Kansas City-based AltCap offers a compelling option for people who want to invest capital gains into Opportunity Zones but want an experienced project manager to handle it.
AltCap is a community development financial institution dedicated to driving investment into undercapitalized communities and businesses. It has been participating in the New Market Tax Credit program since 2007, investing more than $200 million in areas now designated as Opportunity Zones.
“So we have an ability to identify these projects,” AltCap President Ruben Alonso III said. “We have a pipeline of projects that we constantly are looking at, trying to provide financing. We just think now with Opportunity Zones, it’s just another way for us to bring additional sources of capital to projects.”
Opportunity Zones are a new tax tool that allows people to invest in specially designated economically disadvantaged areas and then reap tax savings on capital gains. The legislation allows investors to reinvest capital gains within an Opportunity Zone and delay realizing that gain until Dec. 31, 2026. If investors leave the money in that project for five years, they will eliminate 10 percent of the liability, and if they leave it there seven years, they can eliminate an additional 5 percent. If they leave the money alone for 10 years, they owe zero capital gains on the Opportunity Zone investment itself.
AltCap is putting the infrastructure together to launch its first Opportunity Zone fund early next year.
“We’ll probably have multiple Opportunity Zone funds,” Alonso said. “We’ll start off with one fund, maybe working with one project or investor. We’ll expand from there, becoming flexible enough to accommodate whatever type of investment people have in mind. Are they purely looking for a tax-advantaged investment, or are they looking for a significant return? We’ll provide a range of options in terms of what they want to get out of their investment.”
Alonso said the initial focus will be on real estate investments because they’re an easy target. AltCap also has the experience and resources to leverage other sources of tax credits to really make investments attractive.
AltCap’s goal will be to focus on projects that will have a profound positive impact on communities, create jobs, remove blight and stimulate additional investment in undercapitalized areas.
“People can go create their own opportunity funds, but do you really want to manage those funds and be involved in all that?” Alonso said. “We’ve been doing this for years. We already have this as a mission. We’ve got experience putting together $200 million worth of projects like this since 2008 by using New Market Tax Credits. All our New Market Tax Credit investments have essentially been in Opportunity Zones.”
Originally Published on December 18, 2018 at 04:26PM
Article published originally via “opportunity zone” – Google News https://www.bizjournals.com/kansascity/news/2018/12/18/altcap-opportunity-zone-ruben-alonso.html