(co-authored with Ross Baird)

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To that end, Opportunity Alabama has emerged as a best-in-class model in how states and communities mobilize local corporations, high net worth individuals, universities, hospitals, foundations, and governments to get coordinated, invest at scale and attract outside capital.

The key mover in this was Alex Flachsbart, a remarkable individual who saw the potential of Opportunity Zones and moved quickly to organize Opportunity Alabama (OPAL) to maximize the potential of this new tool for his state. Ross singles out Alex as the single best “new localist” entrepreneur he’s worked with over the past five years. As Ross likes to say:

“I grew up in Georgia, and we always had a saying: “Thank God for Alabama.” It made us feel a little better about our rankings in everything. But in the world of Opportunity Zones, Alabama has defied the usual narrative. Thanks to the leadership of Alex and the work of OPAL (Opportunity Alabama), the state now ranks in the top ten nationally in OZ capital deployed.”

Alabama’s success isn’t just a story of unexpected triumph; it’s a blueprint for what’s possible when innovative thinking meets strategic execution. As Opportunity Zones stand on the brink of potentially significant expansion, the lessons from OPAL are more relevant than ever. We are excited to hear Alex unpack how one state leveraged this program to not only bring in unprecedented capital but also create the infrastructure for sustained inclusive growth.

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Our state’s largest utility (Alabama Power), our state’s largest bank (Regions), and a number of other corporate and philanthropic partners coalesced around the creation of a new nonprofit organization to be the “one stop shop” for capital access through the OZ incentive. This new nonprofit (Opportunity Alabama) would help originate investment opportunities, identify capital sources, and train project sponsors and capital allocators alike on how to leverage OZs and combine that incentive with the dozens of others at the state and federal level that could drive investment. Our goal was to put boots on the ground in every county, hosting educational events, listening sessions, and deal talks all over Alabama over a two year period. We wanted Alabama in the thick of the national conversation around OZ investing — and, over time, we hoped the same infrastructure that delivered OZ capital could start channeling non-OZ dollars into the same low-income geographies.

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What has the organization accomplished since its inception? Have these accomplishments met or are exceeded your expectations? What projects are particularly memorable?

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For the first two years of our organizational existence, we spent an enormous amount of time on the road, meeting with all the community, deal sponsor and investor representatives that would form the basis of our ecosystem. COVID completely changed the model — doing OZ education and capacity building over Zoom just wasn’t going to work. At the same time, we were realizing the limitations of the “connector” model: namely, that you can lead capital allocators to water, but you can’t make them drink! We decided that we’d rather pool capital within an infrastructure we controlled and could allocate, and spent the next twelve months partnering with Blueprint Local to build out a whole new investment shop within OPAL. We launched it in 2021, started deploying capital in 2022, and have now invested over $500M in deals out of that infrastructure over the last 3 years.

What’s so fascinating about Opportunity Zones is their enabling capacity. So many of the calls that we still get today are from folks that have a capital gain and are interested in OZ investing — but once they hear about the totality of our pipeline and investment infrastructure (which includes everything from tax credit investment and bridge fund products to a debt fund run by our own emerging CDFI), they may ultimately place OZ capital and additional investment, or invest a portion of their gain into one of our other products.

This evolution from having almost no capacity around capital deployment in underserved communities to having a fully-functioning, integrated capital access infrastructure statewide in just six years is, without question, our biggest accomplishment. But we’ve certainly had some memorable projects along the way — we’ve done everything from a $36M naturally occurring affordable housing development in a blighted, 20+ year vacant property to a $500K redevelopment of a neighborhood theater into a new home for a nonprofit and a music venue. We’ve invested in woman-owned, Black-owned, Hispanic-owned, and veteran-owned businesses, and have helped close deals from Selma to Heflin (population 3,500). And I believe we’re just scratching the surface of what this infrastructure can ultimately do for Alabama.

What lessons have you learned over the life of the organization? About local capacity? About private sector risk tolerance?  

I had a list that was about 20 bullet points long in response to this question! We have learned an enormous amount over the last few years (and much of it is what NOT to do, learned by experience), but if I were to pick a “Top Three”, they would be:

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What advice would you give a place that wants to adapt the Opportunity Alabama model? What are pitfalls to avoid? Surprising elements to elevate early? 

As mentioned above, I could write a small novel on pitfalls, but to keep your readers engaged — let’s do another Top 3 List:

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• The Cavalry is Not Coming Over the Hill. Early in our OPAL work, we were convinced that much of our capital (both operating foundation support and private investment) would come from national investors and philanthropy. While we had some luck with both (thanks to folks like Woodforest, Arctaris, Lumina Foundation and EFA), it was a drop in the bucket compared to what we were able to do locally. Only now that we’ve fully built our investment infrastructure, hired a strong management team, deployed millions in capital, and received consistent local buy-in are we attracting the kind of non-OZ-motivated national capital we hoped would “crowd in” from the start. The lesson learned here? Find or create an incentive powerful enough (more on this below) to make every single local capital allocator listen to your pitch, get as many of them as you possibly can into your infrastructure, and THEN go big with it.

• Have a “Hook” to Build Your Ecosystem. OPAL would not exist without Opportunity Zones. Over the last 20 years, various efforts to start CDFIs, leverage SSBCI, create local-vesting venture funds, etc. all ran into the same problem: they didn’t provide a big enough “tent” to draw in all the possible capital allocators, communities, and project sponsors, and/or they didn’t offer a compelling enough incentive to make them stay to listen. In Alabama, Opportunity Zones acted as the center tentpole — but that’s not to say that a special “local-vesting” oriented state tax credit couldn’t do the same thing in your community. And with what we think will be a favorable setup for Opportunity Zone renewal in 2025, there may be a second bite at the apple for leveraging a “revamped” OZ 2.0 to build a new OPAL wherever you are.

Bruce Katz is the Founding Director of the Nowak Metro Finance Lab at Drexel University. Ross Baird founded Blueprint Local, which has invested $250M in Opportunity Zone capital in projects that now have an estimated ~$2B in value across the country.