One of the biggest questions hanging over the opportunity zones established by 2017’s Tax Cuts and Jobs Act is whether they will work as advertised, bringing new investment to forgotten neighborhoods rather than simply pulling dollars into areas already on the investment community’s radar.

Ryan Cos. President-Great Lakes Region Tim Hennelly answered that question with an emphatic yes at Bisnow’s Chicago Opportunity Zones and 2019 Forecast event Thursday.

He announced that Ryan will break ground in May on a 400K SF industrial building at Pullman Crossings, a planned industrial park in an opportunity zone on the Far South Side that covers Chicago’s historic Pullman community, and it was that designation that brought in the necessary investment.

The opportunities for significant capital gains tax breaks on investments made within a zone made the numbers work for investors that otherwise would not have placed bets on a Pullman property, he said.

Steve Glickman, founder and CEO of Develop LLC, an architect of the opportunity zone program, said people should set their expectations high.

“This is a systemic change in the way capital markets work,” he said.

Other programs meant to drive community development, such as tax credits, work on a smaller, project-by project scale, whereas this effort was designed to steer $100B a year into a vast stretch of areas that cities and state governments consider underserved.

“It’s not just another community development program; it’s a new industry.”

He emphasized several times how new opportunity zones are. The U.S. Treasury Department, which first set out the governing rules and regulations last fall, still has more work to do in fully fleshing out all of the details.

“In 2013, this was an idea on the back of a napkin,” Glickman said.

Its quick passage and implementation over the last year and a half was due to deep bipartisan support, with key early backing coming from Sen. Tim Scott (R-SC) and Sen. Cory Booker (D-NJ), he added.

Glickman said that deep well of support should give confidence that opportunity zones, which now cover 12% of the country, will go forward with full, long-term backing from mayors and governors, many of whom had never heard of the program when it hit President Donald Trump’s desk for a signature.

The zones are not just for investments in commercial real estate, although that has been the initial focus, Glickman said. He hopes that as federal officials continue designing and publishing new regulations, investors will consider how they can capitalize businesses located within zones, as well as infrastructure projects and other possibilities.

The government still hasn’t precisely defined which business investments will qualify for tax breaks. Any new business entirely within a zone definitely qualifies, but what happens if it spreads beyond those boundaries is just one of several unknowns.

Treasury officials are working on a precise definition, though the process has been delayed by the government shutdown.

“But right now, it’s a little murky,” Glickman said.

Patricia Davis, president of Unique Casework Installations Inc., a small contractor on Chicago's West Side, attended the conference, and said even though opportunity zones seem promising, some people in her community worry about big developers parachuting in and shoving unvetted projects down their throats.

She hopes that other attendees will keep that in mind as they examine potential investments in neighborhoods where they have never invested before.

"If you're going to develop in the community, try to reach out to some of us in the grassroots."