Sonoma’s Highway 12 featured in Trump’s new ‘opportunity zone’ program
Will there be a rush of new development in the Valley’s Springs neighborhood stemming from Highway 12’s inclusion on a new list of state-designated “opportunity zones”?
That will depend on whether developers are lured to Sonoma by the Trump administration’s tax-friendly program.
The concept of opportunity zones was part of the Trump administration’s tax overhaul – more formally known as the Tax Cuts and Jobs Act of 2017. It offers tax breaks to investors who fund new developments in designated low-income neighborhoods. Last Wednesday, President Trump held a press conference about the program and its ability to revitalize “distressed areas.”
“Our tax cuts have kicked off a race to invest in opportunity zones beyond anything that anybody in this room even thought,” said Trump at the press conference.
The opportunity zone criteria required a neighborhood to have at least 20 percent of its residents living at or below the poverty level, or median family income below 80 percent of the regional median income.
Based on that criteria, California officials selected nearly 900 census tracts for the new program, including three in Sonoma County.
Sonoma County’s three zones are downtown Santa Rosa, Roseland and the Highway 12 corridor in the Springs. The Springs zone runs for three miles along the west side of Highway 12 from north of Donald Street to Madrone Avenue.
Last month, more than 60 real estate developers and investors from within and outside the Bay Area jumped on a bus to tour the Sonoma County opportunity zones and to meet with Santa Rosa City officials and planners.
Santa Rosa assistant city manager David Guhin said that the March 15 tour generated a “really strong response.”
“We have had a lot of follow-up meetings since the tour,” said Guhin about the Santa Rosa zones. “The interest has primarily been housing and we are urging developers to go ‘up not out’ with 8- to 10-story buildings.”
Guhin said the City of Santa Rosa is putting “a lot of measures in place” to encourage housing downtown and near mass transit. “We’ve developed a multi-pronged approach, of which the opportunity zone designation is one prong,” said Guhin, “to encourage infill building downtown at multiple levels of affordability.”
Matt Regan is senior vice president of public policy at economic-development nonprofit the Bay Area Council, and he helped organize the tour. He said tours like these are invaluable because “at the end of the day, the decision to invest in a community is math – but it also depends on the decisions being made by humans, and meeting with a mayor face-to-face, and hearing them say they are serious about affordable housing might tip the scale for that developer to proceed.”
The opportunity zone initiative works from a tax standpoint in a similar way to the home mortgage interest deduction. Both land and vacant buildings – housing and businesses - are eligible investments. Opportunity zone investments can defer or eliminate federal taxes on capital gains.
Sonoma County Community Development Commission Executive Director Margaret Van Vliet said she wasn’t aware of any investor or developer who’d become interested in the Springs specifically because of the opportunity zone designation.
Regan wasn’t aware that Sonoma Valley even had an opportunity zone, one reason that the March 15 tour of developers never made it down Highway 12.