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Fife staff to seek Opportunity Zone designation to attract federal capital gains investment
Summary
City staff outlined a plan to apply for Opportunity Zone designation for a census tract covering parts of Fife and the Tide Flats, saying the federal capital‑gains incentives could unlock private financing for housing and mixed‑use projects; council asked questions and staff will return with a resolution in mid‑April (application window April 1–May 1).
Director Larson presented the city’s plan to apply for federal Opportunity Zone designation for the eligible census tract that includes everything north of Interstate 5 and west of 54th, the Tide Flats, parts of the City of Fife, unincorporated Pierce County and a portion of Milton. He described how the federal program uses capital‑gains tax incentives to attract private investment to economically distressed areas.
"Tonight, we are here for an opportunity that we can't really pass up," Director Larson said, framing the designation as a tool to help finance projects envisioned in Fife’s comprehensive plan and city‑center subarea. He explained the basic investor incentives: tax deferral for five years, a basis step‑up (about a 10% discount after five years), and tax‑free appreciation if the investment is held for ten years.
The staff presentation included a map of eligible census tracts in Washington and a closer view of the tract that would cover the Fife area. Larson said the designation could reopen a financing stream for developments such as multifamily housing, mixed‑use buildings and infrastructure, and noted that parks and certain operating businesses may also qualify for Opportunity Fund investment.
Councilmembers asked how the program would interact with local incentives and projects. A council member asked whether Opportunity Zone investments could be combined with the multifamily tax exemption (MFTE); Larson said yes, and noted previous projects paired MFTE with opportunity fund investment. Council members also asked whether the capital‑gains event must occur in Fife; staff replied that investors can originate the capital‑gains event anywhere in the country and still invest in a qualified opportunity fund that finances projects in the designated tract.
Larson described the next steps: staff will continue outreach to partner agencies and tribes and solicit letters of support (a city resolution carries significant weight in the Commerce scoring). He requested a nonbinding nod from the council to proceed and said staff would return with a formal resolution in mid‑April. The application window opens April 1 and staff noted the application is due by May 1.
The presentation emphasized that designation itself would not impose obligations on the city to guarantee investment. "I don't think there's any obligation for us to ensure x y z happens," Larson said; he added that the application will describe potential projects, projected housing units and affordability outcomes but that the city would not be required to deliver them.
What’s next: staff will pursue support letters (staff names included the Puyallup Tribe’s economic‑development staff, Sound Transit and SHAPE among others) and bring a resolution for council consideration in mid‑April. If the council approves the resolution, staff will submit the application to the Department of Commerce for state scoring, after which the governor recommends tracts to the federal government for final designation.
