Report Prepared by: Amanda Williams, Economic Development Associate
Title
SUBJECT: Approval to Submit Census Tract 06047001801, 06047001301, 06047001302, 06047001603 for the Opportunity Zone 2.0 Submission Form to the Governor’s Office of Business Development
REPORT IN BRIEF
Requesting City Council’s approval to submit the four census tracts for State consideration of Opportunity Zone 2.0.
RECOMMENDATION
City Council- Adopt a motion for the City of Merced to submit census tract 06047001801, 06047001301, 06047001302, 06047001603 for State consideration of Opportunity Zone 2.0.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Refer to staff for reconsideration of specific items (specific items to be addressed in the motion; or,
3. Take no action; or,
4. Deny
AUTHORITY
Charter of the City of Merced, Section 200, et. seq.
CITY COUNCIL PRIORITIES
City of Merced FY 2026-2027 Budget, Section 7, Economic Development, Goals, “Coordinate real estate and infrastructure development that will assist in expanding and attracting new business investment and jobs.”
DISCUSSION
Background
Opportunity Zones 2.0 (OZ 2.0) is a federal tax incentive program designed to attract private investment into economically distressed census tracts. Investors who reinvest capital gains into designated Opportunity Zones through Qualified Opportunity Funds (QOFs) receive federal tax benefits in exchange for making long-term investments in those communities. New designations take effect January 1, 2027.
Opportunity Zones can help finance commercial and industrial real estate, housing, infrastructure, as well as businesses. While Opportunity Zones do not provide grants - it allows projects to become more financially attractive to private investors as it can be a part of the project capital stack and can aid in attracting additional private equity capital. It could also accelerate redevelopment of vacant or underused properties and can be used to support business expansion and job creation.
Process
The Governor’s Office of Business Development (GOBiz) and Department of Finance are accepting applications for eligible census tract nominations. The application process opened on June 15th and closes on July 25th, 2026.
• State will hold a 30-day comment period starting in August and ending in September
• Governor submits their recommended census tracts (660+) by September 28, 2026
• Designation by Federal Government January 1, 2027
Governors will prioritize areas that demonstrate:
• Verified economic need
• Infrastructure readiness
• Shovel-ready/ Near-term projects
• Economic impact
• Ability for local jurisdiction to attract investment
Recommended Tracts
Census: 06047001801 (Northeast Merced)
% People in Poverty 24.19%
Competitiveness:
• Shovel-ready sites
• Entitled projects
• Housing
• UC Merced
• Significant Economic Impact
Census: 06047001302 (Downtown)
% People in Poverty 34.9%
Competitiveness:
• Housing
• Arts & Cultural
• Projects in Pipeline
Census: 06047001301(Downtown)
% People in Poverty 29.64%
Competitiveness:
• Downtown UC Campus
• Arts & Cultural Designation
• PBID
• Housing
• Projects in pipeline
Census: 06047001603 (Southeast Merced)
% People in Poverty 20.52%
Competitiveness:
• Housing
• Food Desert
It is important to note that the following tracts are not guaranteed to be included in an Opportunity Zone.
IMPACT ON CITY FINANCES
No impact on City resources.
ATTACHMENTS
1. Opportunity Zone Tract Map
2. GOBIZ Recommendation Form