Confused about how Opportunity Zones (OZs) will affect your community and wondering how to attract new investment in your community?
1 – Understand what Opportunity Zones are – and are not.
Don’t think of OZs as a stand-alone source of free money. They’re not. Investors are looking for projects with a reasonable return for their equity investment.
Do think of them as a new tool for building an integrated, bottom up economic development strategy for your community that might successfully attract and leveraging scarce public dollars.
2 – Make Sure There Is A Clear Community Quarterback.
Don’t expect an OZ strategy to come together on its own or in one silo of local government or in an Office of Opportunity Zones isolated from other critical community development tools and programs.
Do look to the Mayor, City Manager, a community foundation or a trusted community leader to build an OZ action table to get everyone involved and all possible investment areas from broadband to housing to workforce development at the table.
3 – Create Your Story.
Don’t think of OZs as the magic bullet that can turn your community into Silicon Valley overnight.
Do think of them as a way to build upon your local strengths and the projects that are ripest for private sector involvement – linked to your community’s development story and compatible with development in communities adjacent to designated Opportunity Zones.
4 – Do A Fiscal Check-Up.
Don’t think that OZ investors will flock to a community whose fiscal house and capital project planning systems aren’t in tip top shape.
Do think of them as the catalyst to get your City or County Council and your local agencies to finally pull together a 10-year list of community investment projects that can be screened for investment-readiness (step #5)
5 – Build Your Project List.
Don’t rush to engage investors with whatever projects happen to be on the top of your state and federal grant “wish list”.
Do take the time to get build a long-term capital investment, maintenance and asset inventory by asking your CFO, key agencies and community development partners to identify a 10-year list of possible OZ-investable investment projects.
6 – Hire A Project Finance “Deal Jockey” To Identify Your Top Investable Projects
Don’t assume your government and community has the expertise to turn “good ideas” into investable projects.
Do hire a project finance expert to be your advisor and get them hone down your list of projects into 10-year pro forma statements and investor-friendly formats that show how certain projects could pencil out for an investor AND fit your community’s story.
7 – Engage With Developers and Investors
Don’t focus just on selling investors and developers on just the projects you want.
Do research in advance to find out what kinds of projects individual investors are looking for, and ask them for term sheets that spell out the exact returns and projects they want. Everyone will save time finding each other this way.
8 – Engage With Partners Who Wisely Want Investment Without Displacement.
Don’t forget to work with important economic development anchor institutions like hospitals and educational facilities to develop broad-scale (not just OZ-related) strategies for economic opportunity.
Do rely on trusted community foundations and advocates to consider the need for locally-adopted anti- displacement plans and policies around housing displacement and gentrification.
Learn more: about anti-displacement guidance on pages 11-12 if this report from the Strategic Growth Council.
Learn more about investment without displacement in this report.
9 – Be Smart About Regulations and Incentives Affecting OZs.
Don’t worry that OZs will pre-empt existing zoning and other developmental requirements. They don’t.
Do consider steps to incentivize local development through OZs that are compatible with your community’s development goals and your story. This might even include considering the creation of a local Qualified Opportunity Zone fund in your community and new policies that promote value capture for the public sector.
10 – Engage With The State To Strengthen State-Local Partnerships and Policies.
Don’t assume that existing state programs can easily fit with OZ project funding strategies. Some do. Some do not.
Do work with the State, the State Legislature and key local development organizations such as the California League of Cities, California State Association of Counties, CalED and California Forward to help build more integrated, bottom up strategies that integrate the new OZ tool into existing systems and link to consensus-ready actions and policies.
Learn more: Contact the state’s OZ working group.