Affiliated Development will use Opportunity Zone funding for Fort Lauderdale apartments

The Fort Lauderdale developer plans to deploy up to $13M in capital by the end of the year

Nov.November 09, 2018 04:30 PM

Jeff Burns and SIX13

UPDATED Nov. 9, 5 p.m.: Fort Lauderdale-based Affiliated Development is already planning to start deploying capital for an Opportunity Zone project by the end of the year, as real estate developers across the country scout sites where they can take advantage of the new federal program.

The program gives developers a huge tax advantage for building in Opportunity Zones. Yet few have actually taken action and deployed capital in the projects, since there is still much uncertainty over the program’s exact rules and guidelines.

Affiliated Development, which has a total of 2 million square feet under development, is in the process of setting up Opportunity Funds for its SIX13 project, Burns said. The company could use up to $13 million raised in such funds for its 142-unit workforce apartment complex at 613 Northwest 3rd Avenue near Fort Lauderdale’s Flagler Village, he said. The funding could represent nearly one-third of the total project costs of $41 million.

Opportunity Zones are part of President Trump’s tax plan, designed to encourage investment in low-income areas across the country.

Investors can qualify by building new projects or substantially rehabilitating existing properties in 8,700 designated zones. Last month, the first set of regulations were released from the IRS and the U.S. Treasury Department, prompting renewed interest from developers and investors.

Right off of Flagler Street, SIX13’s site falls into an Opportunity Zone. So does the site of the up-and-coming neighborhood of FATVillage. “The reason that it worked out is because we are a shovel-ready site that is economically feasible,” said Burns, who declined to disclose his investors.

Jaime Sturgis, CEO of Native Realty, said he’s received a lot of interest from investors in the Flagler Village neighborhood and other nearby areas. “Those are established neighborhoods, and this was just kind of icing on the cake,” Sturgis said.

Under the Opportunity Zones guidelines, investors have a limited time to start investing in projects to get the full tax advantage. Due to the short window, investors are feverishly looking for sites such as Affiliated Development’s so they can deploy money quickly and qualify for the incentives.

Burns also said he is also looking to use Opportunity Zones funds for future projects he is working on, but could not disclose.

In South Florida, other developers such as Richard LeFrak, Avra Jain, Jackie Soffer, and Michael Stern have said they are analyzing Opportunity Zones and are looking at ways to utilize them for projects in the region.

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