Revived Opportunity Zones program offers new hope for rural development in Delaware

Ten years after its first Opportunity Zone program to spur private investment in under-served areas, the federal government launched a new version, with more incentives for investing in rural areas, and permanent provisions replacing those that expired after 10 years.

Gov. Matt Meyer in late September nominated 25 census tracts statewide to become Opportunity Zones in Delaware, hoping that tax breaks will spur investment, create jobs, and simulate the local economy where it’s most needed.

Meyer said the state spent “months” looking at where investment is most needed, where it can succeed, and where the state can help it grow. “These 25 nominations reflect a strategy built around investing in people and creating opportunity across our state,” he said in a statement.

There are 13 zones in New Castle County, five in Kent County, and seven in Sussex County. Twelve of the zones – all of those nominated in Kent and Sussex Counties — are in rural tracts, a federal designation that will get extra tax incentives for investors under the new program.

On Thursday, the U.S. Treasury said it certified some 6,500 census tracts across the country as Opportunity Zones, including those in Delaware.

“The new designations will help direct private investment to communities that stand to benefit most, and expand opportunities, support job creation, and unlock long-term growth,” said Treasury Secretary Scott Bessent, in a statement.

The program becomes effective on Jan. 1, 2027.

The new Delaware tracts were selected partly on the basis of poverty rates, median family incomes, brownfield sites, and the presence of existing Downtown Development Districts. They were also identified if they were considered likely to attract investors.

“Delaware therefore focused on communities where the incentive can strengthen investments that already have the potential to succeed while delivering economic benefits to the community,” Meyer’s statement said. “A tax incentive cannot make an unsustainable investment successful.”

The new program, created in July 2025 under the One Big Beautiful Bill Act, set more restrictive eligibility standards for the nominated census tracts, said Patty Cannon, special projects director in the Division of Small Business, who helped to implement the first Opportunity Zones program in Delaware, and is doing so again this time.. That reduced the maximum median family income for a designated zone to 70% of the state or metropolitan median from the previous 80%.

That reduced Delaware’s number of eligible tracts from 85 to 61, of which the Meyer administration chose the maximum 25, she said.

Still, the new program cuts capital gains taxes by 30%, deferred for five years, for investments in rural areas, up from 10% regardless of whether an investment was in a rural or non-rural area, under the first Opportunity Zone program.

The second version “expressly encourages investment into projects or businesses within the certified opportunity zone census tracts that meet U.S. Treasury’s definition to be certified as a rural census tract with up to a 30% step-up in basis while a non-rural investment tops out at a 10% step-up in basis for meeting certain IRS investment benchmarks,” Cannon wrote in an email.

In Sussex County, Economic Development Director Andrew Harton said he was happy that the Meyer administration included in its nomination all seven of the tracts that he had personally recommended for Opportunity Zones.

Harton said he’s more optimistic that the new program will lead to added investment than he saw in the first version. Now, there is an increased incentive to invest in rural areas, and because the tax breaks would be permanent after 10 years.

“The really big incentive is if you hold that investment for at least 10 years, then you won’t have to pay tax on the appreciation of that asset when you go to sell it,” he said. “Now, it’s permanent so you will have way more people – investors, tax advisers, real-estate professionals – looking at this program, knowing that it’s here permanently.”

The earlier version attracted only two private investment projects in the county out of five nominated tracts, Harton said, based on publicly available information, and so was not a big success.

“In Sussex County, with the limited information that I have, I would say the first go-round was not hugely successful,” he said.

But Harton warned that other investments may have been made under the first version but never came to public notice because there is no public-disclosure requirement under the program.

The investments spurred by the first version were the redevelopment of a site at Georgetown that’s due to be occupied by Aspira Academy, a dual language school, and the renovation of a historic firehouse at Milford.

Of the seven county sites nominated this time, Harton said he’s hopeful for investor interest in the south side of Milford, and at Millsboro.

In New Castle County, officials welcomed the inclusion of 13 sites in the new Opportunity Zone program.

“This is what government working together looks like,” said County Executive Marcus Henry. “Our team worked hand-in-hand with the State and the City of Wilmington to make sure New Castle County’s priority communities were part of this conversation from the start. This nomination is a real opportunity to bring investment to communities that need it, and we’re going to stay engaged every step of the way to make sure it delivers for our residents.”

Meanwhile, the Meyer administration also announced the addition of Claymont, Newport and Millsboro to its Downtown Development District program that provides state and local incentives to qualifying residential, commercial and mixed-use developments that would boost the economies of struggling town centers. The three towns were among five that applied for the program, Meyer’s office said.

The towns bring to 15 the total number of participants in the program, the most allowed under a law that was first implemented in 2014. Since then, the program has spurred $693 million in private investment in residential, commercial and mixed-use projects, using some $47 million in state investments.

Jamie Burk, Millsboro Town Manager, said its inclusion in the program will spur renovation of the 1930s-era Millstone Theater which is part of a plan to make the Sussex County town into a regional destination while supporting local businesses and creating housing opportunities through mixed-use development.

Meyer said the DDD program is designed to help towns boost their centers.

The program gives communities “another tool to create housing, support local businesses and bring new life to properties that have been overlooked or under-used,” he said. “We’re creating vibrant hubs in communities Delawareans already call home and giving private investment a reason to follow.”