ICSC RECon: Cities Are Promoting Their Opportunity Zones For Investment
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Cities and economic development teams are getting into the opportunity zone game and bringing potential investment sites to the biggest annual retail real estate convention.
At booths at this year's ICSC RECon, several municipalities and local governments can be seen discussing sites with potential investors. Large maps of designated opportunity zones are hung up inside their booths. Pamphlets and other literature are strewn across the table.
"This is the first place-based incentive that has been rolled out by the federal government in many years," Alliance for Economic Development of Oklahoma City President Catherine O'Connor said.
O'Connor spoke about opportunity zones at ICSC RECon and spoke with Bisnow after the panel.
"This is a bottom-up approach where communities can really use the incentive to drive what they want to have happen," O'Connor said.
This is the 10th year Oklahoma City has attended ICSC RECon. O'Connor is looking for developers to bring retail or mixed-use projects to the city's designated opportunity zones.
The opportunity zone program allows investment in a property or a business in a designated opportunity zone in exchange for a tax benefit depending on the length of the investment.
Each state was able to designate 25% of its low-income census tracts as opportunity zones. Nationwide, there are more than 8,700 designated opportunity zones.
For cities, the program is a good way to lift up certain neighborhoods or areas that have historically not seen a lot of investment and provide much-needed development and businesses.
Here are some of the cities pitching opportunity zones at the convention.
With 19 opportunity zone tracts, Oklahoma City officials are heavily promoting those designated geographic areas.
O'Connor, the president of the nonprofit Alliance for Economic Development of Oklahoma City, said the organization has already completed an investment prospectus and a website promoting the opportunity zone areas.
Some of the tracts are in areas that have already seen heavy investment, O'Connor said. More than $1B in development is currently under construction in the central business district, which lies in a designated opportunity zone.
"It’s a growing economy," she said. "We’re a growing city. We're really involved trying to guide the program and use it in a way it was intended."
Miami Gardens, Florida
Florida has 427 opportunity zone tracts; 68 of those are in Miami-Dade County and six are in Miami Gardens.
But there are two opportunity zones that Miami Gardens Deputy City Manager Craig Clay is most excited about and believes have great investment potential.
One opportunity zone sits in the northwest of the city. The area is about 160 acres and half is already being developed as light-industrial.
Clay said because of the area's location next to a major road, the other 80 acres are prime for another industrial development.
"The zone can help that [site]," Clay said. "We're seeing a lot of distribution centers pop up because of e-commerce."
Clay is most excited about another opportunity zone that sits north of Hard Rock Stadium — the home of the NFL's Miami Dolphins.
Stephen M. Ross, a real estate developer and owner of the Dolphins, just transformed a parking lot and opened a new tennis venue with lounges and restaurants and will soon add a new football practice facility adjacent to the stadium.
Clay said the stadium development could lure investors to the nearby opportunity zone.
"These things will help spur the development of those zones," Clay said. "You have all this activity right next to the zones."
Clay said Miami Gardens is working on an investment prospectus so developers and investors will know exactly what the city is looking for.
In southeast Washington, about three hours south of Seattle and two hours south of Spokane, Kennewick is marketing two opportunity zones.
One opportunity zone spans 650 acres and the other about 350 to 400 acres, Kennewick Economic Development Manager Miles Thomas said.
Prior to the opportunity zone program, the city and the Port of Kennewick teamed up to redevelop an area now in one of the opportunity zones as a mixed-use destination with housing, retail and other businesses.
The joint venture of the city and the port created a master plan and hired a company to build roads, sidewalks, utilities and other infrastructure, The Tri-City Herald reports. The JV has broken ground on the first of a nine-phase, 103-acre development of a former regional airport within the 650-acre opportunity zone.
Because the redevelopment project is in a designated opportunity zone, Thomas hopes the federal program could further the redevelopment of the area.
"We're being the stakeholders in the process by [constructing] some new buildings on the ground [to] kick-start some interest," Thomas said. "Then we'll sell off the parcels as opportunity zone investments."
San Bernardino County, California
One of the largest counties in the United States, San Bernardino County in the Inland Empire region of California comprises 24 cities.
The county is home to more than 50 designed opportunity zones. Many are ripe for industrial, housing, retail and mixed-use development.
"From an economic development perspective, we are always looking to share the advantages of our region and encourage development," said Reg Javier, San Bernardino County Executive Officer of Workforce and Economic Development. "To date, we find that the strength of the county’s population growth has been a major driver."
San Bernardino County has a lot going for it, San Bernardino County Economic Development Coordinator Elisa Laurel said.
It is one of the fastest-growing counties in the state in terms of population. The area's strong logistics and distribution sector has led to the Ontario Airport recently surpassing Atlanta as the nation’s busiest outbound freight hub. China Airlines last year added direct flights to and from China at the Ontario Airport.
Just last week, Cracker Barrel opened its second location in Rialto.
The county offers all of the benefits of a Southern California lifestyle, Laurel said.
"Housing [costs] 50% to 60% less than our coastal counterparts in Orange and Los Angeles counties," said Laurel, adding that more than 100,000 units are in various planning stages across the county. "As rooftops come in, we're going to need retail and other business developments."
U.S. Secretary of Housing and Urban Development Ben Carson, who also is chairman of the White House Opportunity and Revitalization Council, visited Fontana in February and toured one of the city’s opportunity zones.
As one of the cities in San Bernardino County, Fontana has a couple of opportunity zones, mainly in the city's downtown, Senior Planner DiTanyon Johnson said.
One of the opportunity zones sits right along a Metrolink line, Johnson said pointing at a map on a wall in the booth.
"This site has a lot of potential for some type of transit-oriented development," Johnson said.
Along with the opportunity zone, Johnson said, the City Council could make projects in the downtown area easier for developers. The council is slated to vote this week on a new city code that allows for the streamlining of certain mixed-use projects.
Clay said if the city passes the new code, developers will be able to build taller or wider mixed-use buildings in downtown. The city's plan is to create an urban mixed-use village where people can live, shop, work and play.
"We're already seeing a lot of synergy in that area with new opportunities for development that could take advantage of the opportunity zones," Johnson said.