Crypto Pioneer Brock Pierce Speaks to Ashton Addison of EventChain About Qualified Opportunity Zones in Puerto Rico - Video Available on Investmentpitch.com

Los Angeles, California--(Newsfile Corp. - April 9, 2019) - In sharing what he's learned about the resilience and strength of the Puerto Rican people since his move to Puerto Rico in 2017, Crypto Pioneer Brock Pierce commented: "These folks are battle hardened, and certainly did not need 'saving'. We learned that the best approach was to temper our initial enthusiasm and spend time learning more about the culture, the politics, the economic pain points and most importantly identifying key partners on the Island with whom to collaborate. This takes time, but is a necessary step, as that culture of economic extraction has left many locals weary of engaging with "outsiders". It's a delicate balance to establish true collaboration with locals and the assets an entrepreneurial community such as ours can bring to the table. The synergies of these two elements, we believe, ultimately provides the best conditions for maximum economic activity."

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In the second half of 2017 a number of other influential members of the blockchain community joined Pierce in exploring the possibility of relocating their residences and business operations to Puerto Rico. Pierce had previously been involved with a number of projects on the Island, and certainly the Act 20/22 programs were an attractive option many wanted to explore. In the aftermath of Hurricane Maria, the call to action was even greater.

Puerto Rico is the largest economy in the Caribbean. It has always held the potential for being the Singapore of the Caribbean. Nevertheless, a few hundred years of colonialism, a culture of economic extraction by nonresidents, as well as a long history of fiscal and administrative mismanagement has left Puerto Rico far from its potential. The one-two punch of Hurricanes Maria and Irma brought the island to its knees. It is the actions that are taken in the aftermaths of crisis that define matter.

Brock Pierce added: "The community looked to come down to Puerto Rico, not in the business of disaster capitalism as so many others, but rather to make Puerto Rico our home. To invest our time, energy and capital to further support our home, and in doing so, be a beacon that would drive human and investment capital to the island at its time of greatest need in the hopes of igniting its true potential."

Asked was he was ultimately trying to achieve

What happened with Hurricane Maria was not an isolated event. Environmental, and geo-political forces in the coming years are going to create many future Maria-like situations. Just in the last weeks we saw a major event in Mozambique that has left the country and its infrastructure struggling to cope. What we have with Puerto Rico right now is an opportunity to lay the groundwork and establish a roadmap. We will make mistakes, but the mistakes we make will become the roadmap for how capital should engage regions impacted by crisis. If through our efforts in Puerto Rico we can deliver lasting economic and social impact in the wake of a crisis, then we would look to use that playbook to engage globally.

More about Qualified Opportunity Zones and the passion behind the projects

Well, first and foremost it's a really smart program. On one hand, you have individuals with wealth looking for tax advantaged opportunities, on the other you have lower income communities looking for investment capital where there has been historically less of an interest to deploy capital. About 95% of Puerto Rico has been labeled as a Qualifying Zone under the program. Secretary Mnuchin estimates over 100 billion of assets will flow into QOZ projects during the life of the program. We are optimistic in thinking that this number might be even higher, and we are optimistic we can attract those funds to Puerto Rico.

From an investor standpoint, it's an excellent tax structure. Provided you invest the full amount of assets subject to capital gains, you are able to defer taxes for 7 years, and at year 5 and 7 the original basis for that tax amount is moved up 5% and then an additional 10%. That is a step up of 15% on your basis on top of the deferral. Now, if the investment into this QOZ project is held for 10 years, then there won't be capital gains on the new investment.

From an economic development standpoint its excellently structured to drive real economic impact to zones which need it. In the case of a real-estate project there needs to be a substantial improvement to the building purchased. This substantial improvement amount equal to the 1 for 1 value of the building above the land. So right off the bat, you have capital improvements to property, increasing property values and constructions jobs being generated. The tax benefits create an incentive not to buy and flip. Rather it incentivizes holding and running successful commercial endeavors.

Why QOZ in Puerto Rico?

Firstly, it's exactly this type of program which runs counter to a culture of economic extraction and disaster capitalism. The very tax advantage nature of the projects implies you are in it for the long haul. The projects require investment into the local economy and at least a 5-10 year permanence in order to gain the tax benefits. It's almost as if QOZ was perfectly built to meet concerns of an Island that is weary of carpet bagger mentalities.

Secondly, having spent the last year engaging locally, we have found enormous opportunities. Opportunities born out of identifying key pain points on the Island. While real-estate is a clear first low hanging fruit for QOZ capital, other business opportunities also qualify if they are businesses that operate within the designated QOZ tracts of land. With that said, the tax benefit alone is not a good enough reason to enter into a QOZ project. To the contrary, we feel the projects need to be able to stand on their own two feet regardless of the tax benefits of QOZ. It's with this in mind that we are working hard to identify best in class projects to bring to market.

Pierce would love to discuss specifics of what his is working on which includes Micro-grid and agricultural projects.

Puerto Rico is open for business, and a year and a half after Hurricane Maria hit the Island, it's well on its way to recovery. Still, the economy and its people are still feeling the impact of the last two years. When came engaged with the Island initially we saw some amazing opportunities, and then the Qualified Opportunity presented itself and the window to structure tax efficient vehicles to drive projects that have permanence and lasting economic impact was revealed. It's an exciting time to be on this Island. 

For more information, please visit www.brockpierce.io.

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