Minnesota's first multiple-project "Opportunity Zone" fund has launched to attract investor money for real estate projects in one or more of the dozens of low-income neighborhoods selected this year following last December's federal tax-cut legislation.
Backers of the Developing Real Estate in Emerging Areas of Minnesota (DREAM) Fund say they hope to raise up to $100 million from investors attracted by tax breaks and mission in the Minnesota Opportunity Zones. Gov Mark Dayton identified 128 low-income zones by census track in the Twin Cities and outstate Minnesota that were certified by the U.S. Treasury Department.
"Opportunity Zones offer a form of emerging market investing that taps overlooked and undervalued communities to unlock their full potential," said CEO Ravi Norman of Thor Companies.
Norman is also a partner in Minnesota Opportunity Zone Advisors (MN-OZA), which will manage the fund.
North Minneapolis-based Thor with revenue of $268 million and 250 employees, also is Minnesota's largest minority-owned firm. And Norman has said publicly that Opportunity Zones represent great opportunity for Thor's development-and-construction business.
Jamie Stolpestad, a veteran real estate investment manager who grew up in the Twin Cities, returned last year from a job overseeing billions in investments for the New York-based real estate-investment arm of Allianz Life North American. He also has signed on as a partner of MN-OZA.
Stolpestad said the investment partnership has a so-called "triple bottom line" objective of financial return, as well as environmental and social goals to benefit low-income neighborhoods and residents.
"We expect the greatest investor interest coming from those who prefer to invest locally and want to put their money where their heart is," he added.
The U.S. Treasury predicts that $100 billion would flow into Opportunity Zone-related funds nationally.
Under the Invest in Opportunities Act and Treasury guidance in October, investors who sell appreciated assets may roll over the gain from such sales to a qualified opportunity fund within 180 days and defer federal capital gains tax until 2026. In addition, gains from the opportunity fund are free of federal capital gains tax if the investment is held for at least 10 years.
"We have been working for months and are excited that detailed Treasury regulations have been issued so we can finalize the selection and underwriting of specific projects," Stolpestad aid. "We can now talk with prospective investors with greater clarity from the new regulatory guidance."
