Site Development Strategy Key to Early Opportunity Zone Success

Jan 2, 2019 | News, Newsletter

Nate Green
Montrose Development Advisors

 

Marketing helps but a fancy web site cannot replace a strong site development plan that illustrates an Opportunity Zone is prepared for development.  Creating an Opportunity Zone site development plan involves five steps that includes the creation of site plans and infrastructure finance strategies, enacting land use entitlements and tax incentives, advocating for a state and local Opportunity Zone public policy agenda, marketing the Opportunity Zone and seeking professional guidance to operate an Opportunity Zone by seeking investors. 

Site plan and infrastructure finance strategies are an essential first step for Opportunity Zone development as all these 8700 census tracts are competing for investors from around the U.S..  Early Opportunity Zone investment is likely to travel to Opportunity Zones with strong site development plans that outline target industries and infrastructure finance strategies.  Investors want to understand the likelihood of a complicated site generating a profit.  This profit is tied to the succeed gaining in value.  The value proposition is most likely connected to attracting an end-user with an interest in the site but that end user will not move to an Opportunity Zone unless the infrastructure, zoning, water and sewer agreements and local and state tax incentives are in place.

Opportunity Zones must be focused on the highest and best use of the site.  Different Opportunity Zones will have different highest and best uses. Research into the industry likely to find an Opportunity Zone site attractive should be based upon an industry cluster analysis that develops a location quotient measure based upon federal government occupational data as well as with an eye on the impact of automation and other economic trends that could impact the future of investment at the site.  In addition, the costs and availability as measured by the real estate market matter for site development plans as rental rates, land purchase, construction costs, vacancy and absorption rates all impact the likelihood of economic success at an Opportunity Zone.

Understanding the transportation and water and sewer and other infrastructure costs at a site is essential to launching an Opportunity Zone.  No site can develop without adequate infrastructure to permit transportation to and within the site as well as the provision of water and sewer service at the site.  Both Brownfield and Greenfield sites need this analysis so investors can understand the complete development costs tied to their Opportunity Zone investment.

Finally, learning the costs of infrastructure at an Opportunity Zone site sets up the discussion for how these costs are going to be met.  Opportunity Zone infrastructure finance strategies can be based upon U.S. Commerce Department Economic Development Administration Public Infrastructure Grants, New Market Tax Credits, historic preservation redevelopment tools such as Downtown Redevelopment Districts and Historic Preservation Tax Credits, state economic development organization loans and grants, local public finance programs such as Tax Increment Financing and finally local and state tax credits and abatements.

Opportunity Zone site development strategies are not flashy or exciting but they involve the hard work essential for Opportunity Zones to gain early investment.

In Memoriam – The Life of Dan Evers

I first met Dan in the fall of 2016.  I had moved to Central Ohio over the late holiday season in 2015 to begin serving as the new Director of GROW Licking County CIC, Dan’s former role.  I was immediately struck by many in the community who worried that I would “not be enough,” that the “shoes were too big,” and that “Dan was larger than life.”  And they were right. 

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OEDA 2022 Annual Excellence Awards – Call for Nominations

The Ohio Economic Development Association’s annual Excellence Awards program recognizes the achievements of individuals and organizations in Ohio in the areas of economic and workforce development.  Submit your nominations today and have excellence in your community recognized statewide!

A panel of judges will evaluate the nominations, determine finalists, and select a winner for each of the categories noted below.  Award winners will be announced in conjunction with the 2022 OEDA Annual Summit, being held October 3-6 at the Exchange at Bridge Park in Dublin, Ohio. 

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