Tag Archives: Impact Investing

From the Land of OZ – My Top Ten Favorites from the Final Regs

Now that we have all had a chance to celebrate a Merry Christmas, a Happy Kwanzaa or a Happy Hanukah, and have had the chance to digest 544 pages of final OZ regs – what, you say you have not really studied the new final regs yet – can’t be the case :) !

Read more in our new Opportunity Zones blog.

From the Land of OZ – Final OZ Regulations Issued by the IRS/Treasury

On December 19, 2019, the U.S. Treasury Department and the IRS issued final regulations implementing the Opportunity Zones tax incentive. According to the IRS press release, the final rules seek to provide clarity for Opportunity Funds and their eligible subsidiaries in determining qualification and levels of new investment in Opportunity Zones. They also provide guidance regarding the types of gains that qualify for Opportunity Zone investments, as well as gains that may be excluded from tax after a 10-year holding period.

Read more on our new Opportunity Zones blog.

 

From the Land of OZ: New CRA Regulations proposed – including credit for providing “financing for or supports for a QOF”

The Office of the Comptroller of the Currency (OCC) along with the Federal Deposit Insurance Corporation (FDIC) released proposed regulations on December 13, 2019 which would institute significant changes to the implementation of the Community Reinvestment Act (CRA) if implemented.

Read more on our new Opportunity Zones blog.

From the Land of OZ: Rapid increase in funds invested in Opportunity Zone Funds

Despite the laments that I have heard of late at various conferences and read in various articles, Opportunity Zones are, in our little slice of the world, very busy, very active and, per both Novogradac and Bisnow, OZ Funds who are focused on raising third party equity have seen a marked increase in funds under management in the last few months and have raised approximately $4.5B to date. While this is indeed less than the $6T of unrealized capital gains estimated to be available to invest, it is still a very sizable sum of money.

Read more in our new Opportunity Zones blog.

Opportunity Zone Update – OMB Guidance Expected and Some State Follow On – Brad A. Molotsky, Esq.

Continued high interest and activity on the Opportunity Zone fronts on many levels this past week. Conversations, closings and connections continue at a torrid pace – including a packed IMN conference in NYC this past week with many of the national and regional luminaries in attendance. By way of a quick update on a few fronts, courtesy of our friends at Novogradac for their recon:

Federal – On March 12th, the Office of Information and Regulatory Affairs (OIRA) received the 2nd tranche of regulatory guidance for review from the Internal Revenue Service (IRS) concerning the opportunity zones (OZ) incentive. OIRA is a division of the White House Office Management of the Budget. The proposed IRS rule is expected to address what types of property qualify as qualified OZ business property, steps an OZ business must take to be qualified, the penalty for a qualified opportunity fund’s failure to meet the 90% investment standard and more. After a mandated review of at least 10 days, the OMB is expected to release the guidance to be published in the Federal Register. The first tranche of guidance was reviewed for 36 days before it was published.

Vermont – H 442 introduced in the Vermont Legislature would make investments made in Opportunity Zones eligible to apply annually for the state Downtown and Village Center Tax Credit, which is twice as often as other projects are allowed to apply and would expand eligibility under the program only for OZ investments. The Downtown and Village Center Tax Credit covers between 10 percent and 50 percent of eligible rehabilitation expenses and has a $2.4 million statewide annual cap. If enacted, the bill would go into effect July 1.

Ohio – Gov. Mike DeWine said that his proposed 2020-2021 budget will call for a 10% state income tax credit to attract investment to opportunity zones. DeWine will propose a nonrefundable credit using existing tax credit availability to create the new credit.

At this point 31 states have “followed form” and are offering some level of state capital gains relief to those who follow the federal opportunity zone rules and invest in businesses or real estate pursuant to the federal OZ rules and regulations. New Jersey is moving ahead with a bill to become the 32nd state.

I look forward to seeing some of you on the 25th at our discussion in Baltimore on OZs. If of interest, drop me an email as space is limited. Best regards.
– Brad A. Molotsky, Esq.

ESG – Relevant in this day and age or just a fad?

I had the pleasure of attending the National Association of Corporate Directors (NACD) – Philadelphia Chapter meeting yesterday morning at the Union League in Philadelphia.  Very good attendance to hear Dave Stangis (Campbell’s Soup), Jamie Rantanen (US Trust) and Jennifer Wong (Glenmede) discuss the topic of ESG (“Environmental, Social and Governance”) as it relates to public company and private company investment.

ESG provides companies and investors with a systematic means to identify risk within the lens of environmental issues, social issues and governance issues.  Different, but related to, Corporate Social Responsibility (“CSR”) which is the means of improving social outcomes within an organization and how and organization measures its ESG outcomes.

Super conversation and some interesting questions from the audience during the presentation that touched on aligning values with investment outcomes (i.e., impact investing), risk mitigation through focus on ESG, the Sustainable Development Goals (or SDGs), the increase of shareholder activism in the investment space, including an increased focus on ESG issues, the Sustainable Accounting Standards Board (or SASB) and their focus on measurable sustainability metrics, and the difference between philanthropy, impact investing, ESG investing and standard market investing.

To the question about ESG and is it relevant from the audience member focused on mutual fund investing – the panel and this author firmly believe yes, ESG is relevant, becoming more relevant and an increasing amount of investors are seeking to invest in companies that align their ROI with ESG.  No, not everyone, of course, but more and more as time goes on.  I for one believe ESG will continue to become more relevant as a lens within which to view investing, efficiency, and alignment of investor interests with companies that more closely match their values.

I look forward to engaging in the conversation as the year progresses and to including some of my friends and colleagues in a monthly chat on ESG. Come join us if of interest.

Check out RBS’s chart at http://go.pardot.com/l/441592/2018-09-18/jjjrt8 for some interesting data

See also, Larry Fink, CEO of Blackrock’s statement on ESG – https://www.blackrock.com/corporate/literature/publication/blk-esg-investment-statement-web.pdf

#Sustainability #ESG #SRI #impactinvesting #governance #SASB #environmental, social, governance