Fifth Third Bank to invest $100M in Opportunity Zones

The Cincinnati-based bank will invest in affordable and workforce housing

TRD NATIONAL /
Jan.January 29, 2020 08:00 AM
Fifth Third Bank's Greg D. Carmichael
Fifth Third Bank’s Greg D. Carmichael

In coming months, banks could receive a huge incentive to lend and invest in Opportunity Zones thanks to a change in banking legislation.

Cincinnati-based Fifth Third Bank is already doubling down that this will happen. The bank announced it plans to invest $100 million into real estate projects in low-income urban and rural areas in its 10-state footprint. The announcement marks one of the largest investments in the Opportunity Zones program by a commercial bank.

The federal government plans to give commercial banks credit for issuing loans and investing in low-income communities as part of a larger reform to a 1970s-era law called the Community Reinvestment Act (CRA). This was the first direct regulatory incentive for banks to lend in Opportunity Zones. The investment also comes as the program faces an investigation by the U.S. Treasury Department over the designation of certain U.S. Census tracts.

Fifth Third Bank is partnering with two Chicago area funds and investing $30 million with the Decennial Group and $20 million with Fallbrook Multifamily. It is also partnering with The National Equity Fund, an affiliate of New York-based LISC, and Raymond James.

Fifth Third Bank said the investment will go toward affordable housing, workforce housing, and some non-residential or mixed-use real estate serving a particular community need, as well as projects that contribute to local job and business growth. The projects could also include forming a partnership with a housing authority organization to bring a grocery store to a food desert.

Introduced as part of the Trump administration’s 2017 tax overhaul, Opportunity Zones were designed to spur investment in low-income communities across the U.S. by allowing investors to defer or forgo paying capital gains taxes for investing in designated areas.

In recent months, the program faced intense scrutiny from Congressional Democrats and watchdog groups who have decried the program as a tax break for wealthy developers. A government investigation the program was launched in January at the request of three Democrats. The group said it wants to know whether certain Opportunity Zone designations benefited firms or individuals with ties to political leaders, following reports by ProPublica and the New York Times.

In one example, a 700-acre industrial development in Nevada — part-owned by billionaire financier Michael Milken — became eligible for a tax break after the Treasury Department overrode its own rules to designate the area as an Opportunity Zone.

Investment in Opportunity Zones has surged in recent months thanks in part to the government’s release of its final set of regulations in December.

Close to $2.3 billion was put into Opportunity Zone funds between early December and early January, according to a survey from accounting firm Novogradac, a 51 percent increase over the prior month.


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