Tax Incentives for Urban Revitalization: The necessary spearhead for the Social and Economic Development of our Communities

By: Ivan Zavala Steidel, CEO of Realta Real Estate Group

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For the past 7 years, together with a group of Puerto Rican partners, we have been developing the Cerra Street revitalization project. A hyper-local revitalization project in the Santurce sector, which was once the vibrant heart of the great salsa music record labels and then fell into total abandonment and oblivion. We have seen firsthand how culture and art are driving forces that drive development and can converge and give birth to new nodes of economic development and positive social impact for communities. It is from this perspective and the recognition that in each municipality of Puerto Rico there are one or many Calles Cerras or urban centers that I invite you to rethink the role that urban centers and their revitalization will play in the social and economic development of our municipalities and our country.

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As a consequence of sprawl, natural disasters, and the passing of time, what were once centers of great economic, social, and cultural activity have become disused and empty spaces that unfortunately end up occupied by garbage, graffiti, and makeshift shelters. Urban rehabilitation, from our vision, not only improves the aesthetics and functionality of urban areas, but also addresses Puerto Rico's most pressing needs: improving the quality of life of our communities and the housing crisis.

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With high construction costs limiting new construction, the island faces a growing demand for affordable housing. Abandoned properties and public nuisances, estimated at over three hundred thousand properties, present an invaluable opportunity to be transformed into homes and businesses that can revitalize communities.

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However, raising the economic capital for these developments is a major challenge. For purposeful urban revitalization to become a reality, partnerships between government and the private sector are needed. Strategies that consider, among other things, the granting of tax incentives to rehabilitate our urban centers. These incentives could have a multiplier effect, benefiting multiple critical sectors.

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Urban rehabilitation in Puerto Rico represents a strategic opportunity not only to improve infrastructure and communities, but also to support a wide range of vital economic sectors. Currently, tax credits, widely used to promote the tourism sector, could be redirected to boost urban redevelopment, which encompasses and directly benefits other essential sectors such as affordable housing, assisted living for the elderly, and retail, among others. Urban redevelopment promotes the simultaneous development of all these sectors and attributes:

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1) Affordable Housing: Create affordable housing options for people of moderate income, including seniors. This housing is essential for those seeking independence and comfort at an affordable cost,

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2) Assisted Senior Housing: The creation of spaces to meet the needs of older adults who require assistance with daily activities and regular medical care. These facilities offer integrated services such as medical supervision, medication assistance, and support with daily tasks, all in a safe and adapted environment that promotes independence within a supportive framework.

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3) New Generation Living Spaces: Adapting properties to meet the needs of younger generations by offering modern, affordable housing options is crucial to retaining youth on the island and fostering their economic development.

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4) Urban Retail: Revitalization of urban spaces must include the development of commercial areas that not only serve local residents but also attract tourism. Retail can thrive in these renewed spaces, creating jobs and increasing economic activity by encouraging local employment in these new spaces and creating resilient communities.

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5) Job creation and multiplier effect: It has been found that investment in urban rehabilitation and infrastructure development can have a significant multiplier effect on the local economy. For every dollar invested in these projects, multiple dollars in additional economic activity is generated, including the creation of jobs not only in construction but also in related sectors such as building materials, design, architecture, restaurants, and, eventually, in the new stores and services that are established in the rehabilitated areas. A classic study in this area is that conducted by organizations such as the National Trust for Historic Preservation in the United States, which has documented how the rehabilitation of historic heritage (a component of urban rehabilitation) tends to generate more jobs and more local investment than new construction.

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6) Quality of Life Improvements: By renovating and upgrading infrastructure in urban areas, the quality of life for residents is significantly improved. This includes not only better housing, but also the creation of safer and more accessible public spaces, green areas, and transportation facilities that are especially important for this demographic group.

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7) Access to Essential Services: Urban rehabilitation encourages the integration of essential services such as health centers, pharmacies, and convenience stores within neighborhoods, reducing the need for long commutes and providing easy access to everything needed for the day-to-day life of the elderly.

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8) Community Integration:? These projects promote community integration through the creation of community centers and meeting spaces that encourage social interaction and participation in community activities, thus avoiding social isolation.

Additionally, it represents a great opportunity for community residents to have more employment options within walking distance of their homes, thus fostering resilient communities that are less dependent on vehicles.

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9) Sustainability and Safety:? Sustainability-focused urban renovations can provide safer and more energy-efficient housing, which is critical for the older sector who tend to spend more time in their homes and may be more sensitive to environmental conditions. Moreover, pedestrian mobility reduces carbon emissions caused by vehicle congestion, thus aiding the environment.

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10) Short-and Long-Term Impact:? By expanding tax credits to include these projects, Puerto Rico can transform urban areas into centers of vibrant and sustainable activity. This policy would not only address economic and housing issues but also enhance the quality of life for residents, attracting both locals and tourists by highlighting the authenticity and vitality of their urban communities.

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?In conclusion, it is crucial that tax incentives be considered as a strategic tool for the comprehensive development of Puerto Rico. By ensuring that these incentives support urban rehabilitation in a holistic manner, Puerto Rico can progress towards a future where economic growth and social improvement go hand in hand, creating a legacy of thriving and resilient communities.

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This approach not only diversifies the benefits of government investments but also maximizes the economic and social return. By allocating these incentives for urban rehabilitation, we are not just investing in rebuilding physical structures, but we are nurturing a development ecosystem that naturally includes and sustains other high-need projects. This comprehensive approach guarantees that the tax incentives foster a broader and deeper impact, strengthening the foundation of our cities as hubs of community growth and prosperity. Therefore, by broadening tax credits to encompass urban rehabilitation, we are, by extension, supporting all sectors that coexist within this framework, leading to a multiplier effect that benefits the entire Puerto Rican economy and society.

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Puerto Rico:? What are we waiting for?

Versión en Espa?ol: https://ivanzavalasteidel.com/incentivos-contributivos-para-la-revitalizacion-urbana-la-punta-de-lanza-necesaria-para-el-desarrollo-social-y-economico-de-nuestras-comunidades/