pre-development project can serve as a catalyst
that encourages follow on investments.
LATE STAGE OZ INVESTMENTS: COMMUNITY SCALE
INVESTING
As the industry moves to the third and late OZ investment
phase, cities will need to develop a holistic operating
investment strategy. Operating investments favor smaller scale,
community level investments. There are a series of possible
operating investments to both encourage new venture business
as well as to provide expansion capital for existing business
that can be pursued. Many of these operating investments will
also include real estate components that will provide investors
the best of both worlds – the stability of real estate assets with
the unlimited upside of the operating investment. A robust
strategy to attract operating investments can provide a boost to
local entrepreneurship and job creation. The most successful
strategies will contemplate an exit strategy at the outset.
Scale matters. Right now, single asset projects reign king or
queen as they are most likely to be “investment ready,” but
cities must begin planning to create a pipeline of projects
at a larger, master planned scale now to be ready for future
OZ investments. At the same time, municipalities need to
aggressively pursue smaller, community scale projects that
more immediate address local needs and demonstrate the
tangible benefits of the OZ legislation.
Bo Kemp partners with a national network of advisors, advocates,
government and business leaders to help drive growth, tackle
major initiatives and boost efficiency in municipalities. Highly
experienced in the structuring and execution of public-private
partnerships, Kemp drives innovation in municipal utilities, public
infrastructure and economic development for legacy cities. Kemp
previously worked with Senator Cory Booker who co-sponsored
the Opportunity Zone bill. Kemp currently works with the city
of New Orleans, the southeast Louisiana regional economic
development organization and the Tampa Innovation Partnership
among others to develop and implement comprehensive
Opportunity Zone plans.
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