DIRECT APPROACH to Opportunity Zone Financing

The Indirect Approach is illustrated in our Direct Approach Flowchart.

The “Direct Approach” involves a “Qualified Opportunity Fund” which is:

  • a corporation, limited liability company, or partnership organized, which is owned by one or more Eligible Investors as well as the developer (or other owner who is not an Eligible Investor and would otherwise have been an owner);
  • self-certified to the IRS (and no application process is required); and
  • required to invest in and hold at least 90% of its assets in “Qualified Opportunity Zone Property” determined by the average of the percentage of Qualified Opportunity Zone Property held in the fund as measured (a) on the last day of the first 6-month period of the taxable year of the Qualified Opportunity Fund, and (b) on the last day of the taxable year of the Qualified Opportunity Fund.

“Qualified Opportunity Zone Business Property” means:

  • any tangible property used in a trade or business of the Qualified Opportunity Fund if (a) such property was acquired by the Qualified Opportunity Fund by purchase after December 31, 2017 from an unrelated party (at least 80% difference in direct or indirect ownership); (b) the original use of such property in the Qualified Opportunity Zone commences with the Qualified Opportunity Fund or the Qualified Opportunity Fund “substantially improves” the property within 30 months; and (c) during “substantially all” of the Qualified Opportunity Fund’s holding period for such property, “substantially all” of the use of such property was in a Qualified Opportunity Zone; and
  • less than 10% of the average of the aggregate unadjusted bases in the property of such entity is attributable to intangible property and “nonqualified financial property” (such as cash or cash equivalents, debt, stock, and partnership interests, but not including reasonable working capital and construction reserves).

Please click back to: Opportunity Zone Financing for a description of our services for which our fees are generally contingent upon the receipt of the opportunity zone financing.