Turning capital gains into community gains
Opportunity Zones were established by Congress in the Tax Cuts and Jobs Act of 2017 to spur economic development and job creation in distressed communities. Designed to encourage long-term private investments in low-income geographies, Opportunity Zones provide a tax incentive for investors who reinvest capital gains into Qualified Opportunity Funds. The investment capital raised via Qualified Opportunity Funds are used to invest in a Qualified Opportunity Zone Business or Property. By providing private investors with a federal tax deferral on their reinvested capital gains, Opportunity Zones and associated Opportunity Funds invite investments in job creating businesses and catalytic real estate and economic development projects located in the most economically distressed communities throughout the country.
Working with State and local governments, the U.S. Department of the Treasury certified 8,761 communities in all 50 states, the District of Columbia and five U.S. territories. Nearly 35 million Americans live in census tracts located within Qualified Opportunity Zones. Based on data from the 2011-2015 American Community Survey, the designated census tracts had an average poverty rate of over 32 percent, compared with a rate of 17 percent for the average U.S. census tract.
Additionally, the median family income of the designated tracts were on average 37 percent below the area or state median, and had an unemployment rate of nearly 1.6 times higher than the average U.S. census tract. Qualified Opportunity Zones were also twice as likely as other U.S. communities to be located within a persistent poverty county, meaning the county had experienced a poverty rate of at least 20 percent for 30 years. A map and list of Qualified Opportunity Zones can be found at Opportunity Zones Resources and in the Federal Register at IRB Notice 2018-48.
As a successful, mission-driven CDFI, AltCap has facilitated nearly $200 million in investments in what are considered Qualified Opportunity Zones. Our investment track record with the federal NMTC Program as well as micro and small business lending activity gives us the unique ability and expertise for identifying high impact investment opportunities in underestimated communities. By leveraging our experience in creating high performing investment and loan portfolios that offer opportunities for attractive upside to investors seeking double bottom line returns, AltCap is uniquely positioned to attract, deploy and manage investment capital in Qualified Opportunity Zones throughout the Kansas City metro area.
AltCap’s Opportunity Fund will seek to identify high impact investment opportunities that turn capital gains into community gains by aligning the interests and needs of private investors with the community. As an active allocatee of NMTC (AltCap is a 5-time NMTC awardee), AltCap has a continual pipeline of active investment opportunities throughout the Kansas City metro including operating businesses and real estate and economic development projects that are well positioned for Opportunity Fund investments. Additionally, our engagement, collaboration and partnerships with community, economic and business stakeholders throughout the metro gives us unique and varied access to investment opportunities.
Lastly, for over ten years, AltCap has successfully sourced both private and public capital to finance investments in economically distressed communities that have created thousands of quality jobs, provided critical goods and services, removed blight from neighborhoods, redeveloped and repurposed historic buildings, and supported the growth and development of small businesses, especially women- and minority-owned enterprises. Our commitment to marrying mission and capital is what has allowed us to help the communities we serve. We look forward to continuing our successful small business and community development investment efforts in Opportunity Zones and further our vision to ensure all communities have equitable access to the capital and resources they need to thrive.