Delivering on the Promise of Opportunity Zones

Delivering on the Promise of Opportunity Zones

January 13, 2020

A still-novel tax code provision promises plenty of opportunities: Investors get an opportunity for tax savings. Communities get an opportunity for development of neglected or on-the-cusp areas. Real estate developers get an opportunity to access new capital, notably capital with a long-term investment horizon.

But an unresolved question hangs over the Opportunity Zone program. As phrased by ULI Senior Resident Fellow Tom Murphy: is it a swindle, or a good deal for the changing dynamics of a neighborhood?

Murphy, a former mayor of Pittsburgh, acted as the moderator of one of two sessions focused on Opportunity Zones at the 2019 ULI Fall Meeting in Washington, D.C. Real estate executives, tax law specialists, and others discussed projects that have taken advantage of the program in its early days. They also looked ahead to the program’s challenges and possibilities.

“We really view Opportunity Zones as a way to incentivize job growth within communities that currently are underserved,” said Garett Bjorkman, first vice president for portfolio oversight at CIM Group, a national real estate and infrastructure owner, operator, lender, and developer. The program lowers the cost of capital for developers, he said. It also speeds up the timeline for those investments because the law specifies time windows for the most attractive incentives.

“From the investor side, they think this is a once-in-a-lifetime opportunity,” said Jill Homan, president of Javelin 19 Investments, a Washington, D.C., real estate development, investment, and advisory firm.

Program Structure

The Opportunity Zone program was created as part of the 2017 tax overhaul, the Tax Cuts and Jobs Act. It offers incentives for long-term investment—five to 10 years—in designated low-income communities. Investment takes place through what is called a Qualified Opportunity Fund, set up to meet specific legal requirements. While many types of business investments might qualify, much of the attention and action has focused on real estate.

The investor gets three tax breaks that together make it attractive to invest soon and then hold. Tax on capital gains of the invested money is deferred until 2026 (or until the investment is sold or exchanged). A portion of the investment is excluded from capital gains tax—15 percent if the money was invested by the end of 2019, or 10 percent for money invested in 2020 or 2021. (There is no exclusion for later investments.) And if the investment is held for 10 years, appreciation is basically untaxed because the basis is increased to market value at the time of sale. That final break is “most compelling” to investors, said Abraham Leithner, a tax lawyer who is a partner at Goulston & Storrs in New York City. Congress’s Joint Committee on Taxation estimated average annual tax savings of $1.5 billion from 2018 through 2025.

The earliest Qualified Opportunity Funds were formed in 2018. Estimates of how much money those funds will attract vary. Homan said that anecdotally she knows of deals that total $2 billion in equity actually raised, not just talked about. Assume, she said, “I know about 10 percent of the market. We are at inning one of what will be a growing market.”
Critics of the program say that much of the benefits have gone to rich investors rather than to the poor communities the program was touted to aid. In particular, the ULI panelists repeatedly cited a lengthy August 2019 New York Times article, “How a Trump Tax Break to Help Poor Communities Became a Windfall for the Rich.” That article outlined how investors are reaping breaks on projects that were already underway or that serve well-off communities.

But the ULI panelists said that as the Opportunity Zone program matures, it should bring more of the desired type of investment. Most deals that have been completed were already well into the planning and financing process when the program came along, Bjorkman conceded. “That’s not really what the program was intended to do.”

Especially over the first year or so, regulations were unclear, so capital was difficult to come by. As tax rules were clarified in 2019, investor interest picked up. Bjorkman said, “As we go to 2020 and 2021, I really think there is going to be more capital raised.”

Capital at Work

For instance, Bjorkman said, his company worked for five years to entitle development of a solar power project on a 20,000-acre (8,100 ha) tract of contaminated farmland in California’s Central Valley. “This legislation opened the funding door for this project,” he said. “We’ve been able to capitalize this project much quicker than we had ever anticipated.”

Target investors for Opportunity Zone projects are those with significant capital gains to shelter—family offices, high-net-worth individuals, and perhaps the fabled tech billionaire who wants to roll over the profit from a stock sale into what could be a socially conscious venture. “The moon and the stars have to cross,” with an investor who has a taxable gain and is looking to put the money into, say, affordable housing, said John Williams, president and chief investment officer at Avanath Capital Management, an Irvine, California–based real estate investment management firm that owns about 10,000 housing units, most of which are classified as affordable.
Investors might be attracted by the social impact of a project, but they still expect to profit, the developers on the panel emphasized. “We haven’t found anybody that wants to take a lower return,” said Sean Burton, chief executive of Cityview, a Los Angeles real estate investment firm that builds urban mixed-use and multifamily projects in the U.S. West.

There are about 8,700 designated census tracts spread across all 50 states, the District of Columbia, and four U.S. territories. Each jurisdiction designated up to one-quarter of its qualifying low-income communities, and the list will not change unless the law does. Those designated zones “run the gamut from truly distressed . . . to others that are up-and-coming or have been magnets for capital,” said Leithner.

Opportunity Zone capital is, by its nature, long-term. The maximal tax benefits come to investors who stay invested for 10 years. That makes it especially attractive for a place that is attempting to revitalize and reinvent itself, according to James Gronke, an economic development specialist and president of the Erie (Pennsylvania) Regional Chamber and Growth Partnership. “We’re the kind of community Opportunity Zones were designed for,” he said.

There are eight designated Opportunity Zones within the Erie city limits, he said, and most of the developable land within them is bayfront. With the backing of Erie Insurance, a deep-pocketed local business mainstay, the Erie Downtown Development Corp. has raised $30 million. It now hopes to syndicate that into $150 million invested in downtown housing. In August, city development boosters sponsored a two-day event to inform would-be investors about the Opportunity Zones. About 300 people attended, Gronke said.

The Opportunity Zone program “gives us access to capital we wouldn’t otherwise get,” he said. In a place like Erie, where growth is flat, “without patient capital, you can’t get there.”

Location is not the only requirement for a project. To qualify, a project has to make improvements over 30 months that at least double the investment basis for a property.

“The problem is, how do you double the basis in a prudent way?” Williams asked. His company runs four affordable housing funds and works mostly with institutional investors that commit $2 million to $5 million. “If you own a parking lot in an Opportunity Zone, you’re golden,” he said.

Of the 80 properties in Avanath’s portfolio, 14 were in Opportunity Zones, Williams said. Analysis identified four properties with adjacent land that offered the opportunity to create affordable housing and thus increase the value of the land.

For example, at the Woodside Senior Apartments, an income-restricted age 55-plus community in Ontario, California, Avanath had two buildings with about 70 units each. An old office building sat between them. Avanath obtained control of that structure and plans to tear it down to add 100 to 120 senior units. Without the Opportunity Zone financing, it would not have made sense for his company to buy that office building, Williams said. It would have cost too much.

Similarly, at the Ravenna apartments in Orlando, a 228-unit income-restricted property that Avanath acquired in 2015, there was adjacent developable land. The company will build another 100 units there.
Avanath has structured its financing so that the firm is both the buyer and the seller, selling the development projects into an unlisted real estate investment trust that it created as its own Qualified Opportunity Fund. Williams estimated that the Opportunity Zone tax breaks could add about 300 basis points to the high-single-digit or low-double-digit returns that an investor would expect from one of his firm’s multifamily projects.
In some circumstances, it is possible for a project that started out with conventional financing to switch over to Opportunity Zone financing, Burton pointed out. One such circumstance can be if a Qualified Opportunity Fund buys a property before it is granted a certificate of occupancy.

That happened with one Cityview development, a 174-unit apartment project in an Opportunity Zone in California’s San Fernando Valley that was set for completion in late 2019. The company put it up for sale unleased, “which we never do,” Burton said. The company received 17 offers from Opportunity Zone funds. “It’s under contract to sell at what we thought it would have been worth a year and a half from now, fully leased.”
Other Cityview developments also will draw on Opportunity Zone financing. The company already intended to proceed with that work. “The advantage for us was to broaden our investment base,” Burton said.

To date, developers and investors have focused on how to structure deals and investment funds, but it is time to move along from that, Bjorkman said. “Getting around the structure is no more complicated than any other tax issue that we deal with on a day-to-day basis,” he said.

“At the end of the day, you hire a real estate counsel like you always do,” Bjorkman said. If the lawyer signs off on the structure, move ahead. “Focus on your ability to execute on a project.”

Author: Maryann Haggerty

Originally published on Urban Land

Sarah Hunt

Senior Associate, Business Development & Capital Relations

Ms. Hunt joined Cityview in 2021 and is a Senior Associate on the Business Development & Capital Relations team.  She is primarily responsible for relationship management, investor communications, and marketing collateral.  Additionally, she works closely with internal functional teams on due diligence efforts and supports investor reporting and special projects.  She is also a member of Cityview’s Sustainability Committee focused on communication of ESG initiatives to investors.

Ms. Hunt has over six years of real estate investment, capital formation, and investor relations experience.  Prior to joining Cityview, she was an Associate with Chicago-based Magnolia Capital.  During her tenure, she worked on equity capital raises for numerous real estate investment vehicles.  Prior to Magnolia, Ms. Hunt was a Financial Analyst with LaSalle Investment Management where she oversaw the financial performance of assets with over $1 billion in value.

Ms. Hunt received her Bachelor of Business Administration degree in Finance, Investment, and Banking from the University of Wisconsin-Madison.

Ramtin Esfandiari

Director, Acquisitions

Ramtin Esfandiari joined Cityview in 2018 and is responsible for managing acquisitions, including sourcing, underwriting and closing multifamily development deals. Prior to joining Cityview, Ramtin was on the Acquisitions team at The Bascom Group where he underwrote over $9 billion in multifamily acquisitions across the U.S. and supported all aspects of the acquisition process. Ramtin holds a Bachelor’s Degree in Business Economics from the University of California, Irvine, and is an active member of Urban Land Institute.

Jonathan Anderson


Jonathan Anderson is the Controller of Cityview and provides leadership and oversight over the finance, accounting, and shared services departments.  Prior to joining the Cityview team, Jonathan worked at CIM Group where he held several finance and accounting roles during his tenure, most recently as head of private fund reporting and prior to that as director of SEC reporting for one of CIM Group’s publicly traded REITs.  Jonathan began his career in Ernst & Young’s assurance practice where he served both public and private clients in the real estate and asset management industries.  Jonathan graduated from the University of Southern California with both a bachelor’s degree in accounting and a bachelor’s degree in business administration with an emphasis in real estate finance.

Tina O’ Brien

HR Director

Tina O’Brien, HR Director, is a senior national and state-certified HR Professional (SPHR, SHRM-SCP, PHRca), managing the HR team overseeing all aspects of Human Resources for both Cityview and its affiliate, Westhome. Her experience spans the spectrum of the HR field, including recruitment, employee relations, performance management, benefits, compliance and employee development. She joined Cityview in summer 2021 from a telecom technology firm in Van Nuys, and previously worked for a private real estate investment and property management company in Beverly Hills. Tina is an LA native and she’s committed to helping grow our vibrant, healthy corporate culture here at Cityview.

Noah Watts-Russell

Director Asset Management
Noah Watts-Russell is Director, Asset Management of Cityview. As Director of Asset Management, he oversees Cityview’s value-add portfolio and is responsible for establishing and driving the portfolio business plans to maximize performance and value. Prior to joining Cityview, Noah was an Associate in the Real Estate division at The Blackstone Group where he oversaw over $15bn in multifamily real estate (>70,000 units, covering market rate, affordable and rent-controlled) and worked on over $2bn in total sales and $1bn in refinancing. Prior to Blackstone, Noah managed the FP&A team at LivCor, Blackstone’s multifamily asset management company. Noah holds a Bachelor’s degree in Finance and Economics from Washington University in St. Louis.

Denise Katz

Director Asset Management

Denise Katz manages Cityview’s core and development assets across multiple investment vehicles and is responsible for maximizing the operational and financial performance of the assets.  Denise has over twelve years of experience in real estate. Prior to joining Cityview, Denise was Regional Vice President at CIM Group of a $2.4 billion portfolio in the Western US and Latin American markets. During her time at CIM, she managed end-to-end transitions of development projects, acquisitions, and dispositions of office, multifamily, retail, parking, condominium, and mixed-use projects. She holds a double major Bachelor of Arts degree in International Studies and Psychology from Wilkes University in Wilkes-Barre, PA.

Steve Roberts

Director, Development and Construction
Steve Roberts is responsible for the development of several of Cityview’s ground-up multi-family assets, including due diligence, design, entitlement, permitting, construction, and market delivery. Prior to joining Cityview, Steve managed several nationally award-winning projects as Vice President of Development for Community Dynamics, a Santa Monica based developer of residential and mixed-use communities. Steve has built his career on creating exceptional communities that deliver high-quality housing to residents, first-rate design for neighbors and municipalities, as well as strong financial returns to investors. Steve holds a BA in Urban Studies and Planning from UCSD and earned an MBA and Master of Real Estate Development from the University of Southern California.

Anh Le

Director, Development

After 8 years in the construction industry managed complex multi-use development projects, Anh Le joined Cityview in 2018 as Director of Development. Le manages ground-up developments in Northern and Southern California and leads consultant teams through entitlement, design, permitting, budgeting, contracting, construction management and project turnover. She works closely with designers, neighborhood groups and Cityview’s in-house Asset Management team to deliver best-in-class multifamily projects. Prior to Cityview, Le worked as a project engineer and project manager at Cobalt Construction. Le holds a Bachelor’s of Science in Civil Engineering from the University of California, Irvine.

Kyle Naye

Senior Director, Acquisitions

Kyle Naye is Senior Director, Acquisitions of Cityview.  As Senior Director of Acquisitions, he is responsible for managing acquisitions, including sourcing, underwriting, closing and developing comprehensive business plans for investors.  Naye primarily focuses on non-California markets across the Western U.S., including Seattle, Portland, Denver, Phoenix, Salt Lake City, Dallas, and Austin.  In his role, Naye works closely with the Cityview team to manage and expand strategic acquisitions across the firm’s vertically integrated platform.

Prior to joining Cityview, Naye was a vice president of originations at PGIM Real Estate, where he provided transactions and underwriting oversight for core-plus and high-yield debt vehicles. He also held a prior role at PGIM managing the underwriting, investment committee preparation and closing of $992 million in multifamily, retail and office assets across the Bay Area and Pacific Northwest. At earlier stages of his career, Naye was a senior associate of acquisitions at Clarion Partners, senior real estate analyst at Northmarq and an officer in the United States Navy.

Zory Grigoryan

Director, Development

As Director of Development, Zory Grigoryan is responsible for the full cycle development of several of Cityview’s projects, which includes managing the due diligence, underwriting, entitlement, design engineering, construction processes and turnover to asset management. Prior to joining Cityview, Grigoryan worked for Oakmont Capital as a Project Manager overseeing the development and construction of several multifamily projects. Prior to that, he worked at Cobalt Construction as a Project Manager on the construction of numerous mixed use and multifamily projects. During his career, Grigoryan has been responsible for the development, preconstruction and construction of over 1,500 units.

Grigoryan holds a Bachelor’s of Science Degree in Construction Management from the California State University of Northridge, where he was the top ranked graduate of his year. During his time at Cobalt Construction, Grigoryan was also selected as distinguished alumni by the CSUN department faculty and appointed as ambassador for alumni recruitment by CSUN construction management department’s board of governors committee.

Chris Brown

Director, Capital Relations

Chris Brown is responsible for capital raising and investor relations at Cityview. Chris has over seven years of real estate investment and capital raising experience. Prior to joining Cityview, he was a member of the Fund Advisory team at JLL working on equity capital raises for private real estate investment vehicles. Prior to JLL, Chris worked on the Portfolio Management team at Clarion Partners and the Asset Management team at LaSalle Investment Management. Chris graduated from Florida State University with a Bachelor’s Degrees in Finance and Real Estate. He is a general securities representative.

Dana Gomez-Gayne

Vice President and Associate General Counsel

Dana Gomez-Gayne manages the legal aspects of all project-related matters, including acquisition, development, management and disposition, and advises Cityview on corporate formation and maintenance, insurance, risk management and other legal matters. She was previously an Associate at O’Melveny & Myers LLP and Manatt, Phelps & Phillips, LLP where she represented a variety of clients in real estate, project development and finance transactions. Gomez-Gayne also has a background in fundraising development and worked at Teach For America raising philanthropic funds from regional and national corporations and foundations. She is a graduate of Pomona College and Pepperdine University School of Law.

Rob Lester

Managing Director, Business Development & Capital Relations
Rob Lester is responsible for business development and capital formation efforts for the Firm’s investment platforms, developing strategic growth initiatives, and creating long-term relationships with investors and partners. He has nearly 25 years of investment banking and private capital formation experience. Prior to joining Cityview, he was Managing Director with Macquarie Capital, and a Managing Principal with Blackstone. ​

Con Howe

Managing Director

Con Howe leads Cityview’s partnerships to finance, assemble and entitle land for development in the greater Los Angeles area. With over 40 years of experience in planning, entitlements and development, he assists all Cityview funds with acquisitions and development strategies. Prior to coming to Cityview he was the Director of Planning for the City of Los Angeles responsible for the Adaptive Reuse Ordinance and zoning to encourage infill housing. Previously he was the Executive Director of the New York City Planning Department.

Shane Robinson


Shane Robinson is responsible for managing all aspects of Cityview’s stabilized, value add and new development assets. With more than 22 years of experience managing multifamily assets, he is a seasoned real estate professional experienced in a range of investment strategies that drive growth and efficiency for investors.

Prior to this role, Shane held pivotal positions at various organizations in the real estate industry. As Vice President of Property Management at Westhome, Robinson played a vital role in implementing the operational infrastructure that facilitated market expansion.

During his tenure at Sunrise Management, his leadership established and solidified the company’s operational foothold in new markets, contributing to the growth and success of the firm. His early asset management career was at GHP Management, where he specialized in lease-ups and effectively managed a substantial core portfolio of over 5,000 units.

Melissa B. Delgado

VP, Asset Management
Melissa Delgado is responsible for overseeing Cityview’s asset management and portfolio operations. Prior to joining Cityview, Melissa was a Senior Director at TruAmerica Multifamily LLC where she was responsible for achieving the investment objectives of an $800 million portfolio. Earlier in her career, Melissa was an asset manager for Kennedy Wilson’s Southern California portfolio. Prior to that, she was a Vice President and Head of Marketing at Kepler Capital Markets, an investment bank in New York. ​

Devang Shah

Managing Director, Acquisitions

Devang Shah is co-head of Cityview’s acquisitions activities on the West Coast. He has 25 years of experience in real estate investment, development, design, construction and asset management. Previously, Devang was the principal of Marketcents Inc., an independent project management firm, serving as an owner’s representative to investment firms, builders and developers. Prior to that, he worked was Vice-President at RCLCo, LLC, a national independent real estate consulting firm. ​

Adam Perry

Senior Vice President, Development and Construction

Adam Perry oversees all aspects of the commercial real estate development process from acquisition due diligence and entitlement processing through design budgeting, contracting, construction management, closeout and turnover. Prior to joining Cityview, Adam worked at CIM group as an Associate Vice President of Development overseeing ground up retail, office and mixed-use developments. ​

Adam holds a BA Degree in Political Science and History from UCLA and an MBA from the UCLA Anderson School of Management.

Matthew Falley

General Counsel & Chief Compliance Officer
Matt Falley oversees and directs the company’s legal affairs and is the firm’s Chief Compliance Officer. Matt was previously a partner at Greenberg Glusker Fields Claman & Machtinger LLP, where he represented numerous clients in the real estate industry, including Cityview. Matt holds a B.A. from the University of California, Santa Barbara and a JD from the University of California, Berkeley School of Law (Boalt Hall), where he was a member of “California Law Review” and Order of the Coif.​

Tony Cardoza

Managing Director, Acquisitions
Tony Cardoza is responsible for Cityview’s acquisition activities throughout the West Coast. He has 21 years of experience in real estate investment and management. Previously, Tony ran the investment group for Real Estate Capital Partners in the Western U.S., which developed and acquired over 5,000 multifamily units. Prior to that, he worked for Prometheus Real Estate Group in a land and multifamily acquisitions role on the West Coast. Tony holds a B.A. in Economics from Middlebury College and an MBA from the Haas School of Business at UC Berkeley.​

Jennifer Halvas

Managing Director, Investor Relations
Jennifer Halvas leads the firm’s investor relations team, where she is responsible for maintaining relationships with the investor community, bolstering infrastructure for new and existing investors and helping to develop investment strategies and initiatives. She has been instrumental in securing capital needs for several Cityview funds across a broad base of institutional investors, insurance companies, foundations and endowments, family offices and high-net-worth investors. A 12-year veteran of Cityview, she uses her deep institutional knowledge to create value for investors and the communities in which Cityview works.
She was previously at O’Melveny & Myers LLP, where she represented a variety of clients in real estate, project development and finance transactions. Jennifer holds a B.A. with honors from the University of Southern California and a JD from Vanderbilt Law School.

Damian Gancman

Chief Operating Officer and Chief Financial Officer

Damian Gancman oversees the operations of Cityview and its investments while supporting the strategic growth of its finance, acquisition, asset management and property management functions. An 18-year veteran of the firm, Damian is also a partner at Cityview and a member of its investment committee. As CFO, he helped build out Cityview’s best-in-class finance department, including the implementation of strategic process, accounting, reporting and technology improvements that enhance the investor experience.

In addition to his role at Cityview, Damian is a guest lecturer for the University of Southern California’s Master of Real Estate Development program and is a key contributor to the Cityview Leadership Academy. Damian earned a master’s degree in real estate development from the University of Southern California and a dual bachelor’s degree in business administration and psychology from the University of California, Berkeley.

Sean Burton

Chief Executive Officer

Sean Burton has been with Cityview since 2003. Prior to joining Cityview, Sean was vice president of corporate business development and strategy at Warner Bros. Before that, he was an attorney in the real estate and corporate groups at O’Melveny & Myers, LLP and also served in the White House during the Clinton Administration. In 2022, Burton was appointed by President Biden and confirmed by the U.S. Senate as the federal nominee on the Metropolitan Washington Airports Authority Board of Directors, which oversees Washington Dulles and Reagan National airports. He also serves as co-chair of the Los Angeles Coalition, a coalition of business leaders for the economy and jobs in LA. From 2013 to 2021, Sean served as President of the Board of Airport Commissioners which oversees the LAX and Van Nuys airports. Sean holds a B.A. from the University of California, Irvine and a JD from New York University School of Law.