Presidential election may turn spotlight back to Opportunity Zones

Coronavirus has affected investment in federal tax break program for developers, but government has been flexible, TRD Talks panel said

November’s presidential election may turn the spotlight back on the Opportunity Zone program, which has faded from view after the initial rush to invest capital into properties and projects ahead of a key deadline late last year.

And Steve Glickman, the former Obama administration adviser who helped map out the federal tax break program, thinks Opportunity Zones has become so highly politicised that people must wait before judging its effectiveness.

“It is a program that Donald Trump is using in his presidential reelection,” said Glickman, speaking Monday during the latest installment of the The Real Deal’s “TRD Talks” webinar series. Glickman, who now leads the Opportunity Zone advisory firm Develop LLC, said there are news “outlets and politicians who see that as a reason to oppose it regardless of what happens with the program. I think people should hold their breath a little bit, and wait to see how some of this develops before they reach any sweeping conclusions, one way or the other.

Glickman was joined by Virtua Partners’ Quinn Palomino and David Coelho of Bridge Investment Group to discuss the evolution of the three-year-old program that was tucked into the 2017 tax overhaul, particularly in light of the Covid-19 pandemic.

Glickman cited a recent report by the Urban Institute that found the program had created a new ecosystem of economic developers.

Palomino said that retail investors who were active in the program’s initial stages have receded, and what’s left are mainly the family firms and their advisers looking to place capital.

“Especially since coronavirus, we have seen the typical retail investor dropping off,” she said.

Developers struggled to find deals that made economic sense in the earlier stages of the program, partly because property owners with land in Opportunity Zones marked up the asking prices on their sites, thinking the program made them much more valuable.

Coelho said that dynamic has changed, and many owners have brought their pricing expectations down to levels where the deals start to pencil out again.

“As land sellers’ expectations become more reasonable, I think we’re seeing more that will work at the current market,” he said.

New federal guidelines issued earlier this month extended the deadline for investors and developers to put capital to work and begin construction.

Glickman said he thought the government has been “pretty reasonable,” understanding that participants needed more time due to the coronavirus.

Looking forward, Palomino said she wants to see more reporting on the community impact of Opportunity Zone projects when it comes to things like affordable housing and job creation.

“Done right, we really have a once in a lifetime opportunity to give back,” she said.

In January, the Treasury Department launched an investigation into the program, after media reports suggested it had not helped low-income communities as was intended, but had been a windfall for the rich.

Contact Rich Bockmann at or 908-415-5229.