Some Opportunity Zone funds — like one from Kushner brothers-backed Cadre — target gentrified areas

The federal tax incentive program was intended to pour money into distressed neighborhoods, but investors are narrowing their focus

Cadre CEO Ryan Williams (Credit: Getty Images and iStock)
Cadre CEO Ryan Williams (Credit: Getty Images and iStock)

The Opportunity Zones program was crafted as a way to incentivize developers to invest in distressed areas. But recent funds set up by Kushner brothers-backed Cadre and other firms show that money could be heading to already gentrified neighborhoods.

Cadre, the real estate crowdfunding platform partially owned by Jared and Josh Kushner, told prospective investors it will only target a small portion of the zones in certain cities, according to the Associated Press.

The company said it is eyeing places in Los Angeles, Seattle and Miami where populations and incomes are expected to rise faster than the national average.

The fund’s strategy appears to run counter to the purpose of the federal program, which was put forward as part of President Trump’s tax overhaul late last year. The initiative was designed as a way to encourage investment in towns and cities throughout the country that have been overlooked by investors.

Last month, Cadre announced the Opportunity Zone fund, and in a tweet, CEO Ryan Williams said it would serve as an chance for investors to deploy funds into “under-served markets throughout the U.S.”

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The firm told the AP that areas it will seek to invest in may be primed for growth in the future, but still register low income levels and are “capital deprived.”

The more than 8,700 Opportunity Zones across the country have an average 32 percent poverty rate, according to the AP. But these zones also include “contiguous” tracts that are sometimes not actually low-income areas. Some of the Opportunity Zones possess large corporate tenants and wealthy households.

For example, the New York City property where Amazon will build one of its two new headquarters, in Long Island City, Queens, is in an Opportunity Zone. The median household income there is more than $130,000, the AP reported.

Critics of the program say it could simply serve as a giant tax break for wealthy developers who were already planning to be develop in some of the thousands of Opportunity Zones.

Last week, President Trump’s former communications director Anthony Scaramucci — a partner at SkyBridge Capital — announced plans with EJF Capital to raise up to $3 billion for Opportunity Zones projects. On a conference call, Scaramucci mentioned the funds plans to invest in a warehouse project in a “fully gentrifying” part of Oakland, California. [AP]  — Keith Larsen