Consider and take appropriate action on a request to send a letter of support to the State for eligible census tracts related to the Opportunity Zone program. (Judge Brown)
Staff Report & Agenda Item Details
The Opportunity Zone (OZ) Program was created by the Tax Cuts and Jobs Act of 2017 and made permanent U.S. House Resolution 1 in 2025, which extends the OZ Program for ten years. The original OZ Program was established January 1, 2017 and will sunset December 31, 2026.<br><br data-pasted="true">The OZ Program provides federal income tax incentives for investors that reinvest capital gains on opportunities in an approved OZ. The federal tax incentives defer or potentially eliminate capital gains taxes on qualified investment in an OZ. The intent of the OZ Program is to spur economic development in underserved communities by leveraging private investment.<br><br>The State is seeking census tract recommendations from Texas communities to be considered by the State to be included in its submission to the U.S. Department of Treasury (Treasury) for inclusion in the reauthorized OZ. Census tracts approved by the Treasury for the renewed OZ Program will become effective January 1, 2027. The State established a criteria for communities to nominate census tracts for consideration, which primarily based on the number of eligible census tracts in a given county.<br><br>There are currently 71 census tracts in Travis county eligible to be nominated for inclusion in the reauthorized OZ. Under the State’s criteria, Travis County is eligible to nominate up to 90% (64) of the eligible census tracts for consideration. However, the State will ultimately make the final decision regarding which census tracts are nominated to the Treasury.<br><br>Staff developed its recommendation for OZ nomination to the State through a process that removes census tracts with the lowest likelihood of near-term development and focuses on tracts with the greatest potential to attract qualifying private investment. Staff’s approach maximizes the County’s allowable tract nomination of 64 census tracts, while leaving out areas where the OZ Program would have lower probability of a significant impact on historically underserved communities or of attracting near-term development.