As the vice president of business community development at BCB Bank in New Brunswick, Luis O. De La Hoz knows a thing or two about how to use investment dollars to build a community.
And, as the chairman of the board of directors of the Statewide Hispanic Chamber of Commerce of New Jersey, De La Hoz is well-versed in how to help the Hispanic community — the fastest-growing community of entrepreneurs in the state — continue to grow its numbers in the middle class.
That’s why he was so excited about last week’s Opportunity Zone Forum by Choose New Jersey.
And why he was so disappointed that not enough people are seeing what he now sees — that the new Opportunity Zone program can be a catalyst for underserved communities across the state.
“You know how many people I invited?” he asked, then answered: “I sent this to 40 or 50 people.”
De La Hoz pointed to real estate developer/investor Jiqiong Dai.
“And he was the only person who came.
“Most people found an excuse not to come. They think this is only for a big-dollar person. If you don’t get the information, then you’ll never become a big developer, because you’ll be missing the opportunity.”
Jiqiong admits he almost missed it.
Before the event, he said, he didn’t know much about Opportunity Zones, the new federal program in which investors can get a reduced tax rate on their capital gains if they invest them in a designated low-income area — and then potentially have to pay no taxes on capital gains on those investments.
Jiqiong, who worked previously on Wall Street, owns a number of properties that he has renovated and now rents in New Brunswick. He said he now sees how the Opportunity Zone program can help him — and others — do more in the city.
“I think it’s a very good opportunity,” he said. “It’s a little bit complicated, but I think the best way to take advantage of this is to create a kind of hedge fund structure, where you pull in all the people’s money who are willing to invest into this kind of neighborhood.”
Jiqiong said the Opportunity Zones’ benefits make social-impact investing more realistic.
“We need to find other real estate investors who are committed to the rental space for low-income families,” he said. “As an investor, if I can make 12 percent, I’m happy. After taxes, that’s not too much.
“If you can give the tax incentive to the investors, I can make less, I can take 5, 6 or 7 percent and still be happy. That’s a pretty good idea. I think it’s a brilliant way to get people to put their money in.”
Jiqiong started investing in New Brunswick in 2011, when the market, he said, was at rock bottom. Prices have slowly begun to rise, making it difficult for him to continue to buy.
He said the OZ program can change that.
“Things are different now than before,” he said. “In 2011 and 2012, the market was run down and there were deep discounts. At this moment, the market’s gone up a little bit.
“I can come in with more money, but that would push the price up, then everything would spiral up. That would push a lot of people out of the city. You don’t want to do that. You want to keep the price lower and affordable to the low-income family in the neighborhood. But, at the same time, you let the investor make a profit.
“If the investors can make money and you don’t pull the people out, it’s perfect. That’s why this is a brilliant idea.”
De La Hoz sees it, too. He just needs others to do so. He sees this as just the start for rebuilding underserved communities, as Jiqiong is trying to do in New Brunswick.
“If we get the economic support to provide access to capital to new markets, access to networks to our constituency, we can help build what they are trying to build: better communities,” De La Hoz said.
“The first thing is that we have to clean up all of these vacant houses. If the neighborhood has a lot of vacant houses, people get scared. Once you’ve improved the safety, people will come in. And when people come in, business will come in. That’s, basically, the game.”
The game starts with a conversation, he said.
“The importance that I see of this type of program is that it will allow communities to come together to listen, to learn,” he said. “I need people who understand the complete picture.
“People come here and say, ‘Where do I sign for free money?’ That’s not happening. We came here today to learn. If we can add that to the knowledge that we have, we can add to the equation.
“Maybe it’s not 2019, but, what if we start getting ready for 2020? And not just single houses, but buildings that will add housing and retail spaces on the first floor.
“That’s how you rebuild communities.”