Governor Ferguson selects 99 Opportunity Zones to encourage private investment

OLYMPIA, Wash. — Today Governor Bob Ferguson announced the nominations of 99 low-income and rural communities across Washington state for the federal Opportunity Zones 2.0 program.

The second-generation program encourages investors, developers and financial institutions to fund real estate development and businesses in exchange for tax incentives. The first generation of the program spurred an estimated $100 billion in private investments nationwide.

Gov. Ferguson submitted the nominations, representing 27 counties and 17 tribal lands, to

the U.S. Treasury Department. The new designations will take effect January 1, 2027. View the full list of nominations and program details on the Summary OZ Dashboard.

“Washington is a great place to do business,” Governor Ferguson said. “Opportunity Zones help shine a light on communities that have great potential for investors.”

In 2018, 139 areas across 36 counties were nominated for the first-generation version of this program. When the updated program was announced in 2025, the state created a plan to engage with the public and transparently evaluate applications. Feedback received helped finalize the criteria and the application forms used for the next round of nominations.

The public, business leaders and the state’s 29 federally recognized tribes participated in months of feedback and strategic planning, led by the Washington State Department of Commerce.

“We started by listening to communities about their strengths, their ambitions, and what they need to grow,” said Sarah Clifthorne, Interim Director, Washington State Department of Commerce. “There is immense untapped potential across Washington for private investments to thrive and unlock the next chapter of growth. Our goal is to encourage that partnership with local people and the variety of spaces ready for impact.”

The 99 nominated areas were selected from 152 applications. Of those, 36 represent opportunities in rural communities.

How the program works

Originally launched in 2018, the federal program spurred more private investment across economically distressed communities than any previous policy over a comparable period nationally. Investments tied to that first round of designations are estimated to have surpassed $100 billion, reaching over 5,600 neighborhoods nationwide.

In the announced update to the program in 2025, Congress added strict information reporting requirements designed to measure long-term economic impacts. Active funds operating within the original 2018 Opportunity Zones must now adhere to these new compliance mandates.

Meanwhile, geographic designations under the initial OZ 1.0 framework will remain active through Dec. 31, 2028, overlapping with the launch of the updated program.

This impacts several projects underway in Washington state. For example, the Peyton Lofts development in Spokane is looking to add residential density to the urban core, transforming a 135-year-old office building into a 96-unit mixed-use residential community by the end of 2027. It represents a growing effort across the state to turn empty commercial offices into residences at a time when housing is critically needed.

Notable completed projects also include:

• The Koz on MLK affordable and workforce housing development in Tacoma’s Hilltop Neighborhood. Backed by an initial 2018 investment framework, a woman-owned developer finished the building in 2022. It now houses 161 units and ground-floor commercial spaces.
• The Marina Square mixed-use waterfront development in Bremerton completed in 2023 on the site of a former parking lot. Today, it features 270 residential units and nearly 13,000 square feet of ground-floor retail, anchored by the Market at Marina Square and an Express YMCA facility. It now supports the city’s broader waterfront revitalization plans.

What’s new in Opportunity Zones 2.0

The new Opportunity Zone program adds new incentives targeted directly at high-need rural communities:

• Investors who hold a Qualified Rural Opportunity Fund (QROF) investment for five years receive a 30% reduction in taxable value, compared to 10% for the same holding period in non-rural zones.
• Rural properties require capital improvements equal to only 50% of their adjusted basis to qualify for tax benefits, down from the standard 100% threshold.
• Once certified, a designated Opportunity Zone 2.0 area will keep its status through Dec. 31, 2036.
• The 2.0 program is built on a permanent, recurring 10-year cycle, so newly drawn maps will take over on Jan. 1, 2037.
• The new IRS information reporting requirements allow for the program’s successes and challenges to be measured accurately. Currently, it is unclear how many specific jobs or investments resulted from OZ 1.0, and the new requirement will improve transparency.

What happens next

The U.S. Treasury Department will review and certify all nominations it receives from states after submission. Designations are scheduled to take effect Jan. 1, 2027.

Investors can register their Qualified Opportunity Funds (QOFs) with the IRS and begin auditing their realized 2026 capital gains now by visiting the IRS webpage to Invest in a Qualified Opportunity Fund.

Demand for sites within the new boundaries is also expected to be high. The Department of Commerce encourages investors to prepare their strategies ahead of January 1 so they can deploy capital early in 2027 and immediately drive community impact.