Key Takeaways: California's OZ 2.0 Nominations
- The nomination window for the next generation of Opportunity Zones opened July 1, 2026. California's Governor has until September 28, 2026, to submit census tract nominations to the U.S. Treasury.
- California has 2,469 census tracts eligible under the new criteria, but the state may nominate only about 618 — roughly 25% — making the selection process highly competitive.
- New eligibility rules are stricter: the low-income community income threshold drops from 80% to 70% of area median family income, and the contiguous-tract provision from the original program is gone. In the San Jose metro, 95 census tracts qualify as eligible — 89 of them in Santa Clara County.
- Treasury is expected to certify the new designations for a map that takes effect January 1, 2027, with zones refreshed every 10 years going forward.
- The new map defines where Opportunity Zone 2.0 capital can be deployed starting in 2027 — and which markets fall off the map.
The Opportunity Zone program's second act has moved from legislation to logistics. With the One Big Beautiful Bill Act of 2025 making the program permanent, the first concrete step toward Opportunity Zones 2.0 is happening now: governors across the country are redrawing the map. Here is where California's process stands, how the new rules work, and what it may mean for San Jose as the 2027 program takes shape.
The Timeline: A 90-Day Sprint to a New Map
The nomination window opened nationally on July 1, 2026. In California, the Governor's Office of Business and Economic Development (GO-Biz) is coordinating the process, with completed local nomination forms due July 25, 2026 and the Governor's final tract nominations due to the U.S. Treasury by September 28, 2026. Treasury then certifies the designations, and the new map takes effect January 1, 2027.
Unlike the original 2018 designations, this will not be a one-time event. Under the new law, the map refreshes every 10 years, making zone selection a recurring feature of the program.
The New Rules: Fewer Loopholes, Tighter Criteria
The 2026 eligibility criteria are meaningfully stricter than the original program's:
- Tighter income threshold. The low-income community test drops from 80% to 70% of area or statewide median family income, narrowing the pool of qualifying tracts.
- No contiguous-tract provision. The original program allowed certain tracts adjacent to low-income communities to be designated. That carve-out is gone.
The result: 2,469 California tracts are eligible, and the Governor can nominate roughly 618 of them. Cities, counties, and developers across the state are actively advocating for the tracts they believe are best positioned to attract investment.
Explore the Eligible San Jose Tracts
Under the new criteria, 95 census tracts across the San Jose metro qualify as eligible low-income communities — 89 of them in Santa Clara County. Use the interactive map to see exactly where they fall, including which sit within the City of San Jose. For a complete breakdown of the new framework — the rolling five-year deferral, the revised step-up schedule, and the 10-year benefit — see our Opportunity Zones 2.0 guide.
Eligibility data: U.S. Treasury OZ2 eligible-LIC tract list (March 2026). Boundaries: U.S. Census Bureau. Tract eligibility does not guarantee designation; final Opportunity Zones are nominated by states and certified by the U.S. Treasury.
What This Means for San Jose
As we discussed in Looking Ahead: Opportunity Zone 2.0, some of Downtown San Jose's current Opportunity Zone tracts were originally designated under the contiguous-tract provision and may not meet the new, stricter criteria. That makes this nomination window especially consequential for the South Bay: the tracts California nominates this summer will determine where Opportunity Zone 2.0 capital can flow in the San Jose market for the next decade.
Urban Catalyst has been engaged in this process, working alongside local stakeholders to support the nomination of San Jose census tracts that we believe offer strong development potential and align with the program's community investment goals. There is no assurance as to which tracts will ultimately be nominated by the Governor or certified by Treasury, and we will share updates as the process unfolds.
It is also worth remembering what the new map does not change: existing Opportunity Zone investments made under the original program continue to be governed by the original rules, including their designated zones. The new map applies to the new program framework for investments made on or after January 1, 2027.
Why the New Map Matters
The map is the foundation of the next generation of the program. Where the zones land determines which projects can qualify, and markets with strong fundamentals inside newly designated tracts may attract significant early attention when the 2027 program opens.
Urban Catalyst is preparing for a potential 2027 Opportunity Zone fund, and the outcome of California's nomination process will be an important input into that planning. Any future offering would be made only through a private placement memorandum and only to accredited investors, and there is no assurance that any future fund will be launched or will achieve its objectives.
Conclusion
California's Opportunity Zone map for the next decade is being decided over roughly 90 days this summer. Stricter criteria, a hard cap on nominations, and the loss of the contiguous-tract provision mean the 2027 map will look different from today's — in San Jose and across the state. We will continue to follow the process closely and share what each milestone means for San Jose.
For background on the new program, see What Opportunity Zones 2.0 Means for Investors and When the New Opportunity Zone Program Starts, or subscribe to our blog for weekly insights.
This material is for educational purposes only. It is not tax, legal, accounting, investment, or securities advice. It is not an offer to sell or a solicitation of an offer to buy any security or interest in any fund. Opportunity Zone tax benefits are subject to detailed rules, holding periods, and future guidance and are not guaranteed. Real estate investments involve risk, including illiquidity and possible loss of principal. Investors should consult their own tax, legal, and financial advisors.
Important Disclosures
Past performance are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by Issuer, or one of its partner/issuers. Issuer does not warrant the accuracy or completeness of the information contained herein. Thank you for your cooperation.
Real Estate Risk Disclosure:
- There is no guarantee that any strategy will be successful or achieve investment objectives including, among other things, profits, distributions, tax benefits, exit strategy, etc.;
- Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
- Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
- Potential for foreclosure – All financed real estate investments have potential for foreclosure;
- Illiquidity – These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.
- Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
- Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits
- Stated tax benefits – Any stated tax benefits are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.
Opportunity Zone Disclosures
- Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings.
- Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments.
- Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations.
- Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available.
- Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund.
- Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments.
- Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities.
- It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.
The above material cannot be altered, revised, and/or modified without the express written consent of Urban Catalyst.