EARLY LEADERSHIP
WELCOME ELAINE BEDEL PRESIDENT, INDIANA ECONOMIC DEVELOPMENT CORPORATION
PRESENTING SPONSOR KEVIN HIPSKIND REGIONAL PRESIDENT, FIFTH THIRD BANK REPRESENTING FIFTH THIRD FOUNDATION
LAUNCH A CONSORTIUM: A RAPID DEAL ADVANCEMENT AND CONNECTIVITY HUB FOR INDIANA’S OPPORTUNITY ZONES
Historical Context Overview Building the Consortium Activating Portal
INITIATIVE ANNOUNCEMENTS AND THE HISTORIC SCRAMBLE … Urban Enterprise Zones … White House Faith -Based Initiative … New Markets Tax Credits … Promise Zones … Social Innovation Funds . . . and … and ….
NMTC ANNOUNCED NEW MARKET TAX CREDIT IN 2000 EXAMPLE - Indiana responded immediately, setting up the appropriate new bodies predicated - Early deals surfaced but came to a halt, awaiting clarifications at Federal level - It took years before there was a clear sense of how the program was best utilized - While the initiative continues today, it remains complex to deploy - And unfortunately, Indiana ranks near the absolute bottom for direct allocation over the course of its history
BROOKINGS INSTITUTION’S LEADING URBAN At our best, Hoosiers have a notable INNOVATION EXPERTS CITE capacity to combine forces and share INDIANAPOLIS tables – particularly when the results AS AMERICA’S mean our families and LEADING PLACE communities are better off FOR “PERFECTING A CULTURE OF COLLABORATIVE ACTION”
THE CONCEPT
OPPORTUNITY ZONE BASICS Goal al: To encourage long-term private capital investment in low-income urban and rural communities Inc ncentiv entive: Long-term tax deferral on capital gains invested in Opportunity Zones and tax exclusion from new capital gains achieved from those Opportunity Zone investments Eli ligibility ibility: Equity investments Ti Time meline line: : Set to sunset in 2022
O P P O R T U N I T Y F U N D S Eligible Investments Only equity investments are eligible for the Opportunity Zone tax incentive. Business investments Investments in real estate New equipment and other assets 1 2 3 can include must include an ownership are also eligible investments. investments in new interest of new construction stock issuance for or assets that will be corporations and " substantially improved " ownership interests in within 30 months of partnerships and LLCs. acquisition by the Opportunity Fund.
O P P O R T U N I T Y F U N D S Economic Development Examples Business infrastructure Operating business Venture capital 1 2 Enhancement for 3 4 real estate funds: funds: private equity: other federal tax credit transactions: Industrial Equity Seed stage investments recapitalizations Retail NMTCs Series A Growth capital Mixed use investments investments Historic Tax Credits TOD
O P P O R T U N I T Y F U N D S Specific Affordable Housing Examples Workforce Housing Twinning with the LIHTC or the 1 2 HTC Providing housing for families at 80 – 120% AMI Potential for developing housing Anticipate 10 year investments for families at or under 60% AMI. Opportunity Zone benefits are a shallow subsidy, Can provide a higher yield to most effective in conjunction with tax abatements investors depending on deal or other subsidy sources structure No ongoing compliance regulations unless Issues: Do institutional investors required through local funding or zoning have capital gains that they want to Ability to attract high net worth individuals or use to invest in LIHTC? corporations as investors. Will this bring additional investors to the marketplace? Can this benefit high loss deals?
O P P O R T U N I T Y Z O N E S Strengths New Local Flexible Potential Straightforward Investor Class The incentive could Designations are The incentive has attract hundreds of The tool is relatively made by states and The flexibility of the the ability to attract billions of private sector straightforward localities, rather investment tool high net worth capital into low-income from an investment than Federal can support individual investors communities (compared and compliance with about $10 - $12 standpoint, in agencies, ensuring investments in any to community more local buy in type of asset class. development billion annually under comparison to and coordination. finance. LIHTC and $3.5 billion LIHTC and NMTC. annually under NMTC).
O P P O R T U N I T Y Z O N E S Potential Concerns Lack of Gentrification Future of Other Lack of Oversight and Displacement Tax Incentives Impact Incentives The new incentive The tool might aid in Incentives focus on might be used as an the gentrification Lack of oversight back-end returns, excuse to diminish or and displacement of from government rather than eliminate other residents and entities could lead to investments that will community businesses in program abuses. result in community development tax Opportunity Zone impacts. incentives, such as communities. the NMTC program.
C O N S O R T I U M S E R V E S A S F R O N T L I N E F O R I N F O R M A T I O N A N D I N V E S T M E N T C O N N E C T I V I T Y
TARGETED OUTCOMES FOR OUR APPROACH Transform places, support businesses and drive system innovation through smart collaboration and deployment Support business Drive system innovation Support jobs Transform places • Support investments in • More ready access • Partnership facilitation • Connect to ready commercial, industrial, retail, to capital pairing across sectors – public, workforce residential & community facilities private and nonprofit • Technical • Supports for • Broker complementary assistance • Integration of support for training and job investment brokering such as people, places and small placement infrastructure improvements businesses
THE CONSORTIUM BASICS The Goal is Identic tical: al: To encourage long- term private capital investment in Indiana’s low income urban and rural communities Incentive for the Consortium’s Existence : Pool knowledge and assets to more strategically build capacity and pipeline across all stages of a deal, then actively help facilitate investment and information pairing through an online portal as OZ funds begin to flow Membership hip: : Intended as a table for investors and coinvestment partners to connect with communities Ou Outcome mes: Rapid deployment and more refined pairing of investment to propel difficult projects towards the finish line
CONSORTIUM INFRASTRUCTURE Education & Resource Professional Service Investor Members Partners Members Financial Institutions, State Agencies, Associations, Legal, accounting, site selection, Venture/Equity Funds, Impact Foundations, Local wealth management Investors, CDFIs, government Government, Chambers finance agencies, & other funds consultancy firms - Partner to build pipeline and - Access to portal and co- - Source for referrals and deliver capacity building investor table expert technical services services - Early look at deals; able to - Available to assist with - Help cultivate and market follow up with LOIs trainings and workshops portal and information - Benefit from immediate sharing intel on the program Backbone State of Indiana, LISC, Cinnaire, Indy Chamber, Indiana Bond Bank, IEDC, OCRA and IHCDA. LISC will house the online portal.
BACKBONE STAFFING OF THE PORTAL LISC will house the collaborative online portal.
EARLY ADOPTERS – INVESTOR SPONSORS
EARLY ADOPTERS – PROFESSIONAL SERVICES The Pe e Peli lican Gr an Group oups LLC LLC
UNIQUELY COLLABORATING TO MORE STRATEGICALLY PROPEL PROJECTS TO ACTUALIZATION
PORTAL PREVIEW WWW.OPPORTUNITYINVESTMENTCONSORTIUM.COM
PANEL LED BY MARK WUELLNER, INDIANA BOND BANK JADIRA HOPTRY TOM MOORE SAMANTHA IAN NICOLINI GARY HOBBS FIFTH THIRD BANK VECTREN FOUNDATION INDY CHAMBER SPERGEL BWI & OPPORTUNITY ZONES REAL ESTATE INDIANA HOUSING & ADVISORS COMMUNITY DEVELOPMENT AUTHORITY
NEXT STEPS AND CHARGE: 1. Populate Portal: help us build pipeline and get Indiana on map! 2. Learning Laboratory: An advisory leadership group, together with backbone agencies, investors, training, and consultancy partners, will meet to coordinate assistance to communities 3. Building Capacity: Indiana Bond Bank is hosting a Podcast on the Regulations; Webinars and workshops under development with partners 4. Sign Up: Engage in a role with the Consortium, lead partners will be staying after to discuss
WWW.OPPORTUNITYINVESTMENTCONSORTIUM.COM
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