Everything to know about Qualified Opportunity Zones in the United States

So… what exactly is an Opportunity Zone?

Opportunity Zones are economically-distressed communities where new investments, under specific conditions, might be eligible for preferential tax treatment. Districts are eligible to be Opportunity Zones if they have been submitted for that classification by the state and that submission has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.

What is the purpose of Opportunity Zones?

Opportunity Zones serve as an economic development tool. Furthermore, they are modeled to stimulate economic development and higher the job rate in distressed communities.

Have Opportunity Zones been around for a long time?

No, they were added to the tax code by the Tax Cuts and Jobs Act on December 22, 2017. The first set of Opportunity Zones, covering sections of 18 states, were selected on April 9, 2018. Opportunity Zones have now been appointed covering sections of all 50 states, five U.S. territories and the District of Columbia.

What is a Qualified Opportunity Fund?

A Qualified Opportunity Fund (QOF) is an investment vehicle that is designed as either a partnership or corporation for investing in qualified property that is in a Qualified Opportunity Zone.

How do Opportunity Zones stimulate economic development?

They are designed to boost economic development by providing tax benefits to investors. First off, investors can postpone tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026. If the QOF investment is held for more than 5 years, there is a 10% exclusion of the postponed gain.  If held for longer than 7 years, the 10% becomes 15%. Next, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is qualified for growth in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.

Do I have to live in an Opportunity Zone to gain the tax benefits?

The answer is no. You may get the tax benefits, even if you don’t work, live or have a business in an Opportunity Zone. You just need to invest a recognized gain in a Qualified Opportunity Fund and elect to defer the tax on that gain.

Is there a list of Opportunity Zones obtainable?

Definitely. This list can be found at Opportunity Zones Resources and in the Federal Register at IRB Notice 2018-48.  In addition, a visual map of the census tracts designated as Qualified Opportunity Zones can be found at Opportunity Zones Resources.

I want to form a Qualified Opportunity Fund. Can  I access a list of Opportunity Zones available in which the Fund can invest?

Yes, this list can be found at Notice 2018-48.

Is it possible for a limited liability company (LLC) to be an Opportunity Fund?

Absolutely. A LLC that decides to be treated as a partnership or corporation for federal tax purposes can classify as a Qualified Opportunity Fund.

How does a partnership or corporation get certified as a Qualified Opportunity Fund?

An eligible partnership or corporation self-certifies by filing Form 8996, Qualified Opportunity Fund, with its federal income tax return. Early-release drafts of the form and instructions are posted, with final versions due in December. The return with Form 8996 has to be filed timely, taking extensions into consideration.

How can I get more information about Opportunity Zones?

Check out this article for more details on Opportunity Zones.

The Treasury Department and the Internal Revenue Service will be giving more details, including further legal guidance, on this new tax benefit.

Need help with environmental consulting, Phase I Environmental Site Assessments, Property Condition Assessments or Phase II Subsurface Investigations?

UES Consulting and our diverse team know how thorough, time-sensitive Phase I Environmental Site Assessments and Property Condition Assessments are and can help the affair run effortless and finish on time. If you are searching for a company to partner with on your commercial real estate transactions of any sort, look to our in-house engineers and environmental consultants to relieve the stress of environmental issues and mitigate risks.

CRE Investors! Here are 3 ways to quicken decisions in uncertain markets.

Over the last few months, news channels have been filled with stories about movements that are directly affecting the U.S. economy and real estate investments.

-Dan Dokovic Managing Partner, Co-Founder at Bamboo Equity Partners, a leading CRE investment firm.

What are the reasons for these movements?

The first is the news of rising interest rates, trade wars dominating the airways, government shutdown all leading towards business uncertainty. Second is the quick pace of advancing technology which affecting commercial real estate space. Lastly, as seen nationwide popular retailers are quickly closing down and declaring bankruptcy forcing shopping centers to clear out or shut down at rapid rates.

“The real estate industry has become the poster child for uncertainty and anxiety.”

How to overcome this as a CRE investor?

Get ahead of the curve with 3 practical applications below that will help you stay relevant and pivot quickly in response to the shifting industry movements.

1. Fill the space.

Real estate investment companies should reconsider their existing tenant mix. Long gone are the days of 10 to 15 year leases. With any uncertainty in the business market, corporations are often looking for a short-term lease.

Therefore, re-evaluate your long-term leases & business model.

While short-term leases may alter financial forecasting and real estate valuation, immediate increases in net operating income will outweigh the risk of carrying the vacant space.

A major trend is to start diversifying the tenant mixes for overall appeal of your property. An example is mall owners are lending their empty space to startup restaurants, co-working companies, or incubators in hopes it will lure more tenants into the property. These tenants don’t pay rent or nearly as much but will increase foot traffic, visibility, and popularity.

Practical First Step: Initiate partnerships with co-working companies, entice new-age tenants by enhancing your digital strategy, and enlarge your leasing capabilities.

2. Build Relationships

In uncertain times it’s important to focus on growth capital and support from partners and peers. For future stability and success it’s vital to build relationships.

While the industry is in the growth cycle, capital is bountiful. However, as soon as the cycle turns, having capital is the difference between muddling through and controlling destiny.”


Understanding and growing capital relationships comes in two forms: existing capital sources and new prospects with unrelated capital allocations.”

For existing capital relationships, constant communication is crucial. Banking relationships vary with the economic cycles change. Investment executives need to keep in step with bank’s directions and anticipate said direction would have on business.

Here are some examples…

  • Banks that focus on real estate lending might concentrate on commercial and industrial loans after a merger which, in turn, might diminish the negotiating power of borrowers in a downturn.
  • In addition to current capital providers, real estate managers should focus on acquiring alternative sources of equity and debt.
  • A multitenant office owner might want to seek a partnership with a single, long-term tenant equity provider in order to mitigate the risk of short-term leases.
  • Alternatively, office asset managers might want to connect with industrial capital sources in order to diversify high-cost risks, like retenanting office buildings.”

3. Diversify your assets.

According to past data, these changes in real estate are not hitting all markets. An example is the highs and lows of employment rates may affect the office market but the industrial market could flourish due to the increased shift towards e-commerce.

During the last cycle, manufactured housing and self-storage sectors performed better than other property types.

According to Trepp Bank Research’s April 2017 report of historical CRE losses, self-storage had the lowest average loan loss severity of all property sectors at 1.52%, while manufacturing housing loss was at 3.53%. Comparatively, in a different sector, retail had an average loss rate of 6.17% and office at 6.13%. While taking into consideration these examples, property sectors (per research completed by Nareit in December 2018) and manufactured homes provided total returns of 24.93% and 11.43% for the years 2017 and 2018, respectively.

Gaining property sector diversity can lessen risk across your business. But be cautious in your decisions. “While diversification can provide a footing to weather storms, businesses must be prudent as diversification efforts have their own risks.

What crucial questions do you ask before making final decisions in this ages industry?

What oversights can be pulled from current practices?

Who are the allies in this diversification process?

To stay relevant, future real estate leaders need to continue on the path of innovation. While transformation is tough, the only way to continue growing is to advance with the times. As it was in previous cycles, great things come to those who are able to pivot during the hardest times.

Take Action after Big Events & Conferences

After a major networking event or conference, it is important to take action as soon as possible to maintain the great connections you made.

Below is a 6 step guide to follow for all your Spring 2019 events.

1. Categorize and take action accordingly. 

Organize your contacts into 3 categories.

  1. Valuable leads: Contacts you believe to be an ideal client and/or that showed a high level of interest in working with you. 
  2. Qualify leads: Contacts who need to be qualified. They may be seriously interested or they might not, and even if they are you’re not sure they are qualified.
  3. Connections: Prospects you can build a relationship with. You may work together in the future, refer business to one another, or merely get together for a happy hour on the occasion.

“It’s important to follow up with “valuable leads” as soon as possible and schedule a time to meet. Show an effort to follow up with “connections” soon after — in my experience, they are the most valuable people you meet at networking events.” 

— Ryan Meghdies of Tastic Marketing

2. Follow up on Twitter.

I’ve stopped giving (and taking) cards at networking events. Instead, I  follow entrepreneurs (or their businesses) on Twitter. I prefer this approach because it allows me to see their profile and actually remember who they are. I return from networking events with new followers instead of cards. As soon as I return, I follow up with them by sending a quick DM via Twitter. I also browse through their most recent tweets and retweet or like anything that I relate to in my industry. This allows me to connect with them, understand their brand and create a more immediate connection.”

 – Uchechi Kalu Jacobson of Linking Arts Web Design & Development

3. Add them to a CRM then connect on LinkedIn.

  1. Input all the contacts into my CRM and tag appropriately. Now I can send tailored communications to them in the future.
  2. Send connection requests to every connection on LinkedIn.
  3. When connecting, include a personalized message, to remind them of how you met and try to include a memorable section of your conversation.

When messaging and connecting on LinkedIn, another tip is to ask them how you can be of help. This could mean connecting them to someone, answering a question they mentioned, sending a resource, etc. You have to give to get.

 – Zack Hanebrink of HookLead

4. Send a gratitude email.

After entering the new contacts into your CRM, email a reintroduction to the contact thanking them for their time. If the prospect shows interest, then provide them with more information as requested.

5. Make notes immediately.

While at a networking event immediately (after the conversation has ended) write on the back of their card a few notes about the conversation. 

6. Check them out & connect on social media.

Check them out on social media to learn more about who they are. What kind of content do they post? Which platforms are important to them?”

– Stephanie Cartin, Socialfly

Summarized from Forbes Article

UES Consulting Services offers and our team of are well-versed in the demands of commercial and multi-family transactions and how thorough, time-sensitive Phase I Environmental Site Assessments and Property Condition Assessments can help the process run smoothly and close on time. If you are looking for a company to partner with on your commercial real estate transactions of any kind, turn to our in-house engineers and environmental consultants to alleviate the burden of environmental issues and mitigate risks. 

Commercial Real Estate Industry Booming

Qualified Opportunity Zones in Kansas City

Did you know that 52 million Americans (1 in 6) live in economically distressed communities? This is a major problem that Congress recently took a step to fix. Thus, Opportunity Zones were created in the Tax Cuts and Jobs Act of 2017.

Opportunity Zones are an innovative, flexible, and bipartisan solution for catalyzing private sector-led economic growth. In addition, they aim to connect low-income communities with much-needed capital.

In exchange, investors get a graduated series of federal tax incentives tied to long-term holdings.

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Lastly, information provided by Ruben Alonso President of AltCap and Korb Maxwell with Polsinelli. 

UES Consulting and our team are experts in Phase I Environmental Site Assessments and Property Condition Assessments and can help your projects run smoothly and close on time. If you are looking for a company to join together with on your commercial real estate transactions of any type, look to our in-house engineers and environmental consultants.