Washington state Gov. Bob Ferguson has selected nine low-income census tracts in Spokane County — seven of which are located within Spokane city limits — for the federal Opportunity Zones 2.0 program, says Steve MacDonald, director of community and economic development for the city of Spokane.

The Opportunity Zones 2.0 program is a second-generation economic development initiative designed to encourage investors, developers, and financial institutions to invest in real estate and businesses in low-income communities in exchange for tax incentives.

The tracts in Spokane nominated for the program are located in all three of the city's council districts and overlap neighborhoods across downtown Spokane, West Central, and East Central. Two additional tracts in Spokane County were nominated: one predominantly in Airway Heights, which extends into Spokane, and another in Spokane Valley, MacDonald says.

The tracts need to be certified by the U.S. Treasury, and the program takes effect Jan. 1, 2027 and lasts for 10 years, according to a press release from the city of Spokane.  

“Opportunity Zones have been shown nationwide and here in our city to help get projects off the ground that might not have otherwise,” MacDonald says. “It’s important because … we still have a housing crisis here. We still need more workforce housing. We need housing of all sorts here.”

In the first iteration of the program, which will sunset at the end of 2026, Opportunity Zones were predominantly used for multifamily and mixed-use projects, MacDonald says.

Investments reached an estimated $100 billion across 5,600 low-income neighborhoods in the first 10-year cycle of the program, according to the press release.

In the city of Spokane, five developments have incorporated the Opportunity Zones program to get projects off the ground, MacDonald says. Those projects include the Ironside Apartments, at 1411 E. Iron Bridge Way, located in the Chief Garry Park neighborhood; the Boxcar Apartments, at 15 N. Grant, in Spokane's University District; the Warren Apartments, at 206 W. Riverside, in downtown Spokane; and Koz on West 5th Apartments, located at 308 W. Fifth.

Cathy Reines, CEO and president of Snohomish, Washington-based Koz Development LLC, which spearheaded the construction of Koz on West 5th, says she sees the Opportunity Zones program as instrumental in getting projects off the ground.

“There’s no other tax program like it,” Reines says.

The company’s $52 million Koz on West 5th project received a $16.9 million investment from Catalyst Opportunity Funds, Reines says. The Cottonwood Heights, Utah-based real estate investment fund sources from companies, financial institutions, and investors who received deferred capital gains taxes in exchange for their investment, among other tax benefits. 

Reines emphasizes, however, that it took several financing mechanisms working together to deliver the project. Private financing, help from the city of Spokane, and leveraging the city’s Parking to People incentive were all used, she says.

“It took a village to make this project happen,” Reines says.