Opportunity zone developments address housing need, bring investor benefits
April 27, 2026
This piece is sponsored by Ernst Capital Group.
Call it a classic win-win.
An underdeveloped or underutilized area matures into new or improved housing. At the same time, the investors who help make it possible benefit.
That’s the outcome offered by qualified opportunity zones — designated areas created through the 2017 federal Tax Cuts and Jobs Act to encourage long-term investment in economically distressed census tracts.
The program recently was made permanent under federal legislation, allowing for ongoing use as a development tool.
“We’ve approached opportunity zone investing by first making sure what we pursue would be a successful project on its own,” said Chris Daugaard, a partner in Ernst Capital Group.
“Tax policy can change outside of our control, but if we can have a successful project and have it be located in an opportunity zone, that’s definitely the right combination.”
That’s what came to fruition with the Yukon at Benson, a 241-unit apartment and townhome complex in northwest Sioux Falls developed by Signature Cos. with funding from Ernst Capital investors.
“This is an area that’s on the future edge of Sioux Falls development in an area where there’s potential for economic growth, which is where we like to locate many of our investments,” Daugaard said.
“The Yukon has performed really well. Construction came in below budget with our entire contingency left over, lease-up continues to be very strong, and we expect to stabilize occupancy in the next month.”
Ernst Capital financed its first opportunity zone project in Sioux Falls at Aspen Commons, a multifamily development near Jefferson High School.
“We didn’t have investor capital in it because this was a new concept and we wanted to figure it out using our dollars and not investors’ funds,” Daugaard said.
“We learned more about the program, got more tax guidance and were glad we did a dry run without any investor dollars at risk.”
In a qualified opportunity zone, tax benefits are twofold. Investors can defer capital gains taxes by reinvesting in qualified projects located in these zones, and if the investment is held for at least 10 years, any additional gains on that investment can be tax-free.
“Our investments are generally long-term, so it’s a good fit,” Daugaard said.
“That said, the benefits are unique on an individual basis depending on your tax situation. So you’ll want to talk to your tax professional to determine if it’s a good fit for you. Because this is a decade-old program, most tax professionals have had experience with it.”
Ernst Capital also invested in an opportunity zone project in Box Elder, where Lloyd Cos. developed The Union multifamily complex, primarily for those serving at nearby Ellsworth Air Force Base.
“That development also has done well,” Daugaard said. “It’s up and stabilized with 97 percent occupancy and well within budget for construction.”
South Dakota currently has 25 designated qualified opportunity zones in 17 counties.
Now that the program is permanent, South Dakota will be able to reevaluate which areas will be designated as federal criteria evolves.
“There are maps showing potential opportunity zones, and they will be redone every 10 years going forward to reflect changing demographics and market conditions,” Daugaard said.
“From there, South Dakota will be able to decide where specifically the state believes new development or redevelopment would have potential or bring the largest benefit.”
Going forward, Ernst Capital sees continued prospects for future projects.
“We think the Yukon at Benson in particular is a strong example for a model that can work in other parts of Sioux Falls and other communities,” Daugaard said.
“We’ll have opportunities to bring on additional investors interested in projects like these.”
