The U.S. Small Business Administration announced Thursday the designation of an additional 516 census tracts qualified as Historically Underutilized Business Zones (HUBZones) in Puerto Rico, for a new total of 776.
The list includes Roosevelt Roads, which has been designated as a HUBZone until May 17, 2020.
“In keeping with the spirit and intent of the HUBZone program, it has been determined to use Qualified Census Tract data without the population cap calculation applied by the U.S. Department of Housing and Urban Development for purposes of implementing the Low-Income Housing Tax Credit,” said John Shoraka, SBA associate ddministrator for Government Contracting and Business Development.
The Low-Income Housing Tax Credit (LIHTC) is a tax incentive intended to increase the availability of affordable rental housing. The LIHTC statute establishes Qualified Census Tracts (QCTs) based on poverty rate and household income, but ultimately limits the number of QCTs by applying a cap based on the population of a given area. As a result, there are some census tracts which meet the general definition of QCT based on poverty rate and household income, but which do not qualify for the LIHTC.
Until recently, the SBA applied the same analysis for purposes of designating QCTs as HUBZones. However, SBA has determined that it is more appropriate to use the QCT data without applying the population cap in order to be consistent with the goals of the HUBZone program.
“The new HUBZone designations translate into added incentives and further growth opportunities for small firms in Puerto Rico,” said SBA District Director Yvette T. Collazo. “The municipalities of Adjuntas, Coamo, Culebra, Jayuya, Las Marías, Maricao, Salinas, Santa Isabel, Utuado and Vieques have been designated as HUBZones in their entirety. In addition, these and the remaining 68 municipalities contain census tracts that have been designated as HUBZones.”
Previously, there were a total of 260 HUBZone QCTs in Puerto Rico, representing 27.5 percent of all census tracts on the island. With the new designations, there are now 776 –or 82.1 percent.
Nationwide, removing the population cap has resulted in 2,015 additional census tracts that qualify as HUBZone areas, with Puerto Rico benefiting the most with the additional 516 eligible census tracts.
“We have worked intensely and together with SBA to obtain greater benefits for our small and medium enterprises (SMEs), thus increasing Puerto Rico’s participation in the HUBZone program,” said House Speaker Jaime Perelló. “The first step toward our goal was the HUBZone designation for Roosevelt Roads.”
“Today, we announce a 55 percent increase in the HUBZone qualified census tracts. This means that we achieved HUBZone designation for 82 percent of the island. I am grateful for SBA’s commitment to Puerto Rico and for working as a team to foster our economy through our SMEs. We will continue our joint efforts to designate the entire island as a HUBZone,” he said.
Perelló and Collazo also announced a joint orientation event aimed at aspiring and existing SMEs who are interested in learning about HUBZone certification and the program’s benefits. This event will be held as part of the Fuerza PyME initiative, details of which will be announced soon.