Amazon CEO Jeff Bezos: 563,000 employees. (Photo: Albin Lohr-Jones/Bloomberg) Amazon CEO Jeff Bezos (Photo: Albin Lohr-Jones/Bloomberg)

When Amazon announced it had chosen Long Island City in Queens, New York, as one of its two new headquarter locations the feedback was mixed.

Not only would one of the world’s richest companies, led by the wealthiest man on earth, receive state and city tax credits worth close to $3 billion if a minimum 25,000 jobs were created but also the company would benefit from additional tax breaks because of its location, contiguous to a one of 8,700 opportunity zone tracts created as a result of the 2017 tax cut legislation.

Under the legislation – and subsequent preliminary U.S.Treasury and IRS guidelines issued  – investors in opportunity zones can defer capital gains so long as the capital gains are invested within 180 days. Moreover, the investment will receive a stepped-up basis to market price if held for at least 10 years. (The basis increases 10% if held for at least five years and 15% if held for at least seven years.)

(Related: How to Reduce Clients’ Taxes While Providing a Social Good)

“Even by outlier standards, the Amazon tract stands out as deeply at odds with the purpose of the Opportunity Zones incentive,” according to a blog from the Economic Innovation Group, a bipartisan think tank which is credited with the developing the idea of opportunity zones.

The Long Island City neighborhood is already becoming gentrified and Incomes are high, according to EIG, and Politico reports that two development companies have now abandoned plans to build affordable housing in the area because their intended sites will now become part of the Amazon campus.

Still the EIG blog notes that “it would be a shame for Long Island City to overshadow the hard and innovative work being done in the trenches everywhere from rural Alabama to Erie, Pennsylvania,” referring to pending work in opportunity zones. “But it does underscore one core truth about Opportunity Zones: there is no substitute for local leadership.”

The Amazon Opportunity Zone story illustrates some of the concerns raised by impact investing organizations about Opportunity Zone Funds, after the Treasury Department and IRS released preliminary guidance on the fund.

(Related: Tax-Advantaged Opportunity Zone Funds Are Coming to Market)

At the time, the Impact Investing Alliance noted that despite the guidance, the Treasury Department should in subsequent regulations “more squarely acknowledge the importance of investment accountability and transparency …. to ensure that the ultimate beneficiaries are the folks living and working in Opportunity Zones today.”

Justina Lai, director of impact investing at Wetherby Asset Management, and RIA with offices in San Francisco and New York, told ThinkAdvisor there was a need for protections “[that] gentrification doesn’t dislocate people and businesses.”

Both the Alliance and Lai declined to comment on the Amazon story but Andy Hart, a managing partner of Delegate Advisors, which is a multifamily office for 25 wealth families, said the Amazon development could benefit non-affluent local residents if certain policies were adopted by the city for Amazon to follow. A ban on in-house cafeterias for Amazon workers, for example, could inspire development of local restaurants, creating jobs for local residents, said Hart.

He said the best opportunity fund investments place in the upper right hand corner of a XY axis six where the vertical Y axis measures the health of the investment and the horizontal X axis, its social impact.

“We’re trying to have both” results, said Hart, who notes that opportunity funds should be a “real boon to the real estate industry” while potentially helping those who have been left behind, without jobs.

Hart is in no rush to invest in an opportunity zone fund. “Everything looks priced to perfection in real estate.”

Adam Bernstein, an impact investing at Gitterman Wealth Management, similarly says his firm is not investing in any opportunity zone fund yet. “We’re still trying to figure out exactly how the regulations will hold up down the road,” said Bernstein. He added that the firm would prefer to invest in an opportunity zone fund with multiple projects, rather than just one.