Texas quietly filed 605 Opportunity Zones. Here is what it did differently from 2018.
Texas sent its new Opportunity Zone map to Treasury with no announcement. The interesting part is not the 605 tracts. It is how they were chosen.
I posted the short version of this on X. This is the long one.
Texas sent its new Opportunity Zone map to Treasury on Thursday, September 4. 605 census tracts in 105 counties, the most federal law allows. No press conference, no announcement. The list showed up on the Governor’s Economic Development page and that was it.
The interesting part isn’t that Texas picked 605 tracts. It’s how.
I’ve been investing in Opportunity Zones since 2020, and Savoy took part in the Texas process this year along with cities, counties, economic development groups and a lot of other developers. We expect to invest under the new map. More on that at the end. First, what Texas did.
What the Governor was actually choosing
There’s a misconception that governors look across the state and pick neighborhoods they want to help. Congress sets the eligibility test. Under the new law a tract has to have median family income below 70% of the surrounding area, or a poverty rate of at least 20% with income no higher than 125% of the area. Texas had 2,420 tracts that met the test. Every one of them is low income. The Governor’s job was to pick a quarter.
So the question was never which neighborhoods need investment. All 2,420 qualified. The question was: of the neighborhoods that qualify, where can a designation actually cause something to happen?
What the first round taught us
Treasury’s Office of Tax Analysis put out the numbers this summer. Qualified Opportunity Funds held about $112 billion of qualified property at the end of 2024, through roughly 12,800 funds and 41,000 taxpayers. More than three quarters of the tracts designated in 2018 got at least some investment. Texas drew about $7.8 billion, fourth in the country, and 79% of Texas zones got money.
The program moved capital. It did not move it evenly. The top fifth of invested tracts took roughly 90% of the dollars. Rural and urban tracts were about equally likely to get something, but the average urban tract that got money got three times as much as the average rural one.
That tells you how private capital behaves. A tax incentive makes a project more attractive. It doesn’t create zoning, run a water line, put a site up for sale or produce a developer willing to build. Where a designation landed on a neighborhood with a plan and somebody ready to execute, you got buildings. Where it landed on a map with nothing behind it, you got a map.
Texas built its process around that
Before picking, the Governor’s Economic Development & Tourism Office published a scoring rubric and asked cities, counties and economic development organizations to nominate tracts and make the case. The scoring rewarded alignment with local plans and incentive programs, and whether a project could move forward in the next two to four years. In practice that meant showing zoning, utilities, a site for sale or a building somebody wants to renovate, a developer willing to put it in writing, and a councilman or county commissioner behind it.
It’s a prove-it test. Every eligible tract already cleared the need hurdle. Texas asked what the designation would do. Bring a package.
EIG’s July guidance to governors said almost exactly the same thing: balance need with readiness, and ask localities for zoning, permitting, site readiness and pipeline projects. Texas had published its rubric in April.
What the research says
EIG’s February housing study compared designated tracts with similar low-income tracts that were eligible but not chosen. Designation raised new housing construction by roughly 70%. More than 416,000 residential addresses built from 2019 through early 2025 would not exist without the program, and 97 of every 100 were net new homes rather than construction pulled from next door.
So designation works. The first round also showed it isn’t enough on its own. That’s the whole argument for scoring readiness.
The new map
The 2018 Texas map was 628 tracts in 145 counties. The new one is 605 in 105. Underneath, the changes are big.
Dallas County went from 18 zones to 60. The City of Dallas has 44. Harris County went from 105 to 51. Bexar has 34, Tarrant 20, Travis 12. Roughly a third of the tracts are rural.
The rural share matters because the new law gives rural zones a bigger benefit, a 30% basis step-up instead of 10% and a lower bar for improving existing buildings. Over the next decade we’ll find out whether that closes the gap round one showed. My guess is the same rule holds. The incentive matters. The project matters more.
Where Savoy stands
Savoy is not a neutral observer. Savoy has put about $95 million of Opportunity Zone equity into 25 Texas projects. We participated in the nomination process this year, and we will invest under the new map.
That’s also why the process makes sense to me. I’ve watched what happens when a tract has the ingredients for a real project and when it doesn’t. A designation is valuable. It isn’t magic.
What happens next
These tracts are nominated, not designated. Treasury certifies, probably by late November, and can strike tracts. The new rules take effect January 1, 2027. At the same time, first-round investors hit the December 31, 2026 recognition date on their deferred gains. One generation of the program reaches its tax milestone as the next one starts.
The program is permanent now, and states redraw the map every ten years. That makes the selection process matter far more than it did in 2018, when nobody had data. Now there are eight years of it showing where capital went and where a designation accomplished very little.
Texas used it. Congress decided which neighborhoods were poor enough to qualify. The Governor’s office asked which of them were ready to turn a tax incentive into jobs, housing and buildings. Credit to Governor Abbott and the Economic Development & Tourism team for asking the right question, and for listening to the people who pour the concrete. If the next ten years look like the first eight, that question is the difference between putting a zone on a map and building something in it.