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McGuireWoods Consulting senior advisor Brad Alexander discussed the advantages of public-private partnerships (P3) for opportunity zone investors in a Dec. 17 article he wrote for Commercial Property Executive.
Under the new tax law, opportunity zones provide significant tax benefits for investors with large capital gains or long time horizons. The supply of dollars to invest in opportunity zones, however, will exceed the number of available deals as investors begin to facilitate deals, Brad explained, noting that state governments chose these zones in locations that typically do not see a lot of investment.
“The basic idea of the major deferrals, reductions and eliminations of capital gains taxes in the new provisions is to get investors to build and create jobs in those zones,” Brad wrote. “However, the practical side of finding real estate deals that can locate well in economically depressed areas remains significant.” This is where P3 arrangements can help facilitate deals, he said.
“The state and local governments that figure this out first, and put P3 deals on the table in opportunity zones, will be the ones that capture the early advantages from the new law,” he wrote. “On the private-sector side, consider public-private partnerships an essential tool to help create an availability of real estate deals that will satisfy the coming demand from investors seeking to benefit from the new law.”