The buzz with opportunity zones is having an interesting effect on some of Atlanta's poorest areas: Demand is making land values rise.

“Everybody is fighting over the same deals,” Epic Community Impact Fund President Jerry McGaughy said during Bisnow's opportunity zone and capital markets event last week.

McGaughy said landowners are seeing the newly created opportunity zone program as a federal cash cow and a way to pump up the value of their land if it is within one of the state's 260 designated census tracts.

“Now I'm running into real estate owners who are asking crazy prices,” he said.

The federal opportunity zone program allows investors to offset capital gains taxes until 2026 in an effort to drive investment toward roughly 8,000 designated zones across the U.S. Even though the Internal Revenue Service is still ironing out regulations with the program, the effort is driving capital to areas that have not seen any meaningful development in decades.

Pollack Shores has already targeted a development site in Chosewood Park neighborhood in Atlanta. The firm is already underway with Skylark, a 319-unit apartment project at 1099 Boulevard along the future Southeast BeltLine trail. The project is expected to deliver in the fall.

Pollack Shores CEO Steven Shores said the firm benefited from the timing of the legislation when it came to raising financing for Skylark, which is in an opportunity zone.

“The difference between starting that project before the legislation was in place and [now] is it allows us to take advantage of different capital,” Shores said, adding that some of the capital isn't coming from professional real estate investors.

As Bisnow previously reported, the opportunity zone program has become an unexpected potential windfall for some landowners whose projects and land are within the census tracts. But some experts say the program may fail to spur one thing that is critical to Atlanta and other major cities: affordable housing units.

The Strategic Group partner Steve Rothschild said low-income housing development should be the goal of this program, but that in the current financing model, affordable projects do not work on providing strong returns during the opportunity zone's life span of seven to 10 years.

“The way the regulation works, you just can't spend enough money to qualify for what I consider a smart basis,” Shores said.

McGaughy echoed those sentiments.

“We looked at several existing complexes, and it's just rough,” he said. “We just couldn't spend enough [to justify the project].