1. Opportunity Zones Webinar Series
Series 2 – Mechanics of the Tool and Marketing the Zones

2. Today’s Presenters
Joel Walters, Director Missouri Department of Revenue Mark Stombaugh, Business Development Unit Director Missouri Department of Economic Development

3. Today’s Content Webinar Series Investment Mechanics –
Next 2 Wednesday’s at 11:00 AM
Guest speakers
Investment Mechanics –
Opportunity Zone funds
Opportunity Zone investors
Marketing Your Zone – Investors and Deal Flow
Activities Around the Nation
Q&A

4. Opportunity Zone Webinar Series
complete: Sept 26 - Updates, Resources and Actions- What We Can Do Now/What Others are Doing
Speaker: Michael Eggleston, St. Louis Federal Reserve, Sallie Hemenway, DED)
This session provides a refresher on Opportunity Zones in Missouri and nationwide, what resources have been made available in the months since the designation and what activities States and Local governments can undertake to maintain an edge.
today: Oct 3 - Investors and Deal Flow - Marketing Your Zone
Speaker: Director Walters, DOR, Mark Stombaugh, DED
This session focuses on the different types of strategies can communities deploy to attract investors.

5. Opportunity Zone Webinar Series
Oct 10 - Entrepreneurs and Opportunity Zones/Sparking Investment
Speakers: Bill Anderson, TBD
 This session describes the match of angel and early stage investors with opportunity zone funds to take advantage of benefits tied to those riskier equity investments.
Oct 17 - Fund Management and Treasury Regs
Speakers: Brian Bear, DED, UMB Bank representatives
This session reviews the most recent information from Treasury and identifies funds and fund management in the works.

6. Opportunity Zone Facts
161 Missouri Zones designated
8700 Zones designated nationwide
12 percent of the nation’s census tracts
1/8th of America’s neighborhoods
$3-6 trillion in estimated potential income subject to capital gains

8. Early Keys to Success
Requires a proactive stance versus reactive stance
Requires efforts developed from the perspective of the investor
Allows participation in good deals versus marginal deals
Allows focus on returns
Allows locals to match good deals to redevelopment plans (purpose)
Places emphasis elsewhere - Money isn’t the issue, this time.

9. Investment Mechanics Why will it work
Investment Mechanics Why will it work? The only way to think like an investor is to understand the tool.

10. Investment Mechanics perspective of the investor
Provides incentive for the private sector to invest in low income communities
Two powerful motivators
Delay and avoid taxes
Make money
Equity investments in property, stock or partnership
Not debt financing
Not a tax credit
Expectation of a return

11. Investment Mechanics perspective of the investor
Three tax incentives for investing in Missouri’s 161 designated Opportunity Zones through an Opportunity Fund:
Temporary deferral
A deferral of inclusion of taxable income for capital gains reinvested into an Opportunity Fund
Step up in Basis
An increase in basis by 10% if the investment is held by the taxpayer for at least 5 years and 5% more if held for 10 years – excludes 15% of original gain from taxation
Permanent Exclusion
Excludes from taxable income capital gains made from the sale or exchange of an investment in a Fund if held for 10 years.

12. Fund Mechanics How does this work
Fund Mechanics How does this work? The only way to think like an investor is to understand the tool.

16. Source: EIG – Based upon capital gain realized and invested in 2018

17. Marketing Your Zone Not a tool to just pack away in the toolkit
Not a tool designed to limit private sector returns
Private money for a public benefit
Develop local strategies for building your market
What does success look like to you?
What are the specific redevelopment plans for the Zone?
Seek investors that match your goals
Identify deals
Create deal flow
Initiate an “investor prospectus”
Showcase the assets of your Zone

18. Marketing Your Zone Research your target investors
Remember the investors at home
Match private investments with complementing public investments
Attract capital with capital
Commit to the long-term
Measure and report outcomes – success attracts capital

19. Other States? State operated Opportunity Funds
Clearinghouse Activities
Investor Prospectus (KY)
Encouraging local zone strategies (CO)
Layering Incentives, credits, for investment into specific funds. (OH)
Ohio has introduced legislation that would provide a 10% state tax credit on investments greater than $250,000 in qualified Ohio opportunity funds. States can use additional zone- and credit-based programs to compete. Given the six month requirement to invest funds, development incentives (e.g. density bonuses and streamlining reporting) can help communities attract and absorb capital.

20. What can we provide? MO Actions
Zone review and approval
Program specific legislation, SB773 (Historic)
Cabinet Committee on Infrastructure exploring ways to leverage regional tools, including Opportunity Zones
What other tools will help Missouri Zones?
Fund development?
Host interactive website?
Host investor/deal summit?

21. Q&A Thank you!