‘Puerto Rico: A Paradise of Opportunities’ summit to be held Tuesday
Brings public, private sectors together to discuss Opportunity Zone benefits
SAN JUAN – Investors, government officials and experts on the benefits the Opportunity Zones program has to offer will gather Tuesday at the Puerto Rico Convention Center in San Juan at the “Puerto Rico: A Paradise of Opportunities” summit.
Puerto Rico Economic Development Secretary Manuel Laboy is underscoring that virtually the entire island, 94 percent in fact, was declared an Opportunity Zone by the U.S. Treasury Department under the Tax Cuts & Jobs Act of 2017.
Opportunity Zones are low-income jurisdictions for which incentives such as tax benefits are available to attract investment with the end-goal of development and the creation of jobs to help jumpstart local economies.
The federal law encourages investors to reinvest capital gains, which can come from any investment, such as stocks, bonds, real estate or partnership interests. Investors must “sell their asset and realize a capital gain” and then invest in an Opportunity Zone within 180 days of receiving those gains.
Laboy stressed that besides some sectors in the municipalities of San Juan and Guaynabo, which “are not economically disadvantaged areas,” as well as the former Naval Station Roosevelt Roads in Ceiba, the Opportunity Zone program incentives are available for most of the island. The latter was excluded not because the area is not economically disadvantaged but rather because “nobody lives there,” Laboy said. However, Resident Commissioner Jenniffer González is working on having the area reconsidered and included in the program.
“The determination [of the Opportunity Zones] is made through the U.S. Census Tract, where population demographics are verified,” Laboy explained.
Laboy stressed that the the local Opportunity Zones Act complements the federal law, making “Puerto Rico even more attractive in comparison to other zones in the mainland U.S.” because of the number of incentives future investors may be eligible to receive.
“A number of projects are being worked on because Puerto Rico offers a series of incentives aimed at tourism development…,” Laboy said, referring to those available under Act 74 of 2010, known as the Tourism Development Act.
“We are starting to see positive movement because Act 74 incentives can be combined with the capital funds from the Opportunity Zones,” Laboy said.
Puerto Rico government officials are counting on massive real estate investment through the program, which requires substantial improvements to be made to existing properties.
“So they [investors] will be able to combine local incentives with the Opportunity Zones program,” he noted. “For example, real estate can be developed for commercial, institutional or community development purposes…. From an economic point of view, we believe there will be a lot of movement in the tourism area.”
Other areas Laboy believes will also receive a boost are services and retail, with the manufacturing and agriculture sectors benefiting as well. Energy and infrastructure projects are also expected to boost the related activity sought.
“The main benefit is the capital gains,” he added. “All of the capital gains generated from that qualifying fund for real estate or property development has to remain in that qualifying fund to be able to benefit from the tax deferral at a federal level,” Laboy said, referring to the provision that deems capital gains from the sale or exchange of an investment in so-called Opportunity Funds permanently excluded from taxable income if held for 10 years.
InvestPR, the Puerto Rico Federal Affairs Administration (PRFAA), the Puerto Rico Public Private Partnerships Authority (P3s), and the Puerto Rico Central Office of Recovery and Reconstruction joined efforts to host the event and will present the latest actionable information on the program, while showcasing the island as a unique investment destination. The event runs from 8 a.m. to 6 p.m.
InvestPR is a nonprofit organization created by Act 13 of 2017, aimed at promoting Puerto Rico as a competitive investment jurisdiction. It is taking on some of the activities previously carried out by Economic Development and Commerce Department, such as representing the island at investment conferences, fielding requests from businesses and coordinating with local stakeholders.
For more information or to register, visit www.ozprsummit.com