TO: Mayor and Members of City Council
THRU: Jodi Phelps, Assistant City Manager
FROM: Christopher Cauley, Economic & Community Development Director
DATE: June 1, 2026
RE:Title
Opportunity Zone 2.0 Nomination PrioritiesTitle
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COUNCIL DISTRICT(S):
Council District(s)
All
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Relationship To Strategic Plan:
GOAL II: The City of Fayetteville will have a Responsive City Government supporting a diverse and viable economy.
Objective 2.1: To ensure a diverse City tax base.
Objective 2.2: To invest in community places to ensure revitalization and increase quality of life.
GOAL IV: The City of Fayetteville will be a desirable place to live, work and recreate.
Objective 4.5: To ensure a place for people to live in great neighborhoods.
Objective 4.6: To reduce poverty and homelessness.
GOAL V: The City of Fayetteville will be a financially sound city providing exemplary city services.
Objective 5.1: To ensure strong financial management with fiduciary accountability and plan for future resource sustainability by aligning resources with City priorities.
Executive Summary:
City Council is asked to provide direction on the City’s Opportunity Zone 2.0 nomination priorities for submission to the North Carolina Department of Commerce by the June 7, 2026, deadline. Opportunity Zones are a federal tax incentive intended to encourage long-term private investment in designated low-income census tracts and may help attract private development and redevelopment activity. Cumberland County has 31 eligible census tracts and appears to be limited to four nominations, with 25 eligible tracts wholly or partially located within Fayetteville city limits. Staff recommends using a criteria-based ranking approach aligned with State guidelines, local redevelopment priorities, housing and job creation potential, and project or site readiness.
Background:
The Opportunity Zone Program was originally created under the 2017 Tax Cuts and Jobs Act to encourage long-term private investment in economically distressed census tracts. Investors may receive federal tax benefits for qualifying investments made through Opportunity Zone structures, including deferral or reduction of certain capital gains and potential exclusion of gains from long-term Opportunity Zone investments.
The program has been reauthorized and made permanent, with new tract designations to occur every 10 years. The next round of Opportunity Zone designations is expected to take effect January 1, 2027 and remain in effect for 10 years.
The North Carolina Department of Commerce has been designated to lead the State’s nomination process and advise the Governor on tracts to submit to the U.S. Treasury for approval and certification. Commerce is accepting public input and nominations through an official Excel nomination form. Completed forms must be submitted to Commerce by 11:59 p.m. on Sunday, June 7, 2026.
Commerce has identified three state-level guidelines for local leaders to consider when evaluating eligible tracts:
1. Business Development and Job Creation, including potential to attract or expand businesses in high-growth, high-wage sectors and tracts with industrial sites or economic development projects needing additional investment.
2. Strategic Local Revitalization, including tracts supported by documented local plans, recent investments, community revitalization efforts, industrial redevelopment, mixed-use projects, or other community-driven initiatives.
3. Pathways to Increased Housing Supply in High-Need Areas, including tracts where Opportunity Zone designation can meaningfully expand housing supply, particularly near employment centers, transit corridors, recent infrastructure investments, identified housing development sites, or areas with documented housing need.
Statewide, preliminary data suggests North Carolina may nominate 202 census tracts. Commerce has stated that each county with at least one eligible tract will be able to nominate at least one census tract, with remaining nomination capacity distributed among counties with at least two eligible tracts based on county population.
Based on the State’s nomination workbook and supporting data reviewed by staff, Cumberland County has 31 eligible census tracts and appears to be allocated four nomination slots. Staff has identified 25 eligible tracts that are wholly or partially located within Fayetteville city limits.
Issues/Analysis:
The principal issue before Council is how the City should prioritize Fayetteville’s eligible census tracts within a limited countywide Opportunity Zone nomination process.
This is not a City-controlled designation process. The City may submit recommendations to the North Carolina Department of Commerce, but the State will make final nomination decisions for submission to the U.S. Treasury. The City’s goal is to provide the strongest possible local recommendation within the short timeframe provided by Commerce.
The City is not being asked to approve funding, create a new program, or commit local funds. The question is whether Council supports staff submitting a ranked recommendation to Commerce based on policy criteria that reflect State guidelines, local redevelopment priorities, housing and job creation potential, and realistic investment readiness.
Based on the State’s nomination materials, Cumberland County has 31 eligible census tracts and appears to have four available nomination slots. Staff GIS review has identified 25 eligible census tracts that are wholly or partially located within Fayetteville city limits. Because the number of eligible Fayetteville tracts significantly exceeds the apparent countywide nomination capacity, staff does not recommend asking Council to rank every eligible tract individually during the work session. That approach would be difficult to complete within the available time and could result in a district-by-district discussion rather than a strategic investment discussion.
Staff recommends a criteria-based approach using the following considerations:
Business and Job Creation Potential.
Priority should be given to tracts with realistic potential to attract private business investment, support job creation, expand commercial or industrial activity, or leverage existing economic development assets.
Housing Supply Potential.
Priority should be given to tracts where Opportunity Zone designation could help support affordable housing, mixed-income housing, workforce housing, or other housing production in areas with documented need or proximity to employment centers.
Strategic Local Revitalization Alignment.
Priority should be given to tracts that align with adopted or emerging City priorities, such as redevelopment corridors, Murchison Choice Neighborhood planning and implementation, downtown and core area revitalization, neighborhood revitalization, public infrastructure investment, or other documented City plans.
Project or Site Readiness.
Priority should be given to tracts with known development sites, publicly owned land, infrastructure capacity, redevelopment opportunities, existing partner interest, or other indicators that private investment could realistically occur during the 2027 to 2036 designation period.
The highest-priority tracts should be those where multiple criteria overlap. For example, a tract with high need but no clear development opportunity may be less competitive than a tract with high need, redevelopment alignment, available land, infrastructure capacity, and realistic housing or job creation potential.
Staff also recommends coordination with Fayetteville Cumberland Economic Development Corporation and Cumberland County to reduce the risk of conflicting local submissions. Because Commerce will accept nominations from local governments, economic development organizations, and the general public, uncoordinated submissions could dilute the local message. A coordinated recommendation would better communicate Fayetteville’s priorities to the State.
Budget Impact:
There is no direct budget impact from providing direction on Opportunity Zone nomination priorities.
Opportunity Zone designation does not provide direct funding to the City and does not require the City to appropriate local funds. The designation is a federal tax incentive intended to encourage private investment in eligible census tracts.
Future projects located in designated tracts may request City participation, incentives, infrastructure support, housing funds, or other public/private development tools. Any such requests would require separate Council consideration and approval through the City’s normal budget, incentive, grant, or development agreement processes.
Options:
• Authorize staff to prepare and submit the City’s Opportunity Zone nomination recommendation to the North Carolina Department of Commerce by the June 7, 2026 deadline.
• Do not authorize staff to submit an Opportunity Zone nomination recommendation on behalf of the City.
• Provide other direction to staff.
Recommended Action::Recommended Action
Staff recommends that Council authorize staff to prepare and submit the City’s Opportunity Zone nomination recommendation to the North Carolina Department of Commerce by the June 7, 2026 deadline, using the State’s nomination guidelines and local considerations including business and job creation potential, housing supply potential, strategic local revitalization alignment, and project or site readiness.
Staff further recommends that Council authorize staff to coordinate with Fayetteville Cumberland Economic Development Corporation and Cumberland County before submission to promote alignment among local recommendations where possible.
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Attachments:
Opportunity Zone 2.0 Nomination Priorities Presentation