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RXR Realty is reportedly starting a fund specifically for projects in the federal government’s newly created opportunity zones.
The firm is seeking to raise $500M, Bloomberg reports, largely from high net worth individuals. The new federal program designed to bring investment and development into low-income areas passed in December as part of the Tax Cut and Jobs Act. The zones give investors a tax break in exchange for investments in underserved communities.
There are around 8,700 communities that were nominated by governors across the country, Bloomberg reports. New York State has so far suggested 514 census tracts to become zones, according to Empire State Development.
RXR, led by Scott Rechler, a power broker in regional planning and transportation groups, reportedly already has developments that would work well for the fund. Its $170M development in downtown New Rochelle is a possible contender, as is its $83M project in Nassau County and its development on Hall Street near the Brooklyn Navy Yard.
Supporters of opportunity zones say they will bring much-needed capital to ailing communities, but critics have questioned its effectiveness and suggested it could just be used as a tax dodge by developers.
Phoenix-based equity firm Virtua Partners made a similar move, and has launched a fund to invest in properties in opportunity zones in the Sun Belt states, including Texas, Florida and Georgia. It is targeting a $200M raise.
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