Opportunity Zones 2.0: Governors Redraw the Map by September 28
Opportunity Zones ended up as a housing program. Investors put roughly $112 billion into the original zones through 2024, and about three-quarters of OZ capital went to real estate, with multifamily leading. An Economic Innovation Group working paper found designation raised net residential address growth in those tracts by roughly 70%, adding more than 416,000 homes through the first quarter of 2025. In Ohio, the Urban Institute found 64% of OZ capital went to housing or mixed-use projects.
That map is being redrawn, and most of the redrawing happens this month. Under the One Big Beautiful Bill Act, governors nominate up to 25% of their eligible low-income tracts by September 28, with one 30-day extension available. Treasury identified 25,332 eligible tracts nationally, 8,334 of them rural. The test is tighter: the income threshold drops from 80% to 70% of area median family income, poverty-route tracts are capped at 125%, and the contiguous-tract rule is gone. Tracts that anchored OZ 1.0 multifamily pipelines may fall off, and whatever gets picked stays in place from 2027 through 2036.
States are filing. Texas submitted 605 tracts across 105 counties on September 4. Treasury certification is expected by November 28, with designations effective January 1, 2027. The program is now permanent, deferral runs five years from the date of each investment, the basis step-up is 10% at year five, and qualified rural funds get 30% plus a 50% substantial improvement threshold in place of 100%.
The affordability record is weaker. Urban found 78% of units in OZ-backed Ohio multifamily rented above the tract median. OZ investors underwrite to appreciation, and LIHTC rent restrictions limit it. Because sponsors often keep 80 to 90% of a tax credit project's residual value, the OZ benefit tends to land in sponsor economics rather than inside the tax credit partnership.
OZ 2.0 also requires funds to report residential unit counts, and Treasury's outcome reports must track affordable units. The developers and housing agencies that put site control, zoning, and subsidy commitments in front of their governor's office before September 28 will shape where that capital can go for the next ten years. Everyone else will underwrite the map they are handed.
Sources
David Opalek is the founder of Dane Isaac Associates, a real estate capital advisory firm in Columbus, Ohio. Book a call to discuss a transaction.