NBA Owner Makes Big Bet On Opportunity Zones As Biden Presidency Sparks Fresh Start For OZs
Steven Bertoni Forbes Staff
CEO Network Forbes Senior Editor & VP covering CEOs, Tech, startups, finance, VC.
An owner of the Sacramento Kings is driving hard into the Opportunity Zone market. RevOZ—an investment arm of the Bhathal Family, which parlayed their swimsuit business into a real estate empire and stake in the Kings—plans on investing roughly $250 million into OZ projects over the next few years. The capital follows the $125 million RevOZ has already plowed into OZ investments, including apartment complexes in Sacramento, a healthcare center in San Bernardino, CA, and an eco-friendly hotel in Redmond, Oregon.
Lisa Bhathal Merage, who cofounded RevOZ with brother Alex Bhathal, says she got interested real estate impact investing after the Kings ownership group built their stadium, the Golden 1 Center, in downtown Sacramento in 2016. "We saw tremendous job growth and the jump in new retail stores and businesses that opened in the surrounding area," says Merage. "The social impact piece of opportunity zones resonates and makes it so different from traditional real estate investing."
Passed into law with the 2017 Trump tax cuts, Opportunity Zone legislation was designed to send a rush of capital into America's poorest communities by offering investors a chance to lower, and sometimes erase, tax on capital gains reinvested into designated OZ neighborhoods. While it became law under the Republican tax overhaul, OZs were a bipartisan backed program initially sponsored by Senator Cory Booker (D-NJ) and Tim Scott (R-SC)—and backed by more than 70 lawmakers across the political spectrum.
As I've written before, OZ was ideological surf and turf. For Republicans, it promised a tax cut, a market-based solution, and a way to put power in the hands of state and local governments. Democrats, meanwhile, liked the prospect of pouring money into areas in dire need of funding. Senator Booker calls OZs "domestic emerging markets."
All tax laws create tax loopholes. The OZ program has faced early criticism in the press over projects that seemed to enrich wealthy developers and investors while doing little to lift the local community. A slow rollout of regulations, a lack of clear plans to measure the program's impact, and controversy over where some cities put their opportunity zones drew controversy too.