How can I set up my Opportunity Zone fund to allows investors to choose between different OZ projects?

Answers

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  Marko Belej

  Taft

  August 12, 2021

  You can use a "tracking stock" approach. Under this approach, the Qualified Opportunity Fund (QOF) would be formed as an LLC, each of the QOF's projects would be held in a separate LLC and the QOF would hold 99% of the membership interests of each project LLC (so that each project LLC is treated as a partnership for tax purposes). The operating agreement of the QOF would have a separate distribution "waterfall" for each of its project LLCs. An investor's capital contribution to the QOF would be pushed down only to the project LLC in which he wants to invest, and he would participate only in the waterfall for that project LLC.

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  Matthew Rappaport

  Falcon Rappaport & Berkman

  August 14, 2021

  The easiest way would be to allow your investors to form their own Qualified Opportunity Funds (QOF) and JV with individual Qualified Opportunity Zone Businesses (QOZB), but that's a fair bit more costly from the sponsor side.

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