Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 974

I spent this evening reading about Opportunity Zones , or “O-zones”, in the United States. 

For a census tract to become an O-zone, it has to have a poverty rate of 20% or higher, or the median household income has to be less than 80% of the surrounding area. Governors are also only able to designate 25% of their eligible census tracts.

Here is a map of the areas that have been designated as Opportunity Zones.

Here is how these O-zones work. (All excerpts taken from this Forbes article .)

The law’s engine is a new breed of financial product, the opportunity fund, that offers investors a trifecta of attractive tax breaks. Here’s how it works. Investors who sell assets have 180 days to plow their taxable capital gains into an approved opportunity fund, which must hold 90% of its assets in Opportunity Zone projects. To put money to work fast, the law requires that the funds invest all of their cash within some specified time frame. (The Treasury Department is still deciding on that and other crucial details.) Tax on the original reinvested gain isn’t due until 2026, and the taxable gain is cut by 15%. Meanwhile the new opportunity investment grows tax-free, like a Roth IRA, provided it’s held for at least ten years. (If it’s sold earlier, it can be rolled into another opportunity fund and remain tax-free.)

Here is how it could get the real estate industry to take action.

For real estate developers, O-zones offer cheap real estate and unlimited, untaxed upside if a neighborhood takes off. Developers must do more than stash cash in crumbling property. To qualify for tax perks, they must make swift and significant upgrades (at least equal to the cost of the initial purchase). With real estate projects come new office buildings, industrial districts, restaurants and affordable housing—all of which can lay the groundwork for an economic boom. “The real estate aspect is a great catalyst to attract new businesses,” says AOL founder Steve Case, an early supporter of the O-zone initiative, whose Rise of the Rest Fund invests in backwater areas. “But it’s the startups that will be the real job creators.”

And here is how it could influence where new businesses decide to locate.

“If Facebook could have chosen to locate itself in an Opportunity Zone, like the Tenderloin in San Francisco, the investors would’ve paid no capital gains on their equity,” says Parker, who presumably would have been one of the big winners. The promise of mega-returns could send VCs, investment banks and private equity firms scrambling to launch their own opportunity funds to create incubators, scour second cities for overlooked talent or move portfolio companies into O-zones. “It wouldn’t surprise me if a lot of Silicon Valley VCs started to tell founders, ‘We’d like you to go over the bridge to Oakland, or we’d like you to go to Stockton,’” Parker says.

If you’d like to learn more about Opportunity Zones, check out the Forbes article .

Look, I get it. 

The Raptors had plateaued. When the Cavaliers swept them in the playoffs earlier this year we all knew there were going to be significant changes in the off-season. Many people who know more about basketball than I do also seem to believe that sending our franchise player DeMar DeRozan to San Antonio in exchange for Kawhi Leonard is a win for us. The betting odds also seem to reflect this win.

But, like many people here in Toronto, the first emotion I felt this morning when I heard the news was sadness. Here is a guy who has played his entire professional career in Toronto (9 years) and has openly and continually expressed his loyalty to this city. He wanted to retire a Toronto Raptor. He declared himself to be Toronto.

Of course in the end this is a business. And the primary goal of this business to win championships. If you don’t think you’re in a position to win championships – or lose to the Golden State Warriors in the finals, which is probably the most that teams can hope for right now – then it behooves you to make the necessary changes, however painful they may be.

I have no idea how this all went down, but the Instagram story that DeRozan posted this morning makes it abundantly clear that he feels betrayed. He feels he was told one thing, and that one thing isn’t what ended up happening. That’s the truly sad part for me. But I’m not going to speculate. Instead, I would like to thank DeMar DeRozan for his dedication and loyalty to this city. He was one of Toronto’s finest city builders.

On Monday, John Zimmer and Logan Green, the co-founders of Lyft, published this Medium post announcing their “approach to partnering with cities to introduce bike and scooter sharing” to their platform. 

“Approach to partnering with cities” is undoubtedly a carefully chosen set of words given all the backlash going on right now around dockless scooters .

Nevertheless, this is an exciting announcement. I could have used a scooter this afternoon to get to a meeting. And this is all part of their larger goal of transforming Lyft into a multi-modal platform – one that will also support conventional public transit.

Here is an excerpt from the Medium post:

Transit, bikes, small electric vehicles, and infrastructure such as safe pedestrian paths and bike lanes, all play a large role in decoupling people’s right to mobility from car ownership. We know we can’t accomplish this alone, and we’re committed to working with cities and residents to bring these elements together in the most cohesive way to maximize a reduction in vehicle miles traveled.

The company has also set the goal that  50% of all trips on the Lyft platform will be shared rides  by 2020. It is yet another example of the lines between public transit and ride sharing apps becoming blurrier. 

Full post can be found, here .