Blending traditional public-private partnership (P3) methodologies with the newly designated federal Opportunity Zones could create new, affordable funding sources for challenging, smaller scale social infrastructure projects, such as schools, courthouses, and police stations.
Some Opportunity Zone benefits, however, require nearly shovel-ready projects to benefit investors. For example, an investor can defer tax on any prior gains invested in a Qualified Opportunity Fund until the date the investment in a Fund is sold, or December 31, 2026 at the latest.
For a project to be procured, constructed, stabilized and sold by 2026, a jurisdiction would need to go to market within the next 12 months. My team in A&M's P3 Infrastructure Real Estate advisory group is currently exploring strategies to leverage this new federal financing alternative to benefit our public sector and institutional clients.
Given the long-term nature of P3 investment, the ability to permanently exclude all gains generated by a qualified opportunity zone fund if the investment is held for over 10 years presents a significant incentive, and significantly increase potential returns.