PUBLISHED IN MEDIUM | SEPTEMBER 23, 2019
Groundbreaking program brings major investment and revitalization to low-income neighborhoods in all 50 states.
Opportunity zones (OZs) are part of a groundbreaking government initiative, through which billions of dollars could be allocated to low-income communities all over America, making development and community investment more inclusive. Westside Founder Jakub Hejl sees OZs as an effective way to lead change.
“I think it’s a very creative policy that is contributing to the growth of many underprivileged areas that have been historically neglected or abandoned,” Hejl said.
OZs were created as part of the Trump administration’s 2017 Tax Cuts and Jobs Act (TCJA). These are economically distressed communities, in which capital investment could help create better opportunities for local residents. They’re officially designated by the U.S. Treasury Secretary, via the IRS. Investors then create Opportunity Funds, which are invested in various projects in the OZs. In exchange, investors receive tax breaks over a 5-to-10-year period.
For Westside, OZs align with work that the firm is already doing. “We would do any project we invest in regardless of whether the projects happen to be in an opportunity zone,” Hejl said. “We always focus on the fundamental value and to the extent we find such investment within an opportunity zone, even better.”
Hejl believes that a more socially-minded approach to development should come first; the OZ benefits are the icing on the cake.
Westside understands how investment in OZs can positively impact its business, but what really drives the firm’s interest in the program is the chance to reinvigorate areas that have lacked funding and attention.
“We will focus on opportunities that are more transformational in nature, that we believe are not as crowded,” Hejl said.
Westside has been targeting large-scale transformation projects that require a great deal of capital and resources but that also need a patient approach to investing. These include the complete redevelopment of certain areas and the repositioning of particular communities from one use to another. The firm’s objective is to find projects that “create a tremendous amount of value”.