Bryce Butler | Courtesy of Access Ventures

Local capital investment group Access Ventures announced Tuesday that it is exploring national partnerships to create a fund specifically to invest in the newly created Opportunity Zones in Louisville and several other cities, taking advantage of federal legislation passed late last year to incentivize those who invest into low-income areas with large capital gains tax breaks.

In an interview with Insider Louisville on Monday, Access Ventures’ founder and managing partner Bryce Butler said that he hopes to expand the type of investments they have ushered into the Shelby Park neighborhood over the past five years to other low-income Opportunity Zones in Louisville, emphasizing that their intent would be to work with entrepreneurs in those communities, not extract wealth and gentrify neighborhoods.

The newly designated Opportunity Zones throughout the country — which include 144 census tracts in Kentucky and 19 in Louisville — are areas where capital investors can deploy private sector investment vehicles called Opportunity Funds.

These investors are incentivized to roll large amounts of untouched capital into these zones by then having taxes on capital gains deferred, reduced or eliminated — ideally building up a poor community while also rewarding investors with a large return.

While the U.S. Department of Treasury still has not finalized specific rules on how these Opportunity Funds would work, Access Ventures recently announced that it had joined a national coalition of investors, philanthropic foundations and public policy experts to discuss best practices for how these funds should work in order to build up communities, instead of serving as just a tax shelter for the rich to exploit.

Tuesday’s announcement by Access Ventures goes further, as the investment group stated that it will partner with D.C.-based venture capital firm Village Capital over the summer to explore an Opportunity Fund. The nonprofit also has invited other venture capitalists and philanthropic foundations around the country to join its mission and “build on the work that we have done in communities such as Louisville, Tulsa and Columbus.”

According to Access Ventures, this national investment vehicle would build “on the vision we have piloted in Shelby Park,” citing its $2.4 million investment and 200 new jobs in that neighborhood — including small business loans and investments in businesses like Scarlet’s Bakery, MobileServe and the co-working space The Park — as “a vision for what could be.”

Butler told Insider that the fund the partnership is exploring would target not only Opportunity Zones in Louisville but also ones in Atlanta, Memphis, Kansas City and Roanoke, Va.

“We’re still cautious about where this might go, but we want to take several months and explore what this might look like and if there’s enough energy to do something,” said Butler.

What these Opportunity Funds could and should look like is already in being discussed by the national coalition in weekly calls, in which they talk about best practices to avoid gentrification and what type of investments should be certified by the Treasury. Butler said representatives of the Treasury have been invited to some of these calls, as they “try to help inform and educate representatives across the country.”

Butler said the main concern is over whether Opportunity Funds will be allowed to come in and buy real estate, inflate property values and serve as “just another way for investors to make a lot of money” while “communities are left in the dust.”

He added that some in the coalition are concerned that this could be a possibility, as early guidance coming from the Treasury has indicated that these funds “will be self-declared and self-regulated.”

“That’s concerning because that’s somewhat ripe for abuse,” Butler said. So there’s a big push just to get a little bit more clarity from the Treasury on that and what specifically would qualify as an investment in a zone … Ultimately, the way this thing hopefully would be done is that local markets would be participating in the final determination of how these things are deployed.”

Butler said that Bruce Katz of the Brookings Institute has done some work with Mayor Greg Fischer’s office on this same subject, even issuing a report on how Louisville is a great case study for the proper way to deploy some of these strategies.

“The best strategies that will be put forward are going to be strategies that incorporate both the fund and then aligned capital — such as permanent finance, bank financing, CDFI lending, grant and philanthropic capital — to support programs that help local entrepreneurs, small business owners in those communities,” Butler said. “How do we actually provide more of an integrated solution that is not just about real estate, for instance, in these markets?”

The Louisville census tracts in blue were certified as Opportunity Zones by the U.S. Treasury. | Courtesy of the Kentucky Cabinet for Economic Development

Although Butler cited their investments in Shelby Park as a model for the new partnership’s potential Opportunity Fund, some have questioned whether these investments have spurred the beginning of gentrification and displacement as property values rise with new projects and flipped houses.

However, Butler disputes such a notion, saying that Shelby Park residents have been included in their projects and have not been displaced. He added that they have “deployed 3,500 volunteer hours throughout the community in cleanups and community gardens” — in partnership with the adjacent Sojourn Community Church and their “Urban Experience” program — in addition to soliciting input from the community on mural projects.

While Access Ventures was initially involved in purchasing and renovating eight vacant and abandoned properties in Shelby Park, Butler noted that there were more than 300 of such properties at the time, and “we haven’t done any real estate development in the last two years.”

“We’ve been very much mindful of the timing and the pace (of investment),” Butler said. “We want to collectively improve the community, but we want to do so in a way that is honoring to those long-term residents.”

Butler added that while “some of the homes have started to sell for a little bit more than they had historically, I haven’t heard of rents yet going up. We haven’t increased our rents to our tenants since we started four years ago.”

He also noted that “some of the best urban planners in Louisville would tell you that Louisville has no problem with gentrification as a whole because we’ve had flat population growth for 20 years,” as opposed to cities with rapid growth like Houston, Denver and San Francisco.

Another concern of the national coalition is that Opportunity Zones have been selected that include census tracts that are technically considered low income but have also received a huge influx of investment and wealth in recent years. In Louisville, an example of this would be the NuLu neighborhood just east of downtown, and Butler cited examples within California, where east Palo Alto and the campuses of Berkeley and Stanford where designated Opportunity Zones by the governor.

Butler said the Treasury has indicated that they will finalize its rules on Opportunity Funds at some point in June but has not given a hard date. He added that the coalition and partners expect this to happen “in the next several weeks.”

Butler ultimately expects the Treasury to issue a very broad application for Opportunity Funds, which means that “it’s going to be up to the investors and the fund managers to define them.”

“That’s kind of what we’re trying to explore this summer,” said Butler. “Are there enough investors that are willing to kind of put money into a fund that gets them returns but also is aligned with really improving these communities?

“We’re hoping that there will be fund managers out there that see the potential, see the danger and want to develop a fund that’s trying to minimize the danger and maximize the community impact of financial returns. So that’s the sweet spot. That’s the holy grail of it,” he added. “I’m hopeful, but I’m also cautiously optimistic that that can be accomplished.”

Joe Sonka is a staff writer at Insider Louisville focusing on government, politics, education and public safety. He is a former news editor and staff writer at LEO Weekly and has also freelanced for The Nation and ThinkProgress. He has won first place awards from the Louisville Metro chapter of the Society of Professional Journalists in the categories of Health Reporting, Enterprise Reporting, Government/Politics, Minority/Women’s Affairs Reporting, Continuing Coverage and Best Blog. Email him at [email protected]


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