City staff says federal Opportunity Zones 2 rules create timing uncertainty as municipalities prepare nominations

Tracy Reich briefed the committee on Opportunity Zones 2 (the federal program update) as an economic-development tool that offers tax deferral benefits to investors who place capital gains into Opportunity Zone funds. Reich said the original Opportunity Zone rules (first round) were set to sunset and investments were eligible through 2028, and that the new federal changes make the program permanent while changing eligibility criteria for census tracts.

Reich told members municipalities will nominate eligible census tracts to the state (nomination deadlines are in July); the state may forward only 25% of eligible tracts to the federal government, which can further limit approvals. The city is awaiting the latest American Community Survey data (expected at month-end or in March) to determine which tracts meet updated eligibility thresholds; Reich said some eligibility thresholds were narrowed and rural areas received different bonuses. She said consulting firms (Snell & Wilmer, Novogradic) are tracking developments and feeding updates to municipalities.

Committee members emphasized downtown's advantage and the importance of securing an overlay that includes Las Vegas Boulevard and areas near Fremont East, citing major investments in the Arts District, Symphony Park and the Medical District. Reich warned that rising incomes in some neighborhoods have pushed census tracts above eligibility thresholds — "a victim of our own success" — and that staff is trying to identify tract overlays that align with redevelopment priorities.

Reich said staff intends to nominate tract priorities to the state once ACS data and federal instructions are clear and will continue coordinating with consultants to refine the city's list of nominations.