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Earlier this month, on a temporary stage set up on the Block 216 parking lot for a ground-breaking ceremony, an investment manager pitched to an audience of potential investors and VIPs an opportunity zone fund for the 35-story tower in downtown Portland.

Lenders and investment managers from San Francisco and Philadelphia discussed the $600 million project, the scale of which had attracted national capital. Mayor Ted Wheeler heaped praise upon the project. Meanwhile, a sleek, black Bentley sat parked where only days earlier an Iraqi food cart had been selling $8 shawarma.

An 844,117-square-foot tower with a Ritz-Carlton hotel and condos may not be the type of urban renewal foreseen by advocates of opportunity zone tax breaks, but it’s the type of project attracting investment.

It’s unclear how much of a role the Block 216 opportunity zone fund is playing in the project. Mosaic Real Estate Investors previously announced a $460 million, four-year construction loan. Terms of Ritz-Carlton’s deal have not been disclosed.

Tracey Nguyen, a partner at Baker Tilly Capital in Philadelphia, is managing the Block 216 opportunity zone fund. She referred requests for comment to Pat Walsh, a spokesman for developer Walt Bowen’s BPM Real Estate Group. Walsh declined to comment on the project’s financing.

Nationally, it’s difficult to assess how opportunity zone funds are functioning, who is using them, which zones are attracting registered funds or how much money they’re raising.

Opportunity zone funds are not subject to public disclosure, and there appears to be no comprehensive list or database of registered funds.

Opportunity zone funds stem from a federal tax law enacted in December 2017. The funds provide tax benefits for long-term asset holders. After 10 years, investors don’t have to pay any tax on capital gains realized for a property.

It was pitched as a boon for places passed over by the long economic expansion. Opportunity zones are 鈥渄esigned to spur economic development and job creation in distressed communities,鈥� according to the Treasury Department.

Portland’s opportunity zones drew national interest because they cover much of the city’s most desirable real estate, including portions of downtown, the Pearl District and the inner Central Eastside. Yet, so far, opportunity zone activity appears to be modest.

鈥淚t hasn’t been a tsunami of opportunity zone funds, but I continue to see activity there,鈥� said Dan Eller, a tax attorney with Schwabe, Williamson and Wyatt.

Eller said timing has been a deterrent for some clients who had considered opportunity zone funds.

鈥淪ome people had transactions that were ongoing that happened to be in opportunity zones, and looked into doing an opportunity zone fund, but just the timing of connecting investors with their project didn’t work, and so the fund didn’t take off,鈥� he said.

Sturgeon Development Partners has raised $8 million for its opportunity zone fund; the firm’s goal is $330 million. The fund is backing construction of a 126-room hotel in downtown Salem. Demolition began at the site on July 15.

鈥淚nterest has been very steady,鈥� co-founder Vanessa Sturgeon said.

More Sturgeon Development Partners fund projects lie in the future, she added.

鈥淲e expect to leave the fund open for the next four years or so, and continue to take investments on a rolling basis,鈥� she said.

Sturgeon is eyeing Portland’s Central Eastside Industrial District for a second project: a seven-story office building to be constructed with cross-laminated timber. She declined to reveal the property’s precise location.

The Sturgeon Development Partners opportunity zone fund is one of a handful backing local projects. The Goodman family’s Downtown Development Group is working to form single-asset funds for both the Eleven West mixed-use tower at Southwest 11th Avenue and Washington Street, and the PAE Living Building at Southwest Second Avenue and Pine Street, co-President Greg Goodman said.

The Eleven West project will involve an opportunity zone fund in a 50-50 arrangement with a partner, said Goodman, who declined to identify the other investor. Construction of the project, which won Design Commission approval in December 2017, has not begun yet.

Eleven West vested before inclusionary housing rules required developers to provide below-market-rate multifamily units. The project wouldn’t be financially possible today, Goodman said.

鈥淭here hasn’t been a new high-rise in downtown Portland in 28 months with inclusionary housing,鈥� he said. 鈥淲hile the opportunity zoning is good, it doesn’t offset the inclusionary zoning on the high-rise. The inclusionary zoning has shut that market down.鈥�

Some investors have shied away from investing in multi-asset opportunity zone funds, fearing a lack of control or oversight compared to single-asset funds. A potential stumbling block is that investors must also be prepared to pay income tax on deferred gain in 2026.

In May, a bipartisan group in Congress introduced companion bills to require data collecting and reporting that was stripped from the original opportunity zone legislation. The bills were referred to the Senate Finance and House Ways and Means committees and have not advanced.