The frenzy is creating a bit of a Wild West mentality that has some raising concerns about the potential dark side to Opportunity Zones.
“I’m telling clients to hold onto their property, because in one year the prices are going to double, because all of these private equity funds that are being formed to acquire property in Opportunity Zones [are] only going to accelerate,” says Schuyler M. Moore, a partner at Greenberg Glusker Fields Claman & Machtinger LLP in Los Angeles. Opportunity Zones are a boondoggle tax subsidy for the rich and an absolute disaster for the poor, he adds.
The basic premise behind the Opportunity Zones initiative was to offer incentives in the form of deferred and reduced taxes on capital gains to attract private capital for investment into qualifying low-income areas of the country. Virtua Partners supports creating an Opportunity Zone Impact Policy group that will be charged with identifying a set of standards that can be applied to Opportunity Zone projects so communities and investors can evaluate the social impact of the capital poured into such initiatives.
Opportunity Zones will also keep communities on their toes to guide that investment. Among the 8,700 designed Opportunity Zones around the country, Van Keuren sees a valid case for real estate development in less than 100 of those zones.