Norwich — City officials on Friday nominated six areas of the city for a new federal Opportunities Zone tax investment incentive program designed to spur development in low-income “underserved areas.”

Gov. Dannel P. Malloy announced in February the state’s participation in the program, created as part of the 2017 Tax Cuts and Jobs Act, and invited cities and towns to submit applications by Friday’s deadline. Only U.S. Census tracts designated as low income qualify for nomination.

Under the Opportunity Zone program, investors expecting to receive taxable capital gains income can invest a portion of the money into development projects in the designated zones and claim federal tax deductions.

Under the federal guidelines, Connecticut's plan can include no more than 25 percent of the state’s qualifying U.S. Census tracts. As of midday Friday, the state Department of Economic and Community Development had received applications from 20 municipalities, DECD spokesman James Watson said. The state's plan must be submitted to the U.S. Department of Treasury by April 20.

Norwich Mayor Peter Nystrom enlisted assistance from the city planning and community development offices, Norwich Community Development Corp. and Norwich Public Utilities in putting together the city’s application.

The city nominated all six Census tracts that would qualify. Together they comprise the entire eastern and southern portions of the city from Thamesville at the Montville line, a portion of the west side, all of downtown and portions of Laurel Hill, Greeneville, Taftville and Occum.

As required, the city ranked the area of Thamesville running north to the Uncas Leap area on the Yantic River as the top priority, followed by downtown as second and Laurel Hill with a portion of the East Side bordering Preston as third.

“These areas will allow us to promote further waterfront development, expand use of our active rail lines on both sides of the (Thames) river and encourage development adjacent to the Mohegan Sun Reservation, as well as the proposed Preston Riverwalk Development,” Nystrom and City Manager John Salomone wrote in the city’s application.

Mohegan Gaming & Entertainment has a purchase agreement with the town of Preston for the former Norwich Hospital property, now Preston Riverwalk, for a proposed $200 million to $600 million development. Some developers have cited the pending Preston development as a reason for their investment in downtown Norwich properties.

The city listed the Greeneville area as the city’s fourth priority, noting its multicultural neighborhoods and workforce housing, manufacturing and job-creation potential.

The Taftville-Occum tract would be the next priority. City officials noted that the area already is “undergoing major progress and momentum with large-scale multifamily housing that is affordable and luxurious.” New Jersey developer OneKey LLC has completed a $30 million renovation of half the giant Ponemah Mill No. 1 into 116 apartments, and plans to start a $32 million second phase for 121 apartments in spring. Across Route 97 from the mill, The Hills at Riverview luxury apartment complex is expanding.

Norwich’s application also stressed the ability of investors to overlap the new federal incentive program with the state and local Enterprise Zone incentive districts in downtown and Taftville.

Nystrom called the Opportunity Zone program “a perfect fit” for Norwich. He met with U.S. Rep. Joe Courtney, D-2nd District, Friday morning to solicit a letter of support for the city’s application to the state.

The Opportunity Zone program allows investors to use “unrealized capital gains” to invest in qualified Opportunity Zones and claim federal capital gains tax reductions.

Qualifying investments would include commercial and residential, either new or expanded developments, affordable housing, transit-oriented development, energy efficiency and renewable energy projects and mixed-use developments.

c.bessette@theday.com