AgdaPkt 2018-04-09 Joint SA PFA - Laserfiche WebLink

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REPORT To the Honorable Mayor and City Council From the City Manager April 9, 2018 SUBJECT Letter to Governor Brown requesting the reconsideration of including certain Redwood City parcels in the list of Qualified Opportunity Zones eligible for federal tax benefit upon development RECOMMENDATION By motion, authorize the Mayor to send a letter to Governor Brown requesting that Redwood City parcels be removed from the list of Qualified Opportunity Zones and that, if such parcels remain designated as being in a Qualified Opportunity Zone, that relocation benefits be extended to any residents displaced as a result of investment benefitting from the federal tax deferral and that 20% of housing developed with the benefit of the federal tax deferral be designated as affordable housing BACKGROUND In December 2017, the “Tax Cuts and Jobs Act (Act)” was enacted, adding §§ 1400Z- 1 and 1400Z-2 to the federal Internal Revenue Code. The Act created Opportunity Zones to induce local economic development by attracting private investment through tax benefits. Benefits would be provided by rolling individuals’ or corporations’ unrealized capital gains into Qualified Opportunity Funds and defer federal taxes on the profit. Those funds can then be used to invest in Opportunity Zones either to expand or fund new businesses or real estate development. The tax deferral grows the longer an investment is held or taxes can be fully waived if an investment is held longer than 10 years. Opportunity Zones must be in Low Income Communities (LICs); however, states may only identify and nominate a quarter of all LICs as Opportunity Zones. Low Income Communities are defined as Census Tracts that either have 20 percent poverty rates or have median family incomes of no more than 80 percent of statewide or metropolitan area family income. Governor Jerry Brown was required to nominate Census Tracts and submit the list to the Secretary of the Department of the Treasury (Secretary). Governor Brown submitted the list to the Treasury on March 21, 2018. The Secretary may certify and then designate the list of LICs as Opportunity Zones no later than 30 days from 6.1.E. - Page 1