The California Department of Finance released the highly anticipated initial list of Opportunity Zone designations. The Opportunity Zone program is a new federal economic development tool included in the recent tax reform bill. It is meant to incentivize private investment in distressed areas of the county. See the announcement from the Department of Finance below:
We would like to inform you of the invitation for public comment on the Governor’s proposed designation of Opportunity Zones in California. HR 1, the federal tax bill passed at the end of December 2017, allows the Governor to designate eligible census tracts as Opportunity Zones. Under HR 1, individuals who invest in these zones will be allowed to defer or eliminate federal taxes on capital gains. The Governor may designate up to 25 percent of census tracts that either have poverty rates above 20 percent or median family incomes of no more than 80 percent of statewide or metropolitan area family income. There are 3,516 census tracts in 54 California counties that qualify under one or both of the mandatory criteria, allowing the Governor to designate up to 879 tracts. As census tracts are designed to capture geographic areas of around 4,000 people, more than 3 million Californians will potentially be located in one of these areas.
Preliminary Recommended Tracts
These designation criteria identify tracts that significantly overlap with other statewide programs that the Legislature and Governor have previously targeted. For instance, 66 percent of the recommended tracts overlap with tracts identified as disadvantaged in Senate Bill 535 from 2012, and 98 percent overlap with tracts identified as disadvantaged in Assembly Bill 1550 from 2016. (Both of these bills help direct revenues from cap and trade programs.)
An excel workbook OZ Eligibility contains the 3,516 eligible California census tracts. It also indicates the tracts in the Governor’s preliminary recommended option. Given the limited number of designations available, we strongly encourage commenters from local governments to suggest replacing tracts from within their jurisdictions rather than making additions. To comment, please identify the census tracts you have comments on from the provided resources, and use the excel workbook OZ Input to format your comments.
We have set up a new website that will be accessible today at 11am to provide information on qualified census tracts: http://dof.ca.gov/Forecasting/Demographics/opportunity_zones/. All of the information included in this email will be accessible from this website, including the instructions on how to submit comments. Please note that comments will only be accepted through 5pm on Thursday, March 15 through the email OZcomments@dof.ca.gov. If you would like information about business and economic development in general, please visit the California Business Portal or contact GO-Biz.
For any additional questions, please call the Department of Finance at 916-445-8610.