Opportunity Zones Conference Brings Excitement, Anticipation
The inaugural Novogradac Opportunity Zones Conference was in The Big Easy–and while the opportunity zones (OZ) incentive is potentially big, it’s not easy.
At least not yet, for the 1,000-plus attendees who came to New Orleans in early October.
The initial OZ conference was educational and groundbreaking, with presentations on the basics of the OZ incentive, the tax and legal obstacles of the incentive, pairing the OZ incentive with various tax credits and more. It was two days of connections, learning and asking questions.
With attendees waiting for the Internal Revenue Service to issue long-awaited guidance on the incentive, there was uncertainty–although Daniel Kowalski, counselor to the Treasury secretary, told the conference that the initial guidance would come out in October and that a second tranche may come out before the end of the year.
Despite the uncertainty, there was plenty of optimism that the OZ incentive can help channel significant equity into low-income communities.
Image: Courtesy of Novogradac & Company LLP
The Novogradac 2018 Opportunity Zones Conference in New Orleans drew more than 1,000 attendees interested in the latest community development investment incentive.
One attendee was Andrea Papanastassiou, deputy director of consulting, real estate program, for Community Loan Fund–a Community Development Financial Institution, community development entity and consultant in the San Francisco Bay Area.
“We’re here to figure out how we can best use this tool for our clients,” Papanastassiou said. “Can you mix it with new markets tax credits [NMTCs]? Can you do some historic tax credit [HTC] work with it? We’re really trying to figure out how it works for communities facilities or social enterprises, maybe some potential small-scale residential multifamily. We want to know how we can use this as a tool, whether it can be used as a preservation tool.”
The questions from Papanastassiou weren’t universal, but they were representative of those from attendees who hoped to make contacts and learn early best practices in the first major federal community development tax incentive since the NMTC was launched in 2000.
The depth of understanding of the incentive was varied.
There were experts such as John Lettieri of the Economic Innovation Group and Steve Glickman of Develop LLC–two of the “fathers” of the incentive, who shared their experiences and expectations with the group during one of the first-day panels.
There were also plenty of attendees whose interest was new or whose focus was singular.
At that end of the OZ depth-of-understanding continuum was Craig Maraschky, executive director of the Housing Authority of the City of Aurora in Colorado. He was at the conference because of a specific plot of land.
“We have a 2.5-acre parcel of land in an opportunity zone,” Maraschky said. “We want to know if there is any ‘there’ there. We do some [low-income housing tax credit] LIHTC properties and the big question is whether this works for us.”
Maraschky came to New Orleans on a learning mission.
“My understanding is very basic,” Maraschky said. “The basics panel was really helpful, even though several of the speakers went in depth. We’re aware that it took a number of years for the LIHTC to mature, but there’s a 10-year time clock on this.”
The pairing of the OZ incentive with other tax credits was significant to many attendees. With little history to guide them, people like Maraschky are treading lightly.
“I think [people in housing authorities] are curious,” Maraschky said. “We know with LIHTCs that we look to the [state] housing financing agency for guidance. The qualified application plan for the state is the bible [for LIHTC development], but in [the OZ incentive], so much is unknown.”
The conference panel on twinning the OZ incentive with various tax credits was helpful, as attendees learned that the incentive is potentially a good pairing with the HTC (Merrill Hoopengardner of National Trust Community Investment Corporation said that 46 percent of Part 3-approved projects in 2017 were in OZs) and with many 9 percent LIHTC developments (but not most acquisition-rehabilitation developments). NMTC pairings are more complex, but possible.
Papanastassiou predicted that the best use of the OZ incentive will be to fill the gaps for developments in struggling communities that need a final push.
“That’s the hope,” Papanastassiou said. “We don’t know what it will work for and what the expected return will be.”
The conference was the largest in Novogradac history: more than 1,000 attendees in New Orleans and hundreds more watching via live streaming.
During the conference, the firm announced that two OZ conferences are scheduled in 2019: one in April, one in October. Conference locations and details will be posted at www.novoco.com/events.
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