"We currently have enough examples to show that opportunity zones support projects that either didn't materialize or took a long time to move forward," said Seigel. "We also learned that if we do nothing, we will not achieve the results that are important to us."
In Baltimore's southeastern Greektown neighborhood, MCB Real Estate has replaced an abandoned paint factory with a $ 77 million mall. The project is the first phase of the $ 200 million mixed-use Yard 56 development, which includes a grocery store, gym, restaurants and other businesses. In a second construction phase, which is due to begin soon, more retail stores, doctors' offices and apartments will be added.
Mr. Bramble had worked on Yard 56 for years but was struggling to find the funding he needed. When added to an opportunity zone, MCB was able to raise capital from a Prudential Financial fund, which helped round out a financial package that included federal and state tax credits, private investors and conventional debt.
"Any real estate deal is difficult, but doing business in underserved neighborhoods is even more difficult – they usually require multiple levels of funding and incentive, and it takes time to put them together," said Bramble, who is working on another area development opportunity in West Baltimore. "The ability to bring Opportunity Zone capital to a project is a great tool included in the toolbox."
Industry observers expect the legislature to further optimize the rules for opportunity zones in order not only to create transparency, but also to strengthen the role of a community in the projects. And the zones could play a vital role in economic recovery, it said.
This is especially true when investment in companies increases. Those deals had been delayed by the pandemic and slow rule writing by the Treasury Department, but they offer much greater cash out potential than real estate investments, Christian said.
"One third of my opportunity zone business is operational," said Christian, who is building an opportunity zone fund to finance the expansion of a manufacturing company he co-owns that converts shipping containers into homes for the homeless and low-income earners. "They are currently accelerating faster than real estate projects."