Has anyone actually set up an Opportunity Zone Fund yet?

[Michael Wolffs]

I'm thinking about setting up an opportunity zone fund.  This is still pretty new.  There's some talk about it, but I don't know how many actually exist at this point.  So has anyone actually done it, and what has their experience been to date?

[Bryan Mills]

@Michael Wolffs

I have done several for clients. Most people I’ve worked with prefer a single asset “fund” set up for the project as opposed to a true multi-asset fund. The documentation is similar to any other real estate project but with some special Opportunity Zone language inserted into the operating agreement/partnership agreement. The “fund” reports its status as an Opportunity Fund simply by filing form 8996 with the entity’s first annual tax return.

The difficult part usually is navigating all the rules in order for the project to qualify, but that can be relatively straight forward for new construction and projects involving a substantial rehab. The timing/ordering can be critical with the related-party limitations (which often comes into play if an affiliate purchases a property for development and then later plans to transfer the property to a new partnership/LLC set up for the project).