Evaluating Business Prospects in an Opportunity Zone
Once a Tribe has confirmed that an Opportunity Zone includes a tribal jurisdictional area, it may want to conduct its own evaluation of the prospects for specific types of business investment in the zone. In recognition of the fact that investment will be driven by market forces (and not government mandates), tribes and other governments should work to present the case for why business investment in a specific location is likely to be successful and to address any perceived limitations, such as availability of a ready work-force. Some of these efforts may need to be done in collaboration with local or state governments—particularly if the Opportunity Zone includes both tribal and non-tribal land. Some municipal governments are already hosting business forums aimed at highlighting the potential projects within designated Opportunity Zones.
Under the Opportunity Zone legislation, there are very few legal limitations on the types of investments that can be made by an Opportunity Zone Fund. However, the statute does provide—by cross-referencing Section 144(c)(6)(B) of the Code–that investments in a golf course, massage parlor, hot tub facility, suntan facility , racetrack or other gambling facility, or a liquor store –do not qualify. Therefore, tribes should identify which businesses are needed (e.g., market demand for a grocery store or affordable rental housing) and be prepared to show potential investors how investment in such a business could be successful over a five to ten-year period.