City of San Rafael secures two Opportunity Zone designations

Federal tax incentives could help attract investment in housing, local businesses and long-term resilience in Downtown and Southeast San Rafael

San Rafael's two highest-priority census tracts, covering parts of Downtown and Southeast San Rafael, have been certified by the US Treasury for the federal Opportunity Zones 2.0 program. The designation is intended to help attract investment for new projects that could give residents more choices about where to live and work.

An Opportunity Zone is a designated area where federal tax incentives encourage investors to fund qualifying businesses and development projects. By drawing long-term investment to communities facing economic challenges, the program can help support improvements that create jobs or housing.

The United States Department of the Treasury certified San Rafael's two tracts as part of California's selection of 620 census tracts across 55 counties, encompassing an estimated 2.6 million people across the state. These designations take effect January 1, 2027, and will remain in place for 10 years.

What Opportunity Zones 2.0 means

Opportunity Zones offer federal tax benefits to investors who reinvest capital gains, or profits from selling assets such as stocks or real estate, through special funds that then invest in qualifying projects and businesses in designated areas. The incentives encourage investors to keep their money invested for the long term.

Eligible investments may include new housing or commercial buildings, rehabilitation of vacant or underused properties, investments in operating businesses, and qualifying infrastructure or energy projects.

The program began in 2017 and became permanent under the One Big Beautiful Bill Act, signed into law on July 4, 2025. Opportunity Zones 2.0 is the next phase, with updated eligibility rules and a new set of designated areas. Designations are revisited every 10 years.

Why San Rafael prioritized these areas

In a letter to Governor Gavin Newsom on August 20, 2026, the City requested that the state nominate the Downtown tract and the Southeast San Rafael tract. Both of the City's top priorities were accepted.

Southeast San Rafael

Its mix of commercial, light industrial and residential areas offers opportunities to support local businesses and jobs. Investment could build on existing workforce development programs and help carry out the Southeast San Rafael Specific Plan, which will guide future economic investment. The City also identified this area as a priority for attracting resources to address sea level rise and support climate adaptation.

Downtown San Rafael

With SMART, Golden Gate Transit and Marin Transit connections, Downtown offers opportunities for more housing near public transportation. Investment could advance the Downtown Precise Plan, adopted in 2021, and the City's housing goals. It could also help redevelopment of the San Rafael Transit Center and support growth in the life sciences sector around BioMarin's headquarters.

What this means for the community

The designations give San Rafael another tool to attract private investment that supports local priorities, including affordable and workforce housing, business growth, and climate resilience. However, the federal program does not guarantee that the City's potential projects will move forward. The community benefits will depend on which projects attract private investment and how well they serve residents and businesses.

Learn more about Opportunity Zones 2.0 in California.

View Opportunity Zones resources from the U.S. Department of the Treasury.