Opportunity Zones - An Incentive to Invest in Lower-Income Areas

Fields in Ellenburg, Washiongton

What is an Opportunity Zone?

The federal Tax Cuts and Jobs Act of 2017 was signed into law on Dec. 22, 2017. The Opportunity Zone program was included  in that act, which was designed to provide tax incentives to investors who fund businesses in underserved communities. 

Investors are able to defer paying taxes on capital gains that are invested in Qualified Opportunity Funds that in turn are invested in distressed communities designated as Opportunity Zones by the governor of each state. Up to 25 percent of the low-income census tracts in each state can be designated as Opportunity Zones.

Which Tracts in Washington are Designated as Opportunity Zones?

Tracts Designated as Opportunity Zones

CountyList of Designated Tracts
53005010901, 53005011300
53007961000, 53007961100, 53007961200
53009000200, 53009000300, 53009000400, 53009000700, 53009000800, 53009000900, 53009001500, 53009002100, 53009002300, 53009940000
53011040507, 53011040509, 53011041009, 53011041600, 53011042400, 53011042500, 53011042600
53015000300, 53015001100
53019940000, 53019970100, 53019970200
Grays Harbor
53027000200, 53027001000, 53027001500
53031950202, 53031950400, 53031950601, 53031950702
King53033008600, 53033008700, 53033009000, 53033009100, 53033009200, 53033009300, 53033009400, 53033011001, 53033011101, 53033011800, 53033026100, 53033026801, 53033026802, 53033027200, 53033027300, 53033027900, 53033028000, 53033028100, 53033028200, 53033028402, 53033028403, 53033028802, 53033030006
Kitsap53035080500, 53035092200, 53035092300
53037975500, 53037975600
53039950100, 53039950200
53041971000, 53041971100
53045960600, 53045961300
53047940100, 53047940200, 53047970400, 53047970800
53049950200, 53049950300, 53049950800
Pend Oreille
53051970200, 53051970500
53053061400, 53053061601, 53053061602, 53053062400, 53053062600, 53053071408, 53053071409, 53053071503, 53053071805, 53053071806, 53053072000, 53053940007
53057940500, 53057951500, 53057952200, 53057952401, 53057952500
53059950300, 53059950400, 53059950500
53061040200, 53061040700, 53061041901, 53061051400, 53061052803, 53061053509, 53061053700
53063000200, 53063001600, 53063002300, 53063002400, 53063003100, 53063003200, 53063003500, 53063004000, 53063010401, 53063014400, 53063014500
53065941000, 53065950800
53067010100, 53067011200, 53067012320, 53067012720
Walla Walla
53071920300, 53071920500
53073000600, 53073001000, 53073940000
53077000100, 53077000200, 53077001300, 53077001501

How Many Zones Were Created?

The governor of each state could designate up to 25 percent of the total number of eligible census tracts as Opportunity Zones. In Washington, this came out to a total of 139 tracts. 

Map of census tracts in Washington and in the nation.

Nominated Tracts Had to Meet Specific Criteria

Low-income community census tracts were the basis for determining eligibility for Opportunity Zones. A low-income community census tract needed to have an individual poverty rate of at least 20 percent or median family income up to 80 percent of the area median in order to qualify.

How did Washington Decide Which Areas to Designate as Opportunity Zones?

Governor Inslee directed Commerce to develop a procedure for nominating tracts. Commerce consulted with a diverse group of stakeholders, and as a result, set the following goals:

  • Transparent process
  • Created a process that helps strengthen communities
  • Created ability for tribes to directly access some portion of the available census tracts
  • Created ability for each county, in conjunction with the applicable associate development organization (ADO) to access some portion of the available census tracts
  • Created a competitive portion of tracts that were awarded to areas that would most likely result in new investment and job creation.

To accomplish these goals, Commerce requested that cities, towns, counties, tribes, associate development organizations, port districts and housing authorities nominate tracts through one or more of the following three options.

Opportunity Zone Pools

County/ADO Set-Aside: up to 69 tracts totalEach county, through the applicable ADO, may nominate a certain number of eligible census tracts within the county for designation. The number of tracts per county is allocated based on the total number of eligible tracts in the county, and is shown in Appendix A. Counties will receive a minimum of one and a maximum of five tracts through this formula. If fewer than 69 tracts are nominated, any remaining tracts will be added to competitive process.
Federally recognized Tribe Set-Aside: Up to 29 tracts totalEach of the state’s federally recognized tribes may nominate one eligible census tract for designation. The tract may, but need not, include lands owned or controlled by the nominating tribe. If fewer than 29 tracts are nominated, any remaining tracts will be added to the competitive process.
Competitive Process: 31 or more tracts (total will depend on the number of set-aside tracts that are returned to the competitive pool)Eligible entities (cities, towns, counties, tribes, ADOs, housing authorities, and port districts) may submit applications to nominate tracts for designation based on criteria specified below. Each application may nominate as many as three tracts, and entities may submit more than one application. A review team will score each application, and the top-scoring areas will be nominated for designation.

Find Out More About Opportunity Zones in Washington State

To find out more about Opportunity Zones in Washington State:

By street address:  This US Department of Treasury CDFI Fund link allows you to determine if an address is in an Opportunity Zone and/or a New Markets Tax Credit eligible area. Make sure that only the  “Opportunity Zones” box is checked in the “Layers” tab.

How Does the Opportunity Zone Program Work?

The law passed by Congress in December of 2017 states:

  • Qualified Opportunity Zones must be certified by the U.S. Department of the Treasury and are required to hold at least 90 percent of their assets in qualified opportunity zone businesses and/or business property.
  • To qualify, capital gains must be invested in a Qualified Opportunity Fund within 180 days of the date of the sale or exchange that generated the gain.
  • The tax deferral is temporary (up to nine years) and the program ends on December 31, 2026.
  • Today, the U.S. Department of the Treasury and the IRS released proposed regulations on Opportunity Zones designed to incentivize investment in American communities. The Treasury Department plans on issuing additional guidance before the end of the year after notice and comment.

    Additional information:

The IRS has released the second round of Opportunity Zone regulations. Click here for more information.

DISCLAIMER: The U.S. Department of the Treasury has not completed its rulemaking on the Opportunity Zone program.

News and Events

For the latest on Opportunity Zones in Washington State, check out this page.

The White House announced Dec. 12, 2018 that the president will sign an executive order creating a White House Opportunity and Revitalization Council to support investment in opportunity zones

Read the New York Times article

Seattle Conference offered opportunities for communities to learn more about Opportunity Zones


NEW: IRS Issues Draft Regulations

On. Oct. 19, 2018 the U.S. Department of the Treasury and the IRS released proposed regulations on Opportunity Zones designed to incentivize investment in American communities. The Treasury Department plans on issuing additional guidance before the end of the year after notice and comment.

Additional information::

Helpful Tools and Links

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