Numbers Show California's Opportunity Zones Investments In The State Are Down



October 31, 2019

By Joseph Pimentel

In the nearly two years since the passage of a federal program aimed to spur economic development in low-income and distressed neighborhoods, there have been roughly 30,200 commercial real estate transactions in the designated opportunity zones in California.

In the two years prior to the program, there were more than 32,200 commercial real estate transactions in the same zones in the state, according to CRE data site Reonomy.

Proponents of the program thought it was going to significantly boost commercial real estate transactions in the 879 designated low-income neighborhoods spread across 56 counties in the state. But the opportunity zones program in California has so far been a flop, especially in major cities compared to other places nationwide.

Opportunity zones transactions in the Los Angeles-Long Beach-Anaheim MSA had a little more than 3,800 transactions from the start of the program in the beginning of January 2018 to September 2019. The previous two years before the program, that same area had close to 8,000 transactions.

Meanwhile, in the New York-Newark-Jersey City MSA, more than 9,700 properties have traded since the start of the opportunity zone program.

The San Francisco-Oakland-Berkley MSA had 1,098 properties trade, while the Dallas-Fort Worth-Arlington, Texas MSA had 2,600 properties change hands. The Atlanta-Sandy Springs-Roswell MSA had more than 4,400 commercial real estate transactions, while the Seattle-Tacoma-Bellevue MSA had more than 1,100 transactions, according to Reonomy.

The numbers aren’t wholly accurate. The opportunity zone program has no reporting requirement so it is hard to determine whether the buyers are actually taking advantage of the tax benefits of the program.

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Gilroy Sees Chance for New Businesses

Gilroy Dispatch


October 24, 2019

By Nate Mixter

Gilroy business leaders see a new tax incentive as a way to spur investment in the downtown corridor. But the clock is ticking on a timeline to take advantage of the opportunity.

“Opportunity zones” were created when Congress passed the Tax Cuts and Jobs Act in 2017. The act allowed the governor of each state to designate 25 percent of low-income census tracts as such a zone in which tax breaks could be available for business development.

Gilroy received two possible zones, which center on downtown and surrounding areas.

Those who invest capital into these properties in these zones are eligible to receive federal tax benefits. The longer the investor holds on to the investment, the greater the reduction in capital gains taxes.

But the opportunity zone designations only last through 2026, and the chance to receive the most tax benefits is diminishing.

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The Economic Equity Network Launches in Oakland With Investors, Entrepreneurs, and Civic Leaders of Color Focused on Community Wealth-Building Using OZ Capital



October 18, 2019

OAKLAND, Calif.--(BUSINESS WIRE)--The Economic Equity Network (“EEN”) launched yesterday at a private Roundtable event in East Oakland’s Allen Temple Baptist Church. The executive-level convening–a cross-sectoral gathering of Bay Area minority and women-owned business leaders, entrepreneurs, investors of color, nontraditional impact investors, philanthropy, and other public and private stakeholders–featured a series of panels that focused on driving reinvestment into the San Francisco Bay Area's low-income communities and minority-owned businesses; using strategic, impact-focused, and community-directed Opportunity Zone (“OZ”) capital. The event was the first of a series of roundtables the EEN will host in select major cities across the United States, leading up to a national summit. The EEN was created to support the deployment of OZ capital in ways that generate community wealth; to redress the racial wealth gap and stabilize communities of color with improved economic outcomes for future generations.

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In California, Opportunity Zones Have Become a Partisan Tug of War



By Joseph Pimentel

October 13, 2019

As California Gov. Gavin Newsom pores over the stack of new bills that he may sign into law, there is one he won't see at all — an effort to bring California into conformity on opportunity zones.

The state's legislators last month failed to support Newsom’s plan to provide $100M annually for investors who invest in designated opportunity zones across the state.

“We stand out," Kosmont Cos. President Larry Kosmont said. "There is still little support from the legislators for the opportunity zone program.”

The opportunity zones program, passed at the end of 2017, is a federal program aimed to spur economic development and job creation in 8,700 low-income communities nationwide. Investors who roll over their capital gains through a special fund in property or business long-term in designated zones receive certain tax benefits, including tax-free gains upon exiting that investment after 10 years.

In California, and the other nonconforming states, investors would be subject to those state’s capital gains tax.

Opponents of the program claim it is another tax break for wealthy investors and that some investments in certain areas with heavy minority populations could lead to displacement of residents and gentrification.

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How CIM Group Plans to Spend Its $5B Opportunity Zone Fund



By Jon Banister

September 22, 2019

CIM Group earlier this year launched one of the nation's largest opportunity zone funds, targeting a $5B raise, and one of its fund managers Friday shed new light on how it plans to deploy that capital.

CIM First Vice President of Portfolio Oversight Garett Bjorkman, speaking with Bisnow after his panel at the Urban Land Institute's Fall Meeting in Washington, said the firm is looking at opportunity zone investments in the Atlanta, Oakland, Los Angeles and Dallas regions, and specifically in Dallas' Deep Ellum neighborhood.

Bjorkman didn't disclose how much the fund has raised or detail the exact real estate projects it has planned in those markets, but he described the strategy CIM Group is planning in the opportunity zone areas it is targeting. He said the firm plans to cluster investments in individual neighborhoods to create a critical mass of amenities, such as housing and grocery stores, that can increase property values in the area.

"We are thinking about those communities holistically and take a community approach to activating these areas," Bjorkman said. "Without having that community approach, it really hinders your ability to take advantage of this program."

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Opinion: A call to philanthropy to help all Californians rise

The Mercury News


By Michael D. Tubbs and Kathleen Kelly Janus

September 19, 2019

California’s economy is thriving, but not all Californians are sharing in that prosperity.  Inland California, which stretches from Sacramento to Stockton through Fresno, Bakersfield, and the Inland Empire, contributes 17 percent of California’s economic output – but faces more than its fair share of poverty, unemployment and opportunity gaps.

Philanthropic giving mirrors those trends. California’s Bay Area has 20% of the state’s population and receives 53% of its philanthropic dollars, while the San Joaquin Valley is home to 11% of the state’s population and receives just 3% of its nonprofit dollars. Similarly, the Inland Empire accounts for 11% of California’s population but receives just 1% of the state’s nonprofit dollars.

If you’re a philanthropist investing in housing for the 59,000 people on our Los Angeles streets or services for the homeless in San Francisco, you might be wondering what these problems have to do with you. The answer is, everything. The fates of our communities are intertwined. As people migrate inland in pursuit of more affordable living, philanthropy must recognize the opportunity to truly build a California for all.

Bay Area organizations like Hamilton Families, are rehousing homeless families as far away as Sacramento and Fresno to address the skyrocketing need. We must ensure that jobs, supportive services, and affordable housing follow. If we don’t, we are just busing people out and passing big problems down the road, instead of building communities of choice where people can thrive.

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California Legislators Reject ‘Opportunity Zones’ Tax Cuts

The Epoch Times


By Ilene Schneider

September 12, 2019

After California Gov. Gavin Newsom proposed a tax break of $100 million per year for those who invest in qualified clean energy projects or low-to-moderate-income housing, state legislators declined to support the plan before this year’s deadline.

The lawmakers will adjourn their 2019 session on Sept. 13. However, Sept. 10 was the last day for the proposal to be added to a bill to be eligible for a vote.

“The administration remains committed to advancing the key priorities of affordable housing and green technology,” Newsom spokesman Jesse Melgar told Bloomberg Tax.

The proposal (pdf), released on Aug. 22, would have required annual progress reports for each state-level opportunity zone fund and capped allocations at $5 billion total for the entire program.

Kunal Merchant, president and co-founder of CalOZ, a business group that supports qualified opportunity zones (QOZ) in California, told The Epoch Times that the implementing the program at the state level in the future will still benefit the state.

Opportunity zones offer an important new tool, not only to promote economic mobility and the green economy in areas of our state that need it most, but also to re-evaluate and re-imagine how business, government, and community work together to foster a more competitive, equitable and sustainable economy in California,” he said.

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Fellow Democrats Stop California Governor’s Opportunity Zone Push

Bloomberg Law

Posted Sept. 11, 2019, 1:16 PM

  • Gavin Newsom sought narrow benefits for housing, green energy

  • Time runs out for deal in state legislature

By Laura Mahoney | Bloomberg Law

California Gov. Gavin Newsom has failed to win support from lawmakers to create state-level opportunity zone tax breaks this year.

Newsom narrowed an already narrow proposal in last-minute negotiations this week with fellow Democrats, who control both houses of the legislature. But his plan never emerged by the Sept. 10 deadline for bills to be eligible for votes before lawmakers adjourn for the year Sept. 13.

“The administration remains committed to advancing the key priorities of affordable housing and green technology,” Newsom spokesman Jesse Melgar said.

Newsom wanted to give investors in California projects the chance to defer or reduce state tax gains on investments in the zones—a move that would complement the federal program. He tried to convince legislators that his plan was more focused, effective, and transparent than the federal opportunity zone tax breaks.

The governor faced stiff opposition from labor groups even though he agreed to limit the program to housing and green energy projects, cap investments from individual funds at $100 million, and cap total state allocations at $5 billion.

The California Tax Reform Association—representing unions including the California Labor Federation and Service Employees International Union—pushed lawmakers to reject Newsom’s plan as a tax break that wouldn’t result in more investments. Such criticism has also plagued the incentive at the federal level.

“Rather, such an effort would simply be a giveaway of California’s taxpayer dollars to wealthy investors: the epitome of corporate welfare,” the group’s leaders said in a Sept. 9 letter to the chairs of the Assembly and Senate budget committees.

CalOZ, an organization representing investors and business groups advocating for state-level zones, will continue to push for creation of a state-level benefit in 2020, President and Co-Founder Kunal Merchant said. Forty-six of 50 states have enacted state OZs already.

“We were already behind and this just puts us more behind in terms of attracting investment,” he said.

California designated 879 Census tracts as opportunity zones in March 2018. They are spread across 57 of California’s 58 counties, and many have poverty rates of at least 30%.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at

To contact the editors responsible for this story: Jeff Harrington at; Colleen Murphy at

BIG STORY: Can the state make opportunity zones work better?

Statehouse Report


By Lindsay Street

September 6, 2019

A state Democratic lawmaker wants to “supercharge” a new federal tax break aimed at fueling private investment — and subsequently, jobs, housing and business — in blighted areas. 

The federal Opportunity Zones tax break has received criticism from national publications and tax policy experts who say it benefits the wealthy and promotes gentrification. 

But S.C. Rep. Marvin Pendarvis of North Charleston sees a bright side.  That’s because the federal tax break needs a state component to make it successful, he said.

“If what I propose gets introduced and passed, it changes lives tremendously,” said Pendarvis, a Democrat. Half of his district is in an opportunity zone that he said is plagued with drugs, crime, homelessness and hopelessness. “We’re facing some real-life challenges in these zones … We need to make sure the investment has a return for the people as well.”

Pendarvis wants to add a state-level tax break for developers, but with a caveat: There needs to be tangible community benefit — such as jobs, affordable housing or green space — from qualifying projects. He said his bill, which will be prefiled prior to the 2020 session, will also track investments and promote community input to help create transparency and accountability. 

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How to Ensure Opportunity Zone Investments Strengthen Local Communities

Stanford Social Innovation Review


By Kate Gasparro & David Weinberger

September 6, 2019

For two years, investors and neighborhood leaders in cities around the country have responded to economic Opportunity Zones (OZs) with hope and hesitation. The policy, part of the 2017 Tax Cuts and Jobs Act, provides tax incentives for long-term investmentsin low-income census tracts. These incentives are meant to help disinvested neighborhoods, hungry for economic growth, attract new financial opportunities.Heeding this call, nearly 90 OZ funds have dedicated more than $2 billion for investments in OZs.

The interest has highlighted the policy’s pitfalls. While investors set the terms of local investments in business, real estate, and infrastructure projects, they are not required to respond to community needs. Place-based investments, like those incentivized by the OZ policy, are increasingly vulnerable to local resistance, especially when investors do not attempt to understand the local context of their investments. This dynamic recently played out in Amazon’s plans for a second headquarters. Failure to solicit meaningful local input early in their planning process led to community opposition that ultimately thwarted their plans to build in New York City.

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Rockefeller Foundation Pours Millions of Dollars to Keep Opportunity Zones on Track



By Mary Childs

September 6, 2019

The Rockefeller Foundation is injecting another $3.7 million into programs to steer the Qualified Opportunity Zone program closer to its mission of boosting economically distressed areas.

The program -- which was developed in large part by the Economic Innovation Group, a think tank co-founded by Sean Parker of Napster fame, and became law in December 2017—allows investors to defer taxes on their capital gains by investing in property or business equity in a designated Qualified Opportunity Zone. If they hold on to the investment, they pay taxes on just 85% of the original capital gains at year seven, and any appreciation on that zone investment is tax-free after 10 years.

Investors have been interested but cautious given the program’s complexity and initial confusion over a few of the finer points. But the program’s primary criticism and biggest risk is that it will devolve into a real-estate gold rush, spurring a crop of luxury condominiums that not only fail to benefit current residents but displace them entirely.

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The NYT wrote a woefully imbalanced piece on Opportunity Zones.

Jared Bernstein Blog


By Jared Bernstein

September 3, 2019

A number of people (OK, four…but it’s early) have asked me to respond to the NYT piece from last Sunday on how the Opportunity Zone tax break is nothing but a boon to the rich. As I’ve written in a few opeds, I’ve been a cautious supporter of the program, though I’ve been careful to make the points that a) it’s too early to say much about outcomes, and b) while OZs have the potential to become a wasteful tax shelter mechanism, some early signs are hopeful. And, as the Times points out, some early signs are not.

The problem is, the piece was a list posing as an analysis. It just lists many examples of rich people getting the tax break through the program without a shred of evidence that poor people and places aren’t getting helped. That’s largely because, as noted, it’s simply too early to make this foundational assessment, which is why it’s too early to conclude that OZs are failing to have their intended effect.

In essence, the piece makes two points, neither of which should surprise anyone: rich people have capital gains, and rich investors are taking advantage of the OZ tax break. It then cherry picks a bunch of cases that look bad, where Opportunity Funds are supporting the building of luxury dwellings that would have been financed without the tax break.

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Are Opportunity Zones (OZ) Nothing But a Tax Break for the Rich?



By Brian P Phillips

September 1, 2019

Yesterday, the New York Times published an article on Opportunity Zones by Jesse Drucker and Eric Lipton: How a Tax Break to Help Poor Communities Became a Bonanza for the Rich. We think the authors correctly point out several real estate developments underway under the auspices of OZ which do not meet the ambitions or aspirations of the OZ program in terms of delivering needed social and economic development to low-income census tracts. The factors described driving the rise of such projects are all spot-on, including investor opportunism, the inclusion of zones that are not currently or strictly low-income, and zoning that encompassed already planned or pet projects. However, we agree with John Lettieri: this “early wave” is not what we should use to judge OZ overall.

In fact, we believe there will be “Three Waves of OZ”: Wave 1, The Land Rush, is the current focus on real estate (OZRE). It is worth noting, this wave is itself in early days, which is why we see the most opportunistic projects happening first. Wave 2, The Business Boom, is venture capital investment in OZ businesses (OZB) and is the sweet spot of the program in terms of community/social impact as well as broader scale investor returns. Cherry-picked projects aside, venture capital has the potential to deliver higher ROI than real estate development over time. Wave 3, The End Zone, is when OZB and OZRE together deliver on the full promise and ambition of OZ. At that point, OZRE will have slowed and be possibly even be overbuilt, OZRE construction projects will be coming ready for occupancy, and they will need tenants who can pay rents/leases that justify the increase in basis required by OZ regulations. The best source of such tenants ideally will be successful, fast-growing companies and the supporting infrastructure (places for employees to live, eat, and shop) that will have been fueled by OZB investment (wave 2).

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State Unveils New Opportunity Zone Incentives

Albuquerque Business First

Screen Shot 2019-09-12 at 11.22.27 AM.png

By Ron Davis

August 28, 2019

Investors who put money in economic development projects in select low-income communities are set to have another incentive to do so.

The New Mexico Department of Economic Development unveiled Tuesday an opportunity zone incentive, which will guarantee an additional $1 million in Local Economic Development Act funding to projects that are located in one of 63 opportunity zones across New Mexico and fit into a number of criteria from the economic development department.

Created by the “Investing for Opportunity Act” of December 2017, "opportunity zones" are low-income communities ripe for economic development. Under the new tax legislation, any taxpayer in the country can defer, reduce and exclude capital gains taxes through timely opportunity zone investments but they must invest through a Qualified Opportunity Fund, according to the Internal Revenue Service

“One of the goals of my administration is to spread investment to all corners of New Mexico and we want to use every tool we can to accomplish that,” said Gov. Michelle Lujan Grisham in a statement. “That’s why we are going 'all in' for opportunity zones and giving an extra boost to help these communities."

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Trump's tax cuts were mostly a big waste of money, but they also included one idea that just might help rebuild forgotten parts of America

Business Insider


By Jared Bernstein

August 25, 2019

Most of the changes to tax policy in the Tax Cuts and Jobs Act, the 2017 tax cut passed by Republicans in Congress, were designed to cut taxes for wealthy households and corporations, and these cuts have worsened inequality and led to much higher deficits. 

But there was one bipartisan policy in the tax plan with the potential to help low-income people by incentivizing investments in their communities: "opportunity zones." 

Eligibility for this tax break on capital gains (income from selling an appreciated asset) is conditioned on making long-term investments in areas designated as distressed. It is one part of the tax plan that has real potential, but, like any bank-shot tax break, it also carries significant risks, including wasteful subsidies, tax sheltering, and the chance that the program will fail to reach those who need it the most.

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California Governor Renews Push for Opportunity Zones

Bloomberg Law

California Gov. Gavin Newsom has introduced a new proposal for state-level opportunity zones.

California Gov. Gavin Newsom has introduced a new proposal for state-level opportunity zones.

By Laura Mahoney

August 23, 2019

California Gov. Gavin Newsom renewed his push for state-level opportunity zone tax breaks with a revised proposal that loosens rules for affordable housing and green energy projects to qualify.

Newsom’s updated proposal—a modified version of federal opportunity zone tax breaks that allow investors to defer or reduce state tax on gains from investments in the zones—keeps the basic outlines of what he first released in May. In addition to limiting eligible projects to housing and green energy, the governor would still cap investments from specific funds at $100 million, cap total state allocations to $5 billion over the life of the program, and penalize funds that fail to report information about their progress. Newsom, a Democrat, released the proposal Aug. 22.

The governor wants lawmakers to enact the program before they adjourn for the year Sept. 13. Legislators pushed talks on the details of opportunity zones to the end of the legislative session but made room for the program in the state budget that was enacted July 1. 

What’s New

Key changes in the new proposal, according to the Department of Finance, are:

  • High-density housing projects could have fewer units available to low-income households than projects that don’t meet density bonus requirements under a separate state law;

  • The Franchise Tax Board, which would administer the program, would have more flexibility to expand the list of eligible green technology projects as they are approved by other state agencies such as the Public Utilities Commission.

  • An option for funds to exceed the $100 million allocation cap through a more robust vetting at the Governor’s Office of Business and Economic Development is eliminated, making the $100 million cap per fund the maximum.

Lawmakers Involved

Newsom’s office worked with some lawmakers on the updated proposal, including Sen. Robert Hertzberg (D), who has a separate bill that would establish a new board of state officials to oversee the program and allocate investments among zones throughout the state.

Hertzberg’s spokeswoman said Newsom’s new proposal doesn’t contain everything he wanted “but overall we would rather there be some kind of conformity than none at all” with changes in federal tax law. 

A group representing investors that has called for expanding the program to more types of projects said the updated proposal is a positive step.

“This proposal is an important step forward in California embracing the potential of opportunity zones, particularly as a new pathway to grow our clean economy and expand housing options for low and moderate income Californians,” Kunal Merchant, president and co-founder of CalOZ, said.

Labor Groups Opposed

But labor groups that are part of the California Tax Reform Association oppose a California-specific program and are pushing to kill the governor’s proposal. In a Aug. 20 letter to Senate and Assembly leaders, the group said it will oppose all opportunity zone bills, whether they are tied to the state budget or stand on their own, because the program would create more benefits to wealthy investors on top of those they already gained through federal tax reform.

“Unfortunately, the premise of the OZ program is flawed at its core, and legislative clarification will not insulate the state from the numerous negative impacts we can rightfully anticipate would occur,” the association said in its letter.

California designated 879 Census tracts as opportunity zones in March 2018. They are spread across 57 of California’s 58 counties, and many have poverty rates of at least 30%.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at

To contact the editors responsible for this story: Jeff Harrington at; Megan Pannone at

 Link to original article

California Bill Would Partially Conform State to IRC for Opportunity Zones



August 23, 2019

California’s tax code would partially conform to the federal Internal Revenue Code concerning opportunity zones (OZs) under provisions in a draft of a budget trailer bill released today. Under the bill, California would grant the same state tax benefits as federal benefits for OZ investments in affordable housing and housing that meets the requirements of the state’s density bonus law, as well as certain clean energy property. In order to be eligible for the tax benefits, qualified opportunity funds would be required to have 90 percent of their assets in California OZ property. The legislation would cap the aggregate amount of California OZ investment eligible for tax benefits at $5 billion, with a maximum fund size of $100 million. The state Senate and Assembly will both hold hearings on the proposed legislation.

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Opportunity Zones Facts and Figures

Economic Innovation Group

California Gov. Gavin Newsom has introduced a new proposal for state-level opportunity zones.

California Gov. Gavin Newsom has introduced a new proposal for state-level opportunity zones.

August 22, 2019

In the summer of 2018, the U.S. Department of the Treasury certified 8,766 individual census tracts across all 50 states, six territories, and the District of Columbia as Opportunity Zones. 294 Opportunity Zones contain Native American lands and nearly a quarter (23.2 percent) are in rural areas. These communities were chosen by governors from the wider universe of qualifying low income census tracts. Governors selected tracts that on the whole demonstrated far more distress across nearly every available social and economic measure than the eligible tracts they bypassed. The result is a map of both need and opportunity across which one of the most exciting economic and community development experiments in at least a generation will play out.

How do Opportunity Zones work? Investors can now choose to roll capital gains over into qualified Opportunity Funds, which in turn channel patient capital into qualifying equity investments in Opportunity Zones for at least a decade in exchange for capital gains tax reductions and possible exemptions. This new source of risk capital will seed new startups, accelerate business expansions, create jobs, increase and improve housing options, and revitalize the built environment in distressed communities across the country.

Here’s what we know about where these communities stand today.

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What’s the Latest on Opportunity Zones?

Next City


By Oscar Perry Abello

August 20, 2019

Parts of Erie, Pennsylvania, can soon thank Opportunity Zones for free WiFi, even though the city itself was never guaranteed to see a dime of investment via the new federal tax incentive. 

As part of its strategy to court investors and businesses, Erie itself is investing in free WiFi for its eight designated Opportunity Zones, GovTech reported. It’s one of the rarer tactics that various cities, counties and states are using to stand out from the crowd as they vie for attention from the relatively small slice of people and corporations who have the requisite net worth to take advantage of the tax break.

And it is quite a crowd so far. Some 8,700 census tracts around the country received designation as Opportunity Zones last year, making them eligible for investment via the new tax break on capital gains income. Only one city — Boulder, Colorado — took the extraordinary step of telling developers and investors to hold their horses while it updated the zoning and land use regulations in its lone Opportunity Zone census tract. The city is now ahead of schedule to lift its temporary moratorium on Opportunity Zone construction and demolition permits later this month.

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Lendistry Receives $250K Commitment From State Bank of India (California) to Provide Financial Opportunities for Local Businesses



August 20, 2019

Lendistry announced today the State Bank of India (California) (SBIC) has committed $250K to Lendistry’s CRA Loan Fund I to provide financial opportunities to businesses in underserved communities in the Los Angeles area. SBIC joins a growing number of national and regional banks partnering with the fintech lender to provide capital to small businesses.

“The State Bank of India (California) is pleased to be partnering with Everett and his team. We are quite impressed with the community impact Lendistry has achieved in a relatively short period of time,” says SBIC President and CEO Mr. Rama Amara. “I’m especially pleased to see such strong support of minority and women-owned businesses, in addition to the many small business owners that may not have access to affordable capital. I know Everett and his team will continue to have a deep and sustained impact on the communities of California and many communities nationwide.”

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