COVID-19 has created a new headwind for developers and sponsors raising capital for opportunity zone (OZ) investments.
The 2017 tax reform legislation that created OZs unleashed a frenzy of new funds and groups chasing what was projected to be billions of dollars in fresh investment capital aimed at revitalizing economically distressed communities. Delays in getting clarity on those new tax rules created frustrations and took some of the wind out of the sails in early fundraising. “Things were starting to get some momentum at the beginning of the year. There seemed to be a good pipeline of things coming,” says Stephen Sharkey, a tax partner at DLA Piper who advises clients on tax structuring of OZ projects and funds.
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