OZ 2.0 Recommendation Process
The ACA anticipates opening the recommendation process in March 2026 pending decisions from Treasury that will affect Arizona’s total number of eligible tracts and which tracts are considered “rural.” The ACA will initiate input as soon as it can after Treasury makes its decisions public.
Who gets to recommend tracts?
In most counties, the county will speak for the entirety of the county, except for tribal areas. Tribal nations will be asked to weigh in on tracts in their territory statewide. In Maricopa, Pima and Pinal counties, incorporated communities of 10,000 or more population (per the Office of Economic Opportunity’s 2025 population estimate) will be asked to speak for their areas. The counties will speak for smaller jurisdictions and unincorporated areas outside tribal areas.
Generally, jurisdictions are asked to recommend one quarter of their area’s eligible tracts. Jurisdictions that have only one, two or three eligible tracts in their area may recommend one and the ACA will round in determining how many tracts a jurisdiction may recommend; for example, a jurisdiction with seven eligible tracts may recommend two. Accordingly, the ACA expects to receive more recommendations than the number of tracts the state may nominate. This will, therefore, be a competitive process.
The ACA encourages all recommenders to reach out to stakeholders, including cities, employers, landowners, developers, non-profits, schools and others who will have insight into where an Opportunity Zone designation could be most helpful.
Tract recommendations will be due from communities, counties and tribes on or before May 8, 2026.
What makes a census tract a good candidate to be an Opportunity Zone?
A good Opportunity Zone tract is one that is ready for development, that has water, power and sewer connections in it (or at least nearby). It is helpful if it is zoned and entitled. It is beneficial for the tract to be near roads and a population center. A good Opportunity Zone tract has open land or sites suitable for redevelopment. A good Opportunity Zone tract can support projects that ultimately will be profitable for investors. The long-term tax benefit is what draws them to invest in a particular tract, so the tract must be able to support a project that will yield a profitable exit 10+ years from investment. Note that investors in rural tracts get extra tax benefits. That said, the tract still must be able to support a successful, profitable project.
How will the ACA support communities in recommending tracts?
The ACA will engage with communities throughout the process to help them make great choices for their areas. The ACA will host webinars to support recommenders and will host the Arizona Development Finance & Opportunity Zones Summit in Phoenix on April 1-2 to help recommenders consider other tools that may be brought to bear on development in their area, information that will be helpful, as communities, counties and tribal nations consider their options in recommending census tracts for OZ 2.0 designation. In addition, the ACA’s rural economic development team will host gatherings throughout the state in April to provide further information and assistance in this process.
What is the timeline for the process?
The ACA is developing a tool that will allow recommenders to review a map with OZ 2.0 tract options and select the ones they want to recommend right from the map. Recommenders submitting two or more tracts will rank order their selections. All recommenders will be asked to provide a brief explanation for why each tract would make a good Opportunity Zone. This tool will be finalized and shared with recommenders once the announcement of key Treasury decisions about tract eligibility is made available. The ACA anticipates this happening in March.
In the meantime, the ACA suggests that communities, counties and tribal nations review the map below, which shows tracts the ACA knows to be eligible at this time. (The count could go up but should not go down, nor should any of the currently eligible tracts be found ineligible later.)
Once recommendations are submitted to the ACA, they will be reviewed and the list will be pared to the maximum number of tracts Arizona may nominate. This information will be shared with Governor Hobbs, who will make the final decision about which tracts are nominated. Arizona intends to submit its nominations on or around July 1, 2026; the earliest states may submit nominations, in hopes of getting Treasury’s approval of the submittal as soon as possible. After that, approved tracts become OZs 2.0 as of January 1, 2027.
The OZ 2.0 Eligible Tracts Map shows Arizona census tracts that are expected to be eligible to be nominated for OZ 2.0 status later this year, using the most conservative interpretation of qualifying criteria. The tracts highlighted in green would qualify as rural Opportunity Zones. The tracts highlighted in blue would qualify as nonrural Opportunity Zones.
If you have additional questions regarding Arizona’s Opportunity Zones, please contact us at [email protected].