To: Board of Supervisors
From: John Kopchik, Director, Conservation and Development
Report Title: Recommendation of Census Tracts to the State Governor’s Office of Business & Economic Development (GO-Biz) for Nomination for inclusion in Opportunity Zones 2.0
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
1. APPROVE and AUTHORIZE the Conservation and Development Director, or designee, to recommend 17 census tracts in order of preference to the State Governor's Office of Business & Economic Development (GO-Biz) for nomination as Opportunity Zones 2.0 before July 25, 2026.
2. DIRECT staff to seek letters of support from legislators and community and regional partners in support of these recommendations, and submit such letters to GO-Biz.
3. AUTHORIZE the Chair of the Board to sign letters of support requested by cities within the County to GO-Biz in support of the cities’ recommended census tracts for Opportunity Zones 2.0.
FISCAL IMPACT:
There is no direct fiscal impact of the recommended actions. Selection of eligible census tracts for participation in Opportunity Zones 2.0 is anticipated to generate investment in economic development and associated tax revenue.
BACKGROUND:
Description of Opportunity Zone Program
The Opportunity Zone (OZ) Program is a federal tax incentive program designed to encourage investment and economic development in lower income communities. The program is administered by census tract, and federal law prescribes which tracts are eligible according to criteria such as average income. State governors may nominate eligible tracts for participation in the program. These nominations are submitted to the U.S. Department of the Treasury, which makes the final determination of which census tracts receive OZ designation.
On March 13, 2018, the Board of Supervisors recommended 14 census tracts to the State for nomination for OZ 1.0. Nine of these census tracts were in cities and 5 were in the unincorporated area. This list of 14 census tracts was based on a list of 11 recommended to the County by the State Department of Finance plus another 3 added by the Board. Of the 5 unincorporated census tracts recommended by the Board, 3 were nominated by the Governor and selected for OZ 1.0 by the federal government (1 in North Richmond and 2 in Bay Point), while the other 2 were neither nominated nor selected (1 in Rodeo and 1 in Montalvin). The 3 unincorporated census tracts with OZ 1.0 designation will continue to have this status until December 31, 2028, at which time OZ 1.0 will sunset.
H.R.1 established a new framework for OZ 2.0, which will go into effect on January 1, 2027. OZ 2.0 designations will remain in place for 10 years. While the tax benefits of OZ 2.0 are largely similar to OZ 1.0, the income eligibility requirements for census tracts have become somewhat more restrictive and increased tax benefits have been provided for “rural” census tracts, as defined by the program.
Selection of Census Tracts for Participation
As with the original Opportunity Zone statute, governors may nominate up to 25 percent of their state’s eligible census tracts for OZ 2.0. Final selection of census tracts for participation in OZ 2.0 will then be made by the federal government. The California Governor’s Office of Business and Economic Development (GO-Biz) is currently accepting recommendations for nominations from local agencies, including counties and cities, until July 25, 2026. The Local Authority Recommendation Form provided by GO-Biz asks local agencies to submit their proposed lists of recommended census tracts in order of preference. Local agencies may also submit letters of support from legislators and/or community and regional partners in support of the recommendations. Letters of support will be accepted during the public comment period in August. They are not required but are encouraged to demonstrate support.
There are 36 census tracts in Contra Costa County eligible for OZ 2.0. Eighteen of these census tracts are entirely within the boundaries of cities, while the other 18 are wholly or partially located in the unincorporated area of the County. Staff have communicated information concerning the OZ 2.0 nomination process to cities within the County and have encouraged the cities to submit their own recommendations for nominations to the State for eligible census tracts that are within the cities.
Staff propose the Board recommend 17 eligible census tracts that include portions of the unincorporated area to GO-Biz in the order of preference illustrated on the attached map. This proposed list takes into account the socioeconomic, demographic, and economic development criteria the State has indicated it will consider when selecting among eligible census tracts so as to increase the likelihood the County’s most preferred census tracts will be selected for nomination. Staff’s proposed list of recommended census tracts is as follows:
• 1 (Bay Point) and 2 (North Richmond) were designated under OZ 1.0 and are a strong fit with the State’s selection criteria, 3 (Byron, defined as rural) and 4 (Buchanan Field, split with Concord) include the two County airports and have strong potential for development related to aviation uses as well as clusters of existing businesses likely to attract additional investment, and 5 (Rodeo) is in an area identified in the General Plan as an area the County intends to nominate as a Priority Production Area (PPA) and it has strong potential for both industrial and residential development consistent with the State’s criteria
• 6-12 are proposed because they have locations for potential commercial and industrial development and have sites for housing development consistent with state and regional housing goals (One in Vine Hill, on in Martinez, three in El Sobrante, and two in Bay Point)
• 13 is tied to state and regional housing goals and includes Contra Cost Centre, 14 is in an area identified in the General Plan as an area the County intends to nominate as a Priority Production Area (PPA) to encourage future industrial development and includes the site of the former Phillips 66 Carbon Plant in Franklin Canyon
• 15-18 do not have strong potential for development and do not fit well with the State’s nomination criteria and therefore are either at the end of staff’s proposed list or are not recommended for nomination.
No Impact on Allowable Land Uses in Census Tracts Selected for OZ 2.0
OZ 2.0 provides tax incentives for investment in selected census tracts. OZ 2.0 in no way changes or diminishes local authority over land development or land use planning. All development projects within a census tract selected for OZ 2.0 participation will be required to follow the same land use policies and procedures that apply to other areas of the County’s jurisdiction, including the same permitting requirements. OZ 2.0 in no way changes or expands allowable land uses within selected census tracts.
Support from Community Partners
Staff recommend the County seek letters of support from legislators and/or community and regional partners in support of its recommended census tracts, as encouraged by GO-Biz. Staff seek direction from the Board to request letters of support from members of the County’s State and federal legislative delegation representing the 17 census tracts proposed for recommendation to the Governor, as well as the Governing Board of the Green Empowerment Zone, East Bay Economic Development Alliance, and East Bay Leadership Council.
Staff also anticipate that some cities within the County may seek letters of support from the County for the cities’ recommended census tracts. Staff recommend the Board authorize the Chair to sign such letters of support for cities.
CONSEQUENCE OF NEGATIVE ACTION:
The consequences of negative action are that staff will not recommend in order of preference to the State the 17 census tracts for nomination as Opportunity Zones 2.0 on or before July 25, 2026, or to seek letters of support from legislators and/or community and regional partners in support of these recommendations, or to provide letters to GO-Biz in support of the cities’ recommendations for Opportunity Zones 2.0.