Joint Special Council/BFPD
07/7/26 05:30 PM
City Manager Department
Kenneth D Chapa
Resolution
Doc ID: 6442
COUNCIL AGENDA ITEM
AGENDA MATTER:
NOMINATION TO CALIFORNIA GOVERNOR OF QUALIFIED CENSUS TRACTS FOR FEDERAL OPPORTUNITY ZONE 2.0 DESIGNATION
EXECUTIVE SUMMARY:
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently reauthorized and expanded the federal Opportunity Zone (OZ) program. Investors who reinvest capital gains into eligible lowincome census tracts are eligible to receive three federal tax benefits: deferral of capital gains taxes for up to five years; a 30% reduction in deferred capital gains tax liability for investments in Qualified Rural Opportunity Funds (QROFs); and exemption from federal capital gains tax on appreciation of OZ investments held for at least ten years.
Beginning July 1, 2026, the Governor will have 90 days to nominate up to 25% of California's eligible low-income census tracts (approximately 618) to the U.S. Treasury Department. GO-Biz will accept nominations from June 15 to July 25, 2026. Once certified, designations will remain in effect for 10 years, starting January 1, 2027. The City’s primary responsibility is to adopt a Council Resolution supporting the nomination. The City must also direct staff to submit a Local Authority Nomination form for each tract through the GO-Biz portal.
Barstow has four census tracts eligible for OZ 2.0 designation. All four tracts are confirmed as eligible under IRS Revenue Procedure 2026-14 (April 6, 2026), consistent with the 2020-2024 American Community Survey 5-Year Estimates. All meet OBBBA Low-Income Community standards. All four tracts qualify by meeting either the ≥20% poverty threshold or the <70% Median Family Income MSA threshold. Each tract is designated rural, qualifying for the 30% QROF step-up. OZ designation does not require city funds or obligations, allowing Barstow to attract private capital gains investment for local projects at no cost to the general fund.
DISCUSSION:
Based on 2020-2024 American Community Survey data, the City of Barstow has four eligible census tracts that meet the eligibility criteria for Opportunity Zone 2.0 designation. The tracts each meet or exceed OZ 2.0 requirements for “Low Income Community” (LIC) standards. A qualified census tract must meet or exceed one of two income tests: Poverty rate of 20% or higher, OR Median Family Income (MFI) below 70% of the relevant benchmark.
• Additionally, tracts qualifying on poverty rate must have an MFI not exceeding 125% of the relevant benchmark ($123,936 for the Riverside-San Bernardino-Ontario MSA). Official eligibility will be based on the 2020-2024 ACS 5-Year Estimates.
All four nominated tracts are eligible for OZ 2.0 designation and meet at least one of the two qualification criteria.
20% Poverty Threshold: (source: 2020-2024 ACS 5-Year Estimates) Joint Special Council/BFPD
07/7/26 05:30 PM
City Manager Department
Kenneth D Chapa
Resolution
Doc ID: 6442
COUNCIL AGENDA ITEM
1. Main Street Corridor (06071009400):
Population: 4,127
Poverty Rate: 32.1%
2. Central Barstow (06071009502):
Population: 892
Poverty Rate: 21.4%
3. Barstow Interchange (06071009501)
Population: 683
Poverty Rate: 19.8%
(Does not qualify under 20% poverty threshold but qualifies under MFI criteria)
4. East Barstow/MCLB (06071012002)
Population: 5,225
Poverty Rate: 24.1%
70% MFI threshold of the Riverside-San Bernardino-Ontario MSA = $99,149:
(source: 2020-2024 ACS 5-Year Estimates)
1. Main Street Corridor (06071009400):
Median Family Income: $40,923
vs 70% of Metro Threshold: 41.3%
2. Central Barstow (06071009502):
Median Family Income: $76,440
vs 70% of Metro Threshold: 77.1%
(Does not qualify under 70% MFI but does qualify under 20% poverty threshold)
3. Barstow Interchange (06071009501)
Median Family Income: $52,806
vs 70% of Metro Threshold: 53.3%
4. East Barstow/MCLB (06071012002)
Joint Special Council/BFPD
07/7/26 05:30 PM
City Manager Department
Kenneth D Chapa
Resolution
Doc ID: 6442
COUNCIL AGENDA ITEM
Median Family Income: $48,807
vs 70% of Metro Threshold: 49.2%
Furthermore, IRS Revenue Procedure 2026-14 (issued April 6, 2026) lists all four tracts as confirmed eligible LICs and rural designated. The rural designation is important as it provides Qualified Rural Opportunity Funds (QROF) with a 30% step-up benefit over the standard 10% benefit, making these tracts among the most investor-attractive OZs in California.
By leveraging the recently adopted 2048 General Plan and Barstow International Gateway Specific Plan, demand for investment will be critical. Each tract is well positioned to attract investments from QROFs that align with the California Jobs First State Economic Blueprint. Example Investments may include:
Main Street Corridor: Attainable Housing serving essential workers, students, and families.
Redevelopment and adaptive reuse of Main Street Store fronts supporting tourism and encouraging entrepreneurial ecosystems. Additional opportunities for transportation and logistics.
Central Barstow: Expansion and development of quality Healthcare and Medical services as well as workforce development partnerships to support the growing healthcare field. Development of vacant land for attainable housing products.
Barstow Interchange: Housing, commercial and hospitality developments to better serve tourist/travel traffic along I-15.
East Barstow/MCLB: Retail and Food Services, Attainable Housing serving essential workers, students, and families
FISCAL IMPACT:
OZ designation does not obligate the City to any expenditure or financial liability. Instead, it unlocks access to a national pool of private capital gains investment estimated at tens of billions of dollars annually nationwide that can flow into qualifying projects within the designated tracts. With all four tracts confirmed as Rural, investors may additionally form Qualified Rural Opportunity Funds (QROFs) to access the 30% step-up incentive, making Barstow’s tracts among the most financially attractive OZ investments in California.
No impact to the city’s general fund.
RECOMMENDED ACTION:
It is recommended that the Barstow City Council Adopt Resolution No. XXXX-2026 requesting that the Governor of the State of California and the Governor’s Office Business and Economic Development (GOBiz) nominate Census Tracts: 06071009400, 06071009502, 06071009501, and 06071012002 for designation as Qualified Opportunity Zones under the Opportunity Zones 2.0 program