Seven Durham census tracts are being nominated for designation as opportunity zones under a buried provision in the federal Tax Cuts and Jobs Act designed to encourage investment in low-income areas.

The seven Durham tracts were among 252 statewide recommended by Governor Cooper on Friday to the U.S. Treasury Department, which is expected to rubberstamp the nominations.

“The City is excited that seven of our community’s recommendations were selected, especially in those areas and census tracts that need a catalyst for investment and job creation,” says Andre Pettigrew, director of the city of Durham’s Office of Economic and Workforce Development. “Our submission was indeed community focused, involving the public and many community partners, including North Carolina Central University, Duke University, Durham Housing Authority, Downtown Durham, Inc., and Durham County Government, and with support from business leaders like Capital Broadcasting Company. Certification by US Treasury of Durham’s seven proposed Opportunity Zones, as well as forthcoming federal program implementation guidance will be vital to success locally. Durham’s ability to attract and harness investments made possible by Opportunity Zone designation will be equally important.”

Qualifying census tract must have a median family income at or below 80 percent of the area median income (just over $58,000 for Durham) or have had a poverty rate of 20 percent or greater from 2011–15.

The law provides tax incentives to invest unrealized capital gains—assets that have accrued value but haven’t yet been sold—in what’s called a qualified opportunity fund. The fund must then put at least 90 percent of its assets into opportunity-zone properties. Investors can avoid paying taxes for up to nine years on gains invested in opportunity funds and may also pay lower taxes on those gains or see some gains permanently excluded from their taxable income if their investment is held in a fund for at least ten years.

Most of the Durham tracts align with the planned Durham-Orange Light Rail line and include sites owned by the Durham Housing Authority, which is undertaking a full-scale redevelopment in coming years.

Tract 10.01, around the Angier-Driver corridor, is the focus of the city’s poverty reduction initiative. Tract 10.01 had a poverty rate of 41 percent in 2015.

Tract 11, immediately east of 10.01 and north of N.C. 147, had a poverty rate of 51.4 percent. Tract 11 includes the Golden Belt neighborhood and several nontraditional public housing sites.

Tract 13.04, anchored around Weaver Street, had a poverty rate of 47.3 percent. Tract 13.04 includes the Cornwallis Road public housing neighborhood.

Tract 14, which lies mainly to east and south of Durham Tech, had a poverty rate of 57 percent. Tract 14 borders N.V. Central and includes McDougald Terrace, the largest public housing neighborhood in Durham.

Tract 15.02, between 15-501 and Duke University, had a poverty rate of 43 percent.

Tract 20.16, bounded by 15-501, Garrett Road, Old Chapel Hill Road, and Shannon Road, had a poverty rate of 32.7 percent. The tract will be near two hubs along the light rail line, the Gateway Station and Patterson Place.

Tract 23, which extends from DPAC south to Hillside Park, encompassing much of the Hayti neighborhood, had a poverty rate of 48 percent. Tract 23 includes Fayette Place, a vacant twenty-acres owned by the Durham Housing Authority.

(See the map of poverty rates by census tract at the end of this post for more information).

Beth Gargan, a spokesperson for the N.C. Department of Commerce, which led the selection process, says census data, public input, and “direct local outreach” were taken into account. More than 450 tracts were recommended to the state, Gargan said in a statement.

According to the statement, the 252 tracts nominated included 1.1 million North Carolina residents, 45,000 families living in poverty, 50,000 businesses, and $580 million in public and private investments already made.

The Treasury Department hasn’t released a timeline for approving the recommendations but is expected to do so late this year or early next year.

All one hundred North Carolina counties saw at least one tract recommended. Only Cumberland, Gaston, Guilford, Forsyth, Mecklenburg, and Wake counties had more tracts recommended than Durham. Thirty tracts in Durham qualified as low-income tracts.

Previous programs that provided similar incentives for development in distressed areas have been criticized for giving breaks to projects that would have happened anyway, failing to generate economic growth, and depleting state and local resources.

There aren’t many specifics on how opportunity funds will operate and be monitored. The tax bill says the Treasury Secretary will prescribe “rules to prevent abuse” of funds but gives no further details, and it doesn’t explicitly empower local or state governments to control how investments are made. There’s also the question of how intense investment could negatively affect a distressed area and its existing residents.

But proponents of the Opportunity Zone provision say it unlocks more capital than previous attempts, with more opportunities to invest it. The Economic Innovation Group, which pushed the initiative, estimates that U.S. investors and corporations hold $6 trillion in unrealized gains.

“We’re optimistic that this new initiative could bring a much-needed infusion of investment dollars for economic development into the most distressed rural and urban areas of our state,” Gargan said.