Puerto Rico Governor Seeks Deemed Designations of Opportunity Zones

March 12, 2018

David J. Kautter
Assistant Secretary for Tax Policy
Department of the Treasury
Washington, DC 20220

Dear Mr. Kautter:

Thank you for your letter of February 8, 2018 describing the procedures that jurisdictions should follow to request the U.S. Treasury’s formal designation of Opportunity Zones, as defined in the Tax Reform Act. We appreciate this new program and look forward to using it as an economic development tool.

I wish to point out, however, that section 3004 of the recently enacted Bipartisan Budget Act (BBA) of 2018 (H.R. 1892) amends section 1400Z-l(b) to provide for the following "special rule for Puerto Rico":

“Each population census tract in Puerto Rico that is a low-income community shall be deemed to be certified and designated as a qualified opportunity zone, effective on the date of enactment of Public Law 115-97."

Our analysis suggests that as a result of this language, every census tract in Puerto Rico that otherwise meets the eligibility criteria for designation as a Low-income Community (LIC) or is contiguous with an LIC, should be deemed certified by the U.S. Treasury for the Opportunity Zone designation. Passage of this deemed certified provision within BBA indicates that there would be no need for Puerto Rico to “nominate”, and U.S. Treasury to then formally certify communities as “Opportunity Zones”, per the procedures outlined in your recent letter.

More specifically, the aforementioned provision within the BBA clarifies that all communities in Puerto Rico otherwise meeting the eligibility criteria for the aforementioned LIC and LIC-contiguous community designations (see attached listing of Puerto Rico census tracts qualifying, which are based upon currently available U.S. Census Tract data), should therefore be deemed certified for the Opportunity Zone designation and subsequent benefit.

We would be very grateful if you would confirm at your earliest convenience that the attached listing of LIC and LIC-Contiguous census tracts in Puerto Rico are certified so that we may begin immediately in advising investors accordingly, and continuing on the path the toward economic recovery and prosperity for Puerto Rico.

Sincerely,

Ricardo Rossello
Governor of Puerto Rico
San Juan, PR