HomeMy WebLinkAboutItem 6g - Resolution to Support Nomination of 5 Census Tracts for Dsignation in the Federal Opportunity Zone 2.0 Program Item 6g
Department: Administration
Cost Center: 1004
For Agenda of: 8/18/2026
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Laura Fiedler, Economic Development & Tourism Manager
SUBJECT: RESOLUTION TO SUPPORT NOMINATION OF FIVE CENSUS TRACTS
TO THE STATE OF CALIFORNIA FOR DESIGNATION IN THE FEDERAL
OPPORTUNITY ZONE 2.0 PROGRAM
RECOMMENDATION
Adopt a draft Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, Supporting the Nomination of Eligible Census Tracts Within the City
for Designation Under the Federal Opportunity Zone 2.0 Program.”
POLICY CONTEXT
The Opportunity Zones 2.0 program (OZ 2.0) aligns with multiple adopted City of San
Luis Obispo policy frameworks. The program’s emphasis on housing, economic
development, and infrastructure modernization is directly supported by the City’s General
Plan, Economic Development Strategic Plan (EDSP) 2023–2028, and 2026 Legislative
Action Platform.
The 2020-2028 Housing Element of the General Plan includes the goal to facilitate the
production of housing to meet the full range of community housing needs, including t he
goal to stimulate higher density infill where appropriate in the Downtown, Upper Monterey,
and Mid-Higuera Special Focus areas (City of San Luis Obispo Housing Element,
November 2020, Page 16).
The Economic Development Strategic Plan (2023-2028) prioritizes inclusive
neighborhood planning (EDSP Strategy 2.5), increased housing production (EDSP
Strategy 1.5.8, 2.5.1), conference facility exploration (EDSP Strategy 2.3.3), and support
for local business development (EDSP Strategy 1.1)—all of which are advanced through
Opportunity Zone incentives that encourage mixed-use projects, commercial
reinvestment, and redevelopment of underutilized parcels.
The 2026 Legislative Action Platform supports tax-incentive-based tools to promote
research and development (Economic Development Policy #4, pg. 14), attract
head-of-household jobs (Economic Development Policy #5, pg. 14), and strengthen
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economic sectors aligned with Major City Goals (Economic Development Policy #6, pg.
14).
DISCUSSION
Background
The California Governor’s Office of Business and Economic Development (GO -Biz)
describes Opportunity Zones as follows:
“Opportunity Zones are economically distressed communities, defined at the
individual census tract level, that are nominated by the governor s of each state
and territory and certified by the U.S. Secretary of the Treasury through a
delegation of authority to the Internal Revenue Service. Under certain conditions,
new investments in Opportunity Zones may be eligible for preferential tax
incentives.
Opportunity Zones can be a powerful tool for driving private investment into
underserved communities. The program was established by the Tax Cuts and Jobs
Act (TCJA) on December 22, 2017. Originally created as a temporary initiative, the
incentive was later enhanced and made permanent under Public Law 119 -21,
which was passed by the 119th United States Congress.”
Opportunity Zones are intended to catalyze reinvestment in communities by offering
federal tax benefits for qualifying commercial and residential development projects. More
than $100 billion in qualifying investment flowed into OZ 1.0 tracts nationally since 2018.
Census tracts qualify as an “Opportunity Zone” if they meet one of the following criteria
(note: The U.S. Department of the Treasury determined median family income for each
census tract based on the 2020-2024 American Community Survey 5-year estimates):
• Income does not exceed 70% of the applicable median family income; OR
• Poverty rate is at least 20% and income does not exceed 125 % of the
applicable median family income.
GO-Biz further reports that the program now operates on a permanent, rolling 10-year
cycle. Governors must nominate Qualified Opportunity Zones every decade and the first
round of new designations must occur within a 90-day window beginning July 1, 2026,
subject to U.S. Treasury approval. Governors may nominate up to 25% of their state’s
eligible census tracts as Qualified Opportunity Zones. California has 2,469 eligible census
tracts, so the Governor may nominate a maximum of 618 tracts. The state will consider
major demographic and other socioeconomic factors, alongside local recommendations
to inform California’s proposed census tract nominations.
Local jurisdictional authorities were invited to submit nominations of census tracts from
June 15 to July 20, 2026. On August 3, 2026, the state opened a public comment period
through August 28, 2026, on a draft list of census tracts recommended for Opportunity
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Zone 2.0 nomination. The Department of Finance, in partnership with GO-Biz, is expected
to submit California’s final nominations to the U.S. Treasury by September 28, 2026. The
Treasury is expected to finalize designations in November, and they will go into effect on
January 1, 2027.
Six census tracts in and around the City of San Luis Obispo were eligible for nomination.
Consistent with Council’s economic development goals and the City’s General Plan, staff
submitted nomination forms for all five eligible census tracts primarily within the limits of
the City of San Luis Obispo that are eligible for designation. The County of San Luis
Obispo nominated the sixth census tract that includes the core of Cal Poly's campus,
primarily outside City limits.
Based on evaluation of the census tracts against the General Plan, Housing Element,
and Economic Development Strategy Plan, staff listed the census tracts in the following
order of preference on the nomination forms (please note that the text descriptors are for
reference purposes only and are not reflective of official names of these census tracts or
neighborhoods):
1. 06079011101 (downtown core, extending down South Higuera)
2. 06079011104 (corridor along South Broad)
3. 06079011201 (north of Foothill Blvd./west of Highway 1)
4. 06079010902 (Santa Rosa St. towards Grand Ave./Loomis St.)
5. 06079011002 (Upper Monterey, Johnson Ave.)
The map below shows the boundaries of those tracts (last six numerals only).
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In the draft list of nominations published by the state on August 3, 2026, two of the eligible
census tracts in and around City limits were recommended for designation. Th ose two
are census tracts are 06079010903, nominated by the County of San Luis Obispo around
Cal Poly’s core campus, and tract 06079011002, which includes the Upper Monterey and
Johnson Avenue neighborhood s. The map below shows in darker blue the two tract s
recommended for designation on the state’s draft list.
It is important to note that Opportunity Zone designation does not alter or supersede any
local planning, zoning, or land use regulations. All future projects will continue to be
subject to the City’s established standards, requirements, and approval processes. The
designation simply provides an additional voluntary tool that may help attract investment
to areas where the City already anticipates housing, infrastructure improvements, and
economic development activity. The City has already made substantial local public
investments in these areas in mobility infrastructure, water and wastewater upgrades,
cultural venues, Mission Plaza renovations, and parking infrastructure, creating a strong
foundation for leveraging private investment through OZ 2.0.
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The City is aware that Cal Poly is interested in developing Lot H9 in tract 06079011201
for their Faculty & Staff Housing Phase III project, an approximately $100 million
investment that is expected to deliver approximately 150 new workforce housing units for
Cal Poly faculty and staff. The project is in its early planning stages and needs to be
evaluated in terms of utilities, neighborhood access, services, and the Local Agency
Formation Commission (LAFCO) process. City approvals are required and no City action
has been taken on this proposed project.
During the public comment period, GO-Biz will consider letters of support and official
actions taken by nominating agencies (e.g. proclamation, record of action taken, or
resolutions). Staff, therefore, recommend that the Council adopt the attached draft
resolution to indicate its support for this nomination process and confirm the City’s
nomination of five tracts. The resolution also indicates support for the nomination of
census tract 06079010903 by the County of San Luis Obispo that primarily contains the
core campus of Cal Poly State University. If the resolution is approved, staff will transmit
the resolution to the state as part of the public comment process for each of those tracts.
While only two census tracts are on the state’s draft recommendation list, staff
recommend that the attached draft resolution be submitted to the state in support for all
six census tracts, noting the City’s prioritization of the t racts. Staff also recommend
sharing information with regional partners and community organizations regarding the OZ
2.0 program and the public comment period.
Public Engagement
This item is on the agenda for the August 18, 2026, City Council meeting and will follow
all required postings and notifications. The public may have an opportunity to comment
on this matter at or before the meeting.
In addition, the public may submit comment on this matter directly to the state between
August 3 to August 28, 2026, through the California Department of Finance OZ 2.0 Public
Comment portal. Instructions and the link to the portal are available here.
CONCURRENCE
The Department of Community Development was consulted and concurs with staff’s
recommendation.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended
action in this report because the action does not constitute a project under CEQA
Guidelines Section 15378.
FISCAL IMPACT
Budgeted: N/A Budget Year: 2026-27
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Funding Identified: N/A
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ N/A $ $ $
State
Federal
Fees
Other:
Total $ N/A $ $ $
There is no direct fiscal impact associated with the nomination of the five census tracts to
the State of California for designation in the federal Opportunity Zones 2.0 program
ALTERNATIVES
1. Council could provide direction to staff to submit public comment to the state
on one or more census tracts opposing the tract’s nomination by the City or
recommendation by the State. Should Council pursue this option, specific direction
should be given on which tracts’ City nomination should be rescinded or state
recommendation should be opposed.
2. Council could provide direction to staff to amend the dra ft resolution and
submit it to the state through public comment requesting to adjust the
prioritization of nominated census tracts. Should Council pursue this option,
specific direction should be given on how the tracts should be re-prioritized.
ATTACHMENTS
A - Draft Resolution supporting the nomination of eligible census tracts within the City for
designation under the federal Opportunity Zone 2.0 program
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R ______
RESOLUTION NO. _____ (2026 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, SUPPORTING THE NOMINATION OF ELIGIBLE
CENSUS TRACTS WITHIN THE CITY FOR DESIGNATION UNDER THE
FEDERAL OPPORTUNITY ZONE 2.0 PROGRAM
WHEREAS, the Opportunity Zones program was originally established by the Tax
Cuts and Jobs Act of 2017 and permanently renewed and enhanced under Public Law
119-21, creating Opportunity Zones 2.0, a strengthened and permanent federal incentive
for long-term, equity-based investment in eligible census tracts;
WHEREAS, Opportunity Zones 2.0 introduces updated eligibility criteria, tax
incentives, compliance requirements, and a permanent, rolling 10-year designation cycle
requiring governors to nominate qualified census tracts every decade, beginning with the
nomination window from July 1 to September 28, 2026;
WHEREAS, the U.S. Department of the Treasury released the official list of eligible
census tracts on April 6, 2026, including six eligible tracts within and around the limits of
the City of San Luis Obispo;
WHEREAS, the Governor of California may nominate up to 25 percent of the 2,469
eligible statewide census tracts, for a maximum of 618 tracts;
WHEREAS, the California Governor’s Office of Business and Economic
Development (GO-Biz) GO-Biz initiated a formal Local Authority Recommendation
process for jurisdictions to provide evidence-based nominations by the deadline of July
20, 2026;
WHEREAS, the City of San Luis Obispo evaluated the five eligible census tracts
primarily within its jurisdiction and submitted nomination materials for all five tracts,
identifying the tracts’ alignment with statewide priorities, including housing development
and the California Jobs First State Blueprint;
WHEREAS, the City’s evaluation also documented committed local public
investments, including the Local Revenue Measure (2020), capital improvement projects
and investments in cultural and civic facilities;
WHEREAS, consistent with City policy documents, including the Economic
Development Strategic Plan (2023–2028), the General Plan, and the Housing Element,
Opportunity Zones 2.0 designation presents a gener ational opportunity to expand
housing, support infill development, enhance mobility, strengthen economic
competitiveness, and encourage private investment aligned with City goals;
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Resolution No. _____ (2026 Series) Page 2
R ______
WHEREAS, based on this evaluation, the City listed the census tracts in the
following order of preference on the nomination forms: 06079011101; 06079011104;
06079011201; 06079010902; 06079011002; and
WHEREAS, GO-Biz opened a public comment period on August 3, 2026, through
August 28, 2026, and recommended that tracts 06079011002 and 06079010903 be
designated;
NOW, THEREFORE, BE IT RESOLVED that the Council of the City of San Luis
Obispo hereby:
SECTION 1. Supports submission of Local Authority Recommendation Forms to
GO-Biz for the following five census tracts, prio ritized as follows: 06079011101;
06079011104; 06079011201; 06079010902; 06079011002.
SECTION 2. Also supports nomination of census tract 06079010903 nominated
by the County of San Luis Obispo that primarily contains the core campus of Cal Poly
State University.
SECTION 3. Thanks the Governor for recommending on the draft list census tracts
06079011002 and 06079010903 for designation and also respectfully requests that the
Governor considers the City’s prioritization of the tracts and adds to the recommended
list at a minimum census tract 06079011101, as well as tracts 06079011104,
06079011201, and 06079010902.
SECTION 2. Authorizes the City Manager or her designee to continue in the
California Local Authority Recommendation process and Opportunity Zone 2.0
designation process by submitting all necessary forms and information , including by
submitting this Resolution upon adoption to GO-Biz during the statewide public comment
period, open August 3 - 28, 2026.
SECTION 3. Encourages coordinated regional support and invites partner
agencies, local business organizations, educational institutions, community
organizations, economic development partners, state and federal representatives, and
members of the community to provide public comment during the statewide review period.
Upon motion of Council Member ___________, seconded by Council Member
___________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _______________ 20 26.
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Resolution No. _____ (2026 Series) Page 3
R ______
___________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
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