Five Strategies for Engaging
Opportunity Zone Investors
Communities often have a vision for the kinds of investment and development that will be most beneficial to
achieving their goals for an equitable, thriving future. For those with designated Opportunity Zones, communities
often wonder, "How can we engage Opportunity Zone investors to support our vision for community
revitalization?" Data about Opportunity Zones are clear that most of these census tracts suffer from a lack of
ongoing public and private investment. As a result, Opportunity Zones may lack key infrastructure or other assets
that investors seek to ensure a productive return on their investment. This quick guide outlines five key strategies
for engaging Opportunity Zones investors including resources and tips that can help communities attract
investment to their revitalization efforts.
Types of Investors in Opportunity Zones
Opportunity Zone investors are very divers and can
be an individual taxpayer or an entity that has
recently experienced a capital gain. These investors
are in communities of all shapes and sizes and are
seeking investment opportunities in both projects
and businesses located in Opportunity Zones.
Examples of investors include institutional and
corporate investors from banks and insurance
companies, high net worth individuals, community
foundations, or philanthropic impact investors.
As investors experience capital gains, they can
move their gains into an Opportunity Fund to
realize the tax benefits of the Opportunity Zones
incentive. There are three primary incentives
available: (1) defer federal capital gains taxes owed
today for a period of years; (2) be eligible to receive
a reduction in those capital gains taxes; and (3) be
exempted from paying future capital gains taxes if
certain investment criteria are met. Sometimes an
Opportunity Fund is established by an individual
investor. More often an Opportunity Fund is
maintained by a fund manager that combines
investments from many qualified sources and
directs them into Opportunity Zone projects in
communities across the United States. In fact,
Opportunity Funds can invest in projects or
businesses in any of the 8,700+ Opportunity Zones
and are not required to invest in the community
where a particular investor or fund is located.
To better understand the marketplace for
Opportunity Zone investments, Novogradac
maintains a national database of Opportunity Funds
that voluntarily report their investment activities.
Through September 2020, these Opportunity Funds
reported raising over $12 billion of investment
capital to be directed into Opportunity Zone
projects and businesses. Novogradac's analysis
shows a diversity of investments, including funds
that direct capital to projects in a single city or
state, and many with a regional or national focus.
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Evaluating Community Resources
In June 2020, the Economic Innovation Group
released results from a national Opportunity Zones
survey with analysis from investors and fund
managers about investment activities to date. Of
note, 40% reported that Opportunity Zone
investments would only be possible with other
additional forms of capital supporting their projects.
Local communities can show leadership in
attracting Opportunity Fund investments by
proactively aligning other funding sources for a
project. For example, identifying local Development
Finance Agencies (DFAs), Community Development
Finance Institutions (CDFIs), traditional lenders, tax
credit investors, or other government and
philanthropic grants can help Opportunity Zone
investors understand how their equity fits into the
financing plan for a project.
Local communities may also want to consider
proactive investments they make today in order to
attract investment throughout the life of their
Opportunity Zones. Many communities have
discovered that investing in local infrastructure,
such as improved roads or broadband, updating
transportation networks, creating workforce
readiness programs, or developing small business
lending programs prepares their local economic
development ecosystem for Opportunity Zone
investment.
Strategies for Engaging Investors
Communities may want to consider developing a
revitalization financing plan to support their
Opportunity Zone goals. A first step could include
assembling partners that can speak with expertise
and experience about their local economic base and
long-term development goals. Most importantly,
investors often report that they do not need local
communities to be experts on Opportunity Zones
statutes and regulations. Rather, investors rely on
communities to help align their capital with
community priorities. The following five strategies
can help communities attract Opportunity Zone
investors to support their revitalization goals.
Five Key Strategies
1.	Promote Your Community
2.	Be Connectors
3.	Activate Anchor Institutions
4.	Showcase Projects
5.	Create a Campaign
In addition, securing funding from federal agencies
such as the U.S. Environmental Protection Agency,
Economic Development Administration,
Department of Flousing and Urban Development, or
Department of Agriculture for these types of
projects can often be a catalyst for attracting long-
term private investment in Opportunity Zones.
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1.	Promote Your Community
Local Initiatives Support Corporation (LISC) and the
Council of Development Finance Agencies (CDFA)
published Navigating Opportunity Zones, a playbook
for communities to understand the Opportunity
Zones incentive. Community leaders, including staff
in local governments and agencies, should educate
themselves about the basic principles of
Opportunity Zones in order to identify potential
projects ready for investment. By participating in
and presenting at Opportunity Zones gatherings
across the country, communities can attract
interest from new stakeholders and investors.
2.	Be Connectors
The Urban Institute offers statewide
recommendations in An Opportunity Zone Guide for
Governors, many of which can also be applied to
local communities. Local leaders should regularly
communicate with Opportunity Fund managers to
highlight investment opportunities and develop
relationships with investors and mission-driven
financiers that align with local goals and strategies.
For example, communities could provide
matchmaking services that connect local investors
with appropriate fund managers. In addition,
hosting community conversations with updates
about projects and strategies can help to cultivate
continued relationships with investors.
3.	Activate Anchor Institutions
Drexel University published a series of detailed
recommendations for local communities to develop
Opportunity Zone strategies in From Trgnsgctions to
Trgnsformgtions: How Cities Cgn Mgximize
Opportunity Zones. One idea is to coordinate with
local, place-based anchor institutions, such as
hospitals, universities, or other major employers or
economic drivers. Local anchor institutions might
already have investor relationships that can help a
community's Opportunity Zone efforts. For
example, hospitals and universities often support
new businesses and technologies, which can lead to
strong relationships with investors. Additionally,
anchor institutions benefit from a thriving economy,
so there is an incentive for them to partner on
revitalization efforts, especially in distressed
neighborhoods and communities.
4.	Showcase Projects
Many communities have found success by
concentrating on one marquee project to develop
investor interest. This focused strategy can lead to
new investor relationships as that initial project
takes shape and begins to demonstrate returns. The
Governance Project has a Toolkit for Maximizing the
Impact of Opportunity Zones that outlines steps for
identifying priority projects. Further, to attract
investors outside of the community, consider using
an interactive platform to promote projects and
development opportunities. Organizations like The
Opportunity Exchange provide options for sharing
project goals to a national audience of interested
investors.
5.	Create a Campaign
For projects located in an Opportunity Zone that
need to attract capital, consider creating a
fundraising campaign with the same spirit that
philanthropic organizations often employ. Many
high net worth individuals who donate to charitable
causes may also be interested in allocating their
capital gains toward local Opportunity Zone
projects. In order to see a local redevelopment
project take shape, community leaders can come
together to ask neighbors to help address a
financing gap by investing in an Opportunity Fund.
Raising public awareness about redevelopment and
revitalization efforts has the potential to attract
investors from within the community and creates a
feedback loop to refine the plans based on
community voices and involvement.
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Thinking About Positive Community Impact
By proactively coordinating with Opportunity Zone
investors, communities can identify investors who
share similar goals for social impact. Clarifying these
goals up front and developing a mutual investment
strategy will help communities and investors work
together in achieving the revitalization they both
seek.
The U.S. Impact Investing Alliance, the Beeck Center
for Social Impact + Innovation at Georgetown
University, and the Federal Reserve Bank of New
York partnered to create the OZ Framework a set of
guiding principles to help investors align their
capital to effectively address community needs and
priorities. They note that many investors (including
those entering the Opportunity Zones market) have
an explicit goal of creating positive social, economic,
and environmental impact. Local community
leaders are important actors in helping to bridge
the gap between the capital raised in Opportunity
Funds and the social, economic, and environmental
returns that investors seek.
The OZ Framework outlines how communities and
investors can engage in conversations to mutually
identify investment priorities, equitable returns,
and transparency in their financial decisions.
Communities can coordinate with investors and
fund managers to proactively identify measurable
goals and data that can be collected to track social
returns such as community wealth building,
improvement in infrastructure, access to jobs, and
livable wages.
Readiness Checklist
Local communities can control many key site
redevelopment steps to enhance the
attractiveness of a property to investors.
Communities that want to engage with
investors using any of the five strategies
mentioned in this guide can assess their
readiness, and address key indicators of
readiness for investment. Many of these steps
align with requirements for state and federal
funding and technical assistance programs to
secure site control.
~	Assess and address environmental issues
~	Remove unusable buildings and
infrastructure
~	Ensure zoning matches future use goals
~	Build or enhance public infrastructure such
as streets and utilities
~	Align local leadership around a shared
future use vision
~	Identify financing programs and incentives
that can support gaps and meet Return on
Investment needs
This quick guide was developed for the U.S. Environmental Protection Agency (EPA), Office of Community Revitalization by the Council of
Development Finance Agencies (CDFA) with support from Skeo under EPA's Technical Assistance Services for Communities (TASC) program.
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