Opportunity Zones regulation nearly ready: Puerto Rico official
Economic Development secretary says ‘5 to 10 projects’ have expressed interest, of which one has made a formal request
SAN JUAN — The secretary of Puerto Rico’s Department of Economic Development and Commerce, Manuel Laboy Rivera, said Thursday that in the coming weeks it will be ready to begin working on Opportunity Zones cases.
The “Opportunity Zones [program] has a very fixed window at the federal and local levels and that is why in all the states and in the jurisdictions that it applies they are moving aggressively. We believe that in the coming weeks we will be able to be working on cases at the committee level, because we will have the duly established Regulations. However, the request for the exemption decree of 18.5 percent and other exemptions we are already receiving applications,” Laboy Rivera said in an aside with reporters.
Laboy Rivera said there is interest for five to 10 projects, one of which has been formally requested—a tourism development project.
“The incentives are given for development projects of social, residential, commercial interest or substantial improvements to a property. Those qualify for a preferential rate of 18.5 percent preferential rate and municipal exemptions. The investment credit ranges from 5 [percent] to 25 percent,” he said.
“For us, it will be important that if a project is going to receive up to a 25 percent credit per investment, it is because it has a substantial economic impact on jobs, a social, community impact, the investment is substantial, the multiplier effect of that investment is significant and that is part of what we are taking into consideration for the regulations we are preparing,” he said.
Laboy Rivera was the keynote speaker at the “Opportunity Zones” forum sponsored by the Chamber of Commerce, where mayors, business people and government officials discussed the socio-economic impact of the Opportunity Zones in Puerto Rico.
Also Thursday, the director of the Fiscal Agency and Financial Advisory Authority of Puerto Rico (Aafaf by its Spanish acronym), Omar Marrero, said a developer can apply for the same project to qualify for the Opportunity Zones and the Public Private Partnerships (APP) laws.
“The important thing is that the APPs being considered must have the property element. There has to be real estate involved. For example, if you are thinking when we outsource services, such as maritime transport, it will not necessarily be compatible. There must be the element of a commercial or residential property that is improved or is acquired and improvements are made,” Marrero told the media.
He mentioned as an example, several disused buildings that belong to the Ports Authority that he believes could qualify.
“There are certainly opportunities throughout Puerto Rico with properties that are free of bond liens or that are available, because the municipalities have identified them. Certainly, the properties that the government has are excellent properties to recycle, because they have the potential to increase in value,” he said.
Marrero said the government has a list of projects it prefers to develop, but they will be done with the mayors’ approval.
“Hey, municipality, do you want to do residences? Do you want to make a recycling plant or do you want to do a tourism project? The truth is that before…we will see if we can identify a map for these projects. If it is an aerospace project, let it be in Aguadilla. If it is a tourism project we have Ponce, Toa Baja. So that we can have a menu of all Puerto Rico,” he said.