Council makes changes to census tracts

Directs staff to switch census tract 40 with 34

The Porterville City Council Tuesday gave direction to city staff to relay to the governor to switch census tract 40, which includes the Porterville Developmental Center, with census tract 34, which includes the Porterville Municipal Airport and Business Park.

“To me, this is a pretty easy trade off,” said Vice Mayor Brian Ward. “I don’t know how the governor would feel about that, but I don’t see the 40 being as advantageous as 34 for our area.”

He continued, “Census tract 34 encompasses a lot of area with potential for development around the 190 and 65 that I think we would greatly benefit from.”

The council also directed staff to not transfer one of its four designations to Woodlake, which did not receive a preliminary designation.

However, if the state doesn’t allow the city to substitute census tract 40 with census tract 34, Ward said plan B would be to have city staff request the county to request census tract 34 as a large portion of 34 that is within the county.

Jason Ridenour, the city’s economic development and housing manager, said the Federal tax bill passed at the end of December 2017 allows the governor to designate eligible census tracts as Opportunity Zones. Ridenour, who filled in for City Manager John Lollis at the meeting, said investments made by individuals through special funds in these zones would be allowed to defer or eliminate Federal taxes on capital gains.

The governor, Ridenour said, can designate up to 25 percent of census tracts that either have poverty rates above 20 percent or median family incomes of no more than 80 percent of statewide or metropolitan area family income. He said there are 3,516 census tracts in 54 California counties that would qualify under one or both of the mandatory criteria, allowing the governor to designate up to 879 tracts. As census tracts are designed to capture geographic areas of around 4,000 people, Ridenour said more than 3 million Californians would potentially be located in one of these areas.

Ridenour said the preliminary recommended tracts by the governor were selected using the following criteria:

1. Focus on poverty: Only those tracts that meet the Federal poverty criteria were selected to focus efforts on the poorest areas of the state. In addition, within each county, focus was placed on the top 30 percent of eligible tracts.

2. Areas with business activity: Designating tracts with at least 30 business establishments helps distinguish primarily residential tracts from those that are zoned to encourage more business investment.

3. Geographic diversity: The preliminary recommendation maintains a minimum of two tracts per county if possible.

Ridenour said these designation criteria identify tracts that significantly overlap with other statewide programs that the legislature and governor have previously targeted. For instance, Ridenour said 66 percent of the recommended tracts overlap with tracts identified as disadvantaged in Senate Bill 535 from 2012, and 98 percent overlap with tracts identified as disadvantaged in Assembly Bill 1550 from 2016.

Given the limited number of designations available, Ridenour said the governor strongly encourages commenters from local governments to suggest replacing tracts from within their jurisdictions rather than making additions.

With the Tulare County Economic Development Corporation (TCEDC) serving as the lead agency for Tulare County designations, Ridenour said a total of 16 preliminary designations were provided by the governor, of which four are in Porterville. Ridenour said the Porterville preliminary designations are Tract 38.02, which he said includes the Downtown area, Tract 41.01, which includes the Riverwalk Retail Center area, Tract 41.02, which includes the Beckmancoulter and Walmart Distribution Center area, and 80.2, which includes the Porterville Developmental Center.

Ridenour said city staff was disappointed that Tract 34 was not preliminary designated, which includes the Porterville Municipal Airport and Business Park, due to the tract poverty rate percentage of 37.5 percent being 2.5 percent below the highest percentages in the county (40-plus percent). Furthermore, Ridenour said city staff was surprised that Tract 80.2 was preliminary designated, as the tract does not have the threshold of business activity and opportunity for business investment, but has the highest poverty rate in the county at 80.2 percent.

Ridenour said the cities of Exeter and Woodlake are the only county jurisdictions that did not receive preliminary designations. He noted that there has been a collaborative effort led by the TCEDC that each local jurisdiction receive at least one designation. Exeter’s census tracts, Ridenour said, have fairly low statistics in the factors for designation. Ridenour noted that it has been proposed that the Farmersville tract designation would also benefit Exeter.

Ridenour said Woodlake did not receive a designation due to its tracts not having high enough poverty rates, which he said the TCEDC would like to see a designation.

Given the governor’s recommendations for tract designations, Ridenour said an option that has been considered was either the county transferring one of its five designations or the City of Porterville transferring one of its four designations to Woodlake, an option the council declined.

Ridenour said another option considered has been the transfer of a City of Tulare designation to Woodlake, given Tulare has withdrawn from the TCEDC and has not assisted in the Opportunity Zone designation process.

Ridenour said the state has established the deadline of Thursday, March 15 to receive local government comments on designations. He said the TCEDC Board of Directors conducted a special meeting on Wednesday, March 14 to make final county-wide designations. Ridenour said the council’s direction on both the Porterville and county-wide designations is appreciated in anticipation of the TCEDC Board meeting.

The next city council meeting starts at 6:30 p.m. on Tuesday, March 20, in the council chambers at Porterville’s City Hall.