Opportunity zones were almost immediately popular among investors. The hearty tax benefits and robust economy made the investment model of investing in disenfranchised communities attractive. But will that change now due to the pandemic? The low-income communities that make up opportunity zones—the communities in need of capital investment—could also be more exposed to the negative impacts of the pandemic.

There is no doubt that at the heart of opportunity zones are low-income distressed communities that will see a disproportionate negative impact through community income disparity, which is an issue that government, non-profit and philanthropy is focused on," Soua Vang, interim economic development director for San Bernardino County, tells GlobeSt.com. "Additionally, the focus on minority communities assists in prioritizing investments into disadvantaged census tracts, which is another way communities' can leverage OZ to structure their place-based goals to accelerate asset development."

However, opportunity zones still provide a solution for many investors looking to avoid capital gains taxes. "The COVID-19 pandemic created an interesting dynamic. On one hand it increased perceived risk on certain investments, especially in real estate asset classes that might trade below replacement value," says Vang. "The OZ incentive requires substantial improvement which means construction in most real estate projects. When assets trade below replacement cost, construction becomes harder to underwrite. On the other hand, because of investors' panic stock market selling, many are now facing a capital gains tax liability that they need to address. This presents an opportunity for OZ investment."