Opportunity Zone 2.0

Background:

The federal Opportunity Zones program was established through the Tax Cuts and Jobs Act of 2017 to encourage long-term private investment in economically distressed communities by providing federal tax incentives for qualifying investments. Communities designated as Opportunity Zones have leveraged the program to attract investment in housing, commercial development, business expansion, manufacturing, infrastructure, and other economic development projects.

Congress is currently considering legislation commonly referred to as Opportunity Zones 2.0, which would establish a new generation of Opportunity Zones with updated eligibility criteria and incentives. While the legislation has not yet been finalized, states are expected to nominate eligible census tracts for designation following adoption of the program.

Based on the current eligibility criteria, three census tracts within the Town of Paradise qualify for consideration:

Analysis:

Opportunity Zones 2.0 represents a significant opportunity to attract private capital to Paradise and accelerate the community's long-term economic recovery. Federal Opportunity Zone designation can increase investor interest by providing favorable tax treatment for qualified investments, making redevelopment projects more financially feasible and competitive.

The Town has made substantial public investments within all three proposed census tracts that strengthen the case for designation. These investments include:

• Major infrastructure improvements supporting redevelopment and economic growth.
• Downtown planning and revitalization initiatives.
• Utility and transportation improvements.
• Ongoing wildfire recovery investments.
• Housing and commercial redevelopment efforts.
• Economic development planning and implementation activities.

Collectively, these investments demonstrate the Town's commitment to revitalization and position Paradise as a strong candidate for Opportunity Zones 2.0 designation. Securing designation would complement these ongoing efforts by encouraging additional private-sector investment and leveraging existing public investments.

Approval of the proposed resolution authorizes staff to prepare and submit the necessary application materials and coordinate with state and federal agencies throughout the nomination process.

Applications for the program are due on July 20^th, 2026.  The Governor will then select up to 618 census tracts to nominate as Opportunity Zones by September 28, 2026.  Selected census tracts will go into effect as of January 1, 2027 and will be designated for 10 years until January 2037.