- David Meyers
Two Flagstaff Census Tracts Nominated as Opportunity Zones
Two census tracts in the City of Flagstaff have been nominated as federal Opportunity Zones under the new OZ 2.0 program. The tracts are Census Tract 04005000800 and Census Tract 04005001104. Once certified, the designation takes effect January 1, 2027 and runs for ten years, through December 31, 2036.
Governor Hobbs nominated the tracts through the Arizona Commerce Authority’s statewide process, with recommendations from the City of Flagstaff and Coconino County. Arizona nominated 122 tracts statewide, and Flagstaff’s two are among a small number in Northern Arizona.
Where the Opportunity Zones Are
Census Tract 04005001104
This tract covers part of west Flagstaff. Milton Road forms its eastern boundary, West Route 66 its northern boundary, and South Flagstaff Ranch Road its western boundary. Its southern edge follows West Forest Meadows Street, West University Avenue and Interstate 40.
Opportunity Zones give investors federal tax benefits for putting capital gains into businesses and real estate in designated areas. For Flagstaff, this is a new way to draw private investment into sites that are ready for development.
Census Tract 04005000800
This tract lies south of the BNSF Railway and north of Interstate 40. It runs east to just past the Nestlé Purina plant. Its western edge steps from South Lone Tree Road through South Fountaine Street, East Franklin Avenue, South Beaver Street, West Ellery Avenue, South Humphreys Street and West Butler Avenue to South Milton Road.
How the Tax Benefits Work
The H.R.1 One Big Beautiful Bill Act, signed July 4, 2025, made Opportunity Zones a permanent part of the federal tax code. Flagstaff’s two tracts are classified as non-rural, so the standard OZ 2.0 benefits apply. Investors get them by putting eligible capital gains into a Qualified Opportunity Fund (QOF) within 180 days of realizing the gain.
Benefit | What the investor receives |
Deferral | Tax on the original gain is deferred until the investment is sold or five years pass, whichever comes first. |
Basis step-up | After five years, 10% of the original deferred gain is excluded from tax. |
Exclusion of new gains | After ten years, appreciation on the Opportunity Zone investment itself can be tax-free. |
The exclusion of new gains is the largest benefit for long-term projects. It rewards investors who hold and improve property or grow a business over a decade or more.
Rural Opportunity Zones elsewhere in Arizona receive a larger 30% basis step-up. Flagstaff’s tracts do not qualify for that rural tier.
This overview is for general information only and is not tax or legal advice. Property owners and investors should consult a qualified tax advisor about their specific situation.
Property Owners: Get Your Site in Front of Investors
If you own commercial, industrial, or vacant property in either tract, list it now through ACA’s Opportunity Zones site. Listing is free, and you are under no obligation to sell or partner with anyone.
For help with a listing or questions about the tracts, contact David Meyers, Economic Development Manager, at david.meyers@flagstaffaz.gov or 928-890-4496.