I recently attended the 2019 Opportunity Zone Expo in Los Angeles. This sold out event was billed as the largest gathering of experts in the country on the subject of investment in an “opportunity zone (OZ),” using a “qualified opportunity fund (QOZ).”
It was held in the ballrooms at the LA LIVE - JW Marriott Hotel in downtown. Keynote speakers included California Secretary of State Fiona Ma, U.S. Congressman Alex Mooney, Former Nevada Attorney General Adam Laxalt, and former U.S. Congressman Keith Rothfus. The Expo was opened with an enthusiastic videotaped welcome by Los Angeles Mayor Eric Garcetti.
Event panels and breakout sessions had names like Capitalizing on opportunities: financing, sourcing and investors; Following your money: Choosing the best investment and protecting your capital; When to head out: understanding your fund and exit strategies; and Right place, right zone: identifying promising zones and why.
The 1,000+ attendees overflowed the well-appointed facility. Each panel was standing room only, filled with a sea of mostly male participants talking about deal flow, rates of return, whether partnerships or C Corps were the best investment structure, and so on. And on the dais of each session sat developers, fund managers, investment bankers, financial advisors, tax accountants, and incisively articulate, high-priced Washington DC lawyers, comparing bragging rights about their assets under management (from the low hundreds of millions to the tens of billions) available for office, commercial, retail, hotel, resort, industrial, and high density luxury housing development.
You know, just regular folks.
I jest, but make no mistake about it these were some very smart people. And they are precisely the people you want to have sitting around the table with you, figuring out how to address affordable housing needs, environmental protection and social justice – and how to make money doing it. These are the people who are really good at figuring that out. The only problem is if we let the unbridled pursuit of profits be their only guide, we end up with results that throw everything else under the bus.
There was no doubt that the OZ Tax Code is a game changer that could supercharge investment in real estate. But at the end of the day it became equally clear that this would probably be just another case of the rich getting richer.
Don't get me wrong. I have nothing against anyone getting rich. In fact, I'm absolutely all for it, especially if they get rich doing right by others. But if they're getting rich as the result of a gift from the government (taxpayers), then there have to be commensurate public benefits. Otherwise, it always ends up leaving the rest of us holding the bag.
So what are opportunity zones and qualified opportunity funds, and why should you care?
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