Report Prepared by: Amanda Williams, Economic Development Associate
Title
SUBJECT: Approval to Submit Census Tract 06047001801 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 census tract 06047001801 for State consideration of Opportunity Zone 2.0.
RECOMMENDATION
City Council- Adopt a motion for the City of Merced to submit census tract 06047001801 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 20th, 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 Tract
Census: 06047001801 (Northeast Merced)
% People in Poverty 24.19%
Competitiveness:
• Shovel-ready sites
• Entitled projects
• Housing
• UC Merced
• Significant Economic Impact
July 6th, Council Meeting
At the previous council meeting, the southern and central tracts were approved, but council directed staff to investigate the impacts of opportunity zones as it relates to Merced investment. Staff was also directed to further identify the reasoning as to why census tract 06047001801 should be approved and recommended. This site not only exceeds the criteria established by GO-Biz, but its designation would help to stimulate development by addressing the increasing costs of infrastructure that has made developers more reluctant to proceed with new projects.
IMPACT ON CITY FINANCES
No impact on City resources.
ATTACHMENTS
1. Opportunity Zone Tract Map
2. GOBIZ Recommendation Form