The Positives And Negatives Of Reinvesting In Opportunity Zones

The SALT Conference is a gathering of the most well-known executives in finance, policy, economics and beyond.

Three key players at the core of American investment on Wednesday spoke about opportunity zones, the funding investments and leveling the playing field for society.

Brett Messing, president and chief operating officer of SkyBridge led the discussion around reinvesting in the land of opportunity by means of new opportunity zones for big corporations.

Negatives Of Opportunity Zones

According to Russel Bernard, Managing Principal at Westport Capital Partners, a lot of money goes into opportunity zones, many of which result unsuccessfully. He went on to reinforce the importance of executing smart decisions on a fundamental level. Many of these real estate deals aren't always the smartest.

“You will see bad real estate deals, but it’s not always tax policy,” Bernard said. “There will always be bad deals and just because a city is an ideal opportunity zone, it may not be tactful for a good investment or a good move for your business.”

See Also: Follow The Money: Wealth Management Execs Talk Disruption At SALT Conference

Positives Of Opportunity Zones

Dan Kowalski, Counselor to the Secretary of the United States Treasury spoke to the prices of these new expansion incentives.

“Ultimately the incentives are what Congress gave the Treasury and it is very attractive to retrieve the referral of capital gains,” he said.

“If you are in this for the long haul, it can be very attractive. The prices for opportunity zones are good enough to make you look at areas you wouldn't normally look at and forces you to think about going somewhere you wouldn't usually put capital.”

The Process

Speaking to the process of facilitating opportunity zones, John Lettieri, president and CEO of the Economic Innovation Group, and Emanuel J. Friedman, CEO and co-chief investment officer of EJF Capital, put the timing and the impact of these endeavors into perspective.

“Opportunity zones are supposed to decentralize the process of doling out tax credits, connecting the community with a tool to extract capital from the marketplace,” Lettieri said. There’s a lot of flexibility.

“It can scale to the market in a frictionless way without a cap or designated number of communities that are limited to investment," Lettieri said. “It lifts the community up.”

In congruence with the optimism from his peers, Friedman believes this is only the beginning.

“The game hasn’t started, the warmup pitches are just now being started,” he said. “Whenever you have a gigantic change, it takes a while for people to adjust. Just like Google and Amazon, it takes time for this to happen.”