CDBG-DR and Opportunity Zones
October 10, 2018
The US Congress has authorized several appropriations to urban communities affected by a major disaster, including those located in Puerto Rico. These funds are allocated by the Secretary of the U.S. Department of Housing and Urban Development (HUD).
As of this date, about $20 billion in Community Development Block Grant-Disaster Recovery funds have been allocated to Puerto Rico by HUD. These funds must be used in activities related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization. The grantee (the Governor of Puerto Rico) must identify how unmet housing needs will be addressed or how its economic revitalization or infrastructure activities will contribute to the long-term recovery and restoration of housing.
On February 9, 2018, HUD assigned to Puerto Rico the first allocation of 1.5 billion dollars in CDBG-DR funds. A second allocation of approximately $18.5 billion was announced during the second quarter of year 2018. Both allocations will generally support reconstruction, development, and revitalization activities to be implemented as part of five programs: (1) housing; (2) economic recovery; (3) infrastructure; (4) multi-sector; and (5) planning.
It is interesting to note that other initiatives are expected to maximize revitalization activities. One of these initiatives refers to the Opportunity Zones (O-Zones) created by the Tax Cuts and Jobs Act of 2017 to encourage investment in economically distressed communities. The referred law required the U.S. Department of the Treasury to designate O-Zones. On April 9, 2018, the U.S. Treasury announced that it approved the designation of all of Puerto Rico as a Qualified O-Zone. These zones are eligible for tax benefits involving the investment of “recognized capital gains.”
In summary, reconstruction and revitalization activities, as well as other legal initiatives create unique business opportunities that may be of benefit, not only to investors, but also to the recovery of Puerto Rico.
Goldman Antonetti & Cordóva, LLC stands ready to assist as you and your business adjust to Puerto Rico’s regulatory and legal changes. If you need further assistance in this area, please contact the following members of our firm:
Alicia Lamboy Mombille, Esq.
Gretchen Méndez, Esq.
Rebecca Cuevas Fontán, Esq.
Fernando Bruno, Esq.
Although the information included in this document may concern legal issues, it is not a legal opinion or professional advice and clients shall not use it as such. We assume no responsibility or liability of any kind for any information contained herein, and we expressly disclaim all liability for any claim for damages arising from the use, reference to, or reliance on, such information. If legal or other expert assistance is required, the services of a competent professional should be sought.