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BOSTON—If you are a housing developer already located within an opportunity zone, you might as well enhance the area even more and do things that can help the community and its residents, says John W. Gahan III, a partner with Sullivan & Worcester, a locally-based international law firm. "Open up community rooms, host job fairs, conduct workforce training, buildout a child care center, and generally find ways to give back to the community."
Why? The most successful affordable housing developers are the ones who do the best job for their residents by providing amenities and services that add to the quality of life of those living in their developments. That advantage is turbo charged when a developer of low-income housing, within a defined opportunity zone, sets up a computer center for residents. It creates a natural mix between opportunity zones and affordable housing, Gahan tells GlobeSt.com.
The majority of residents in opportunity zones have below-average household incomes, low high school graduation rates and too few are gainfully employed. Gahan believes that with an increase in wages and jobs plus an investment in a community's infrastructure, opportunity zones and investors alike would benefit.
"While it seems likely that, in 2019 at least, most of the bandwidth devoted to opportunity zone investments will still center on structuring issues, amassing capital and executing deployment strategies, for those seeking a longer lifespan of the program, it isn't too soon to focus attention on documenting the community benefits their OZ investments have delivered," says Gahan.
Affordable Housing within Opportunity Zones
The primary capital tool for those who develop affordable housing is the Low Income Housing Tax Credit program (LIHTC). But the industry has struggled to find an effective, additive way to combine LIHTC with opportunity zone funds in a way that attracts return-oriented investors. For them to receive opportunity zone benefits, they need to reinvest capital gains into an affordable housing project and the financial returns are not the double digit multiples those with money look for. Such a program can help create retail and mixed-use developments which, in turn, can improve communities populated with affordable housing.
"Opportunity zone funds can also be used to provide necessary amenities that contribute to a community's energy and sustainability in addition to its affordable housing," says Gahan. "So many communities need a plethora of vital services and, in my opinion, that is an area where opportunity zones can also provide value."
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