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For some people, the Opportunity Zone initiative is a taxincentive-based investment program. But for NES Financial EVP ReidThomas, it's much more.

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"This initiative was created to address one of the biggestissues our country faces by creating opportunities for all in thecommunities that have been left behind in this recent economicgrowth cycle," Thomas says. "As such, it has the potential to bethe most impactful economic development tool in US history."

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NES Financial recently collaborated with Howard W. Buffett, whois Warren Buffett's grandson, to develop what it says is the firststandardization technology for predicting ESG impact in OpportunityZones.

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"The ultimate success of this initiative will be measured by thepositive social impact that results in these communities," Thomassays. "As a technology company focused on enabling these types ofinitiatives to do the good they are intended to do, we developed apurpose-built solution that helps administer all aspects of the OZfund, including accounting, tax compliance, and impactmeasurements."

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As part of this strategy, NES began looking for an objective andconsistent measuring methodology to track the positive impact of OZinvestments. With Buffett, it implemented the impact rate of returnas part of its platform.

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"Despite the fact that the Opportunity Zone legislation isbipartisan and has evolved over decades under both Republican andDemocratic administrations, it is still subject to the politics ofthe day," Thomas says. "Left unchecked, these politics couldeventually kill the initiative."

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Thomas contends that the impact rate of return can break throughthat noise and show the real impact that the initiative is or isnot having. "We believe that Opportunity Zones are working and areenabling good things to be done that otherwise might not have beenpossible," Thomas says. "Our hope is that OZ legislation isultimately extended and expanded with real data supporting theimpact in an objective way."

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To evaluate the social, environmental and economic impact ofOpportunity Zones, the impact rate of return evaluates magnitude,quality, time and cost. Thomas says it is essential to standardizesocial impact and OZs in a scalable way.

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"Most of what is out there is subjective and requires extensiveconsulting, so we looked for something that could be implemented intechnology, that's algorithmic, and does not place any additionalcost burden on our clients," Thomas says.

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Thomas envisions that groups will use the tool to help designtheir projects to optimize returns and do good in the community."This will be helpful to our fund managers and their partners whenworking with local communities, and economic development corps ingetting the necessary permits and approvals to move forward withtheir plans," Thomas says.

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Leslie Shaver

Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.