Business Agenda Item 4a
STAFF REPORT
Business Agenda Item
DATE: July 20, 2026
TO: Honorable Mayor and Council Members
FROM: Brendan Byrd, Community Development Director/City Engineer SUBJECT: Direct Staff to Nominate Census-Tracts within the City of Fortuna for Opportunity Zone 2.0 Designation, Resolution 2026-28
STAFF RECOMMENDATION:
Adopt Resolution 2026-28, a Resolution of the Fortuna City Council Authorizing the Community Development Director/City Engineer to submit a nomination of census tracts identified in Fortuna for Opportunity Zone 2.0 designation.
EXECUTIVE SUMMARY
Opportunity Zones are a federal program that encourages private investment in economically distressed communities through capital gains tax incentives. Originally established under the Tax Cuts and Jobs Act of 2017, Congress recently reauthorized and expanded the program, now called Opportunity Zone 2.0.
Opportunity Zone 2.0 establishes a new designation process that requires states to nominate eligible census tracts for designation. Governors may nominate up to 25 percent of eligible census tracts within their state. California has identified 2,469 eligible census tracts, of which up to 618 may be nominated for designation.
The Governor's Office of Business and Economic Development (GO-Biz) has invited local governments to submit eligible census tracts for consideration, including a ranking of preferred priority. Approved designations become effective in January 2027.
Opportunity Zone designation serves as an economic development tool by encouraging long-term private investment in designated areas. Investors who reinvest eligible capital gains through Qualified Opportunity Funds receive federal tax incentives, making projects within Opportunity Zones more attractive for private financing. Unlike traditional grant programs, Opportunity Zones do not provide direct public funding. Instead, the designation can improve access to private equity for projects such as multi-family housing, mixed-use development, commercial redevelopment, historic rehabilitation, manufacturing, and business expansion.
Three census tracts within or partially within the City of Fortuna meet the federal eligibility requirements. Staff evaluated each tract based on the State's published competitive selection criteria, including poverty rate, median family income, development potential, land use, and alignment with California's targeted investment sectors. Staff recommends the Council authorize staff to apply to the state for Opportunity Zone designations for the following three census tracts, listed in order of priority.
Maps showing each census tract are also shown in Attachment 2.
Business Agenda Item 4a
Priority 1 – Census Tract 06023010901 (Highest Priority) • Includes Redwood Village and the significant majority of the Mill District. • Meets both federal income eligibility thresholds.
• Contains a Low-Moderate concentration of Housing Element-identified vacant sites. • Is predominantly zoned for mixed-use, commercial, and higher-density residential development.
• Contains the highest density of readily available vacant commercial land for development.
Priority 2 – Census Tract 06023011000 (Moderate Priority) • Includes a portion of the lower Mill District, and Strongs Creek Plaza. • Meets one of the federal income eligibility thresholds. • Contains a moderate amount of vacant land for new housing development along Ross Hill Road.
• Is predominantly zoned for Single Family Development and has moderate potential for MixedUse/Commercial Development.
Priority 3 – Census Tract 06023010800 (Lowest Priority) • Includes the Riverwalk District and a small portion of the western Mill District that borders US Route 101
• Meets one of the federal eligibility thresholds.
• Has moderate potential for redevelopment and vacant mixed commercial use land available. • Predominantly zoned for development to attract the touring public.
With approval from the Council staff would immediately move to apply, as the application deadline for the program is July 20th, 2026.
FINANCIAL IMPACT:
There is no fiscal impact against the City’s 2026/2027 budget as the application has no cost, and this designation would not result in the use or loss of public funds in the future. There is expanded potential for future economic development should businesses take advantage of the capital gains tax incentives in designated Opportunity Zones. The applications themselves are simple and will take minimal staff time to complete.
RECOMMENDED COUNCIL ACTION:
1. Receive staff presentation and review Council questions with staff.
2. Open and close Public Comment.
3. Make a motion to direct staff to complete and submit the Opportunity Zone 2.0 Application to the California Business and Economic Development and adopt Resolution 2026-28, read by title only. Roll Call vote.
Business Agenda Item 4a
ATTACHMENTS:
1. Resolution 2026-28, A Resolution of the City Council of the City of Fortuna Approving the Nomination of Eligible Census Tracts for Opportunity Zone 2.0 Application
2. Attachment 2: Maps of Eligible Opportunity Zone Census Tracts.