Opportunity Zones in California
The federal tax bill passed at the end of December 2017 allows the Governor to designate eligible census tracts as Opportunity Zones. Investments made by individuals through special funds in these zones would be allowed to defer or eliminate federal taxes on capital gains. The Governor can 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 would 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 would potentially be located in one of these areas.
Preliminary Recommended Tracts
The recommended tracts are highlighted in the maps below and were selected using the following criteria:
Focus on Poverty. Only those tracts that meet the federal poverty criteria were selected to focus efforts on those poorest areas of the state. In addition, within each county, focus was placed on the poorest areas (top 30 percent of eligible tracts).
Areas with Business Activity. Designating tracts with at least 30 business establishments helps distinguish primarily residential tracts from those that are zoned to encourage more business investment.
Geographic Diversity. To increase geographic diversity, the preliminary recommendation maintains a minimum of two tracts per county if possible.
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.) More information is provided in the following presentation.
The Administration received much helpful input in designing the criteria for these preliminary recommendations, and invites comments on the proposed designation of California Opportunity Zones. Provided below are links to the following resources:
A Census Bureau address lookup that provides tract numbers.(www.census.gov)
A large, non-interactive map (28 inches x 40 inches) of the eligible census tracts for California. Click here to view or print.
An interactive map displaying eligible tracts and the recommended tracts. (cafinance.maps.arcgis.com)
An excel workbook, OZ Eligibility, contains the 3,516 eligible California census tracts. It also indicates the 798 tracts in the Governor’s 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. The workbook contains three worksheets: Instructions, Comments on Recommended Tracts, and Additions and Replacement Tracts. Only comments sent via OZcomments@dof.ca.gov and correctly using the OZ Input sheet will be considered. If you previously submitted comments, please do so again using the provided format. If you would like information about business and economic development in general, please visit the California Business Portal or contact GO-Biz.
Click here to read or print frequently asked questions.
Click here to download a spreadsheet showing the number of preliminary recommended opportunity zone census tracts by California legislative district and the percentage of a district’s Census 2010 population within those tracts. *Note: Some census tracts overlap multiple Assembly or State Senate districts.