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Phoenix staff outline tighter federal Opportunity Zones rules and warn of May 8 state nomination deadline
Summary
City staff told the Economic Development & Arts Subcommittee that federal Opportunity Zones 2.0 tightens eligibility and that Phoenix must submit a narrowed map by May 8 to avoid losing its chance at state nominations; staff will continue council-district outreach to finalize up to 33 candidate tracts.
City staff briefed the Economic Development & Arts Subcommittee on April 8 about new federal Opportunity Zones 2.0 rules and a fast-approaching state nomination deadline that will require Phoenix to narrow its candidate census tracts.
"The federal government has issued new guidance on this program and that's requiring the city to establish a new opportunity zone map," Community and Economic Development Research Manager Jasmine Lumbera said. She reviewed the program's origins in the 2017 Tax Cuts and Jobs Act and explained that Phoenix previously had 42 designated tracts.
Under the updated 2.0 criteria, staff told the subcommittee, a tract must meet one of two thresholds using 2024 census data: a median family income at or below roughly $69,611 (about 70% of the metropolitan area median family income) or a poverty rate of 20% or greater (with adjacency rules allowing up to 125% MFI in some cases). States may nominate up to 25% of eligible tracts; Phoenix plans to submit a list of up to 33 candidate tracts to the Arizona Commerce Authority for state review.
"We ran all of our census tracts through that criteria," Community and Economic Development Director Ryan Toohill said, describing a three-phase process: data screening, internal division review using market intelligence sources (including CoStar), and council-district outreach before finalizing the map for council action on April 22 and submitting to the state by May 8.
Council members pressed staff about community outreach. "Is it your intent when you provide that information to the council members, is it the intent that we then go out to our community and engage them?" Councilman Robinson asked. Staff said they would facilitate and prioritize district outreach ahead of the April 22 council action.
Councilwoman Pastor said she has at least 10 communities she wants staff to visit and warned the May 8 deadline leaves limited opportunity for in‑person outreach. Staff replied May 8 is a firm Arizona Commerce Authority deadline and pledged extra staff support to make outreach feasible.
If Phoenix misses the state submission window, staff said it could forfeit the opportunity to have the state nominate local tracts under the new federal rules. The item will return for formal council consideration on April 22 so members can confirm final selections after district input.
Proponents and opponents of Opportunity Zones were not the subject of formal debate at the hearing; council members focused on outreach timelines and the technical criteria staff used to screen tracts.
What’s next: staff will continue district briefings and aim to return to council April 22 for approval of the proposed map and a timely state submission by May 8.
