Robb Rill

Robb Rill, founder of The Strategic Group PR and The Act 20/22 Society.

The 20/22 Act Society—organization comprised of investors who relocated to Puerto Rico under the decrees of Acts 20 and 22 of 2012—filed a lawsuit against the local government for breaching the agreements and contracts established when the laws were enacted.

Robb Hill, founder of The 20/22 Act Society, argued that the entity recurred to legal action after holding several conversations to solve discrepancies. He argued that there have been constant changes to the acts’ decrees, thus transgressing the agreements that prompted investors to set their gaze on Puerto Rico.

“Given the constant modifications to Acts 20 and 22, which were changed in hear totality and are now compiled in the new Act 60 of July 1, 2019, investors are compelled to to stop the retroactive implementation, since their initial contract is being violated. This may result in a bad precedent for investment on the island,” said Pedro Ortiz Álvarez, legal representative of The 20/22 Act Society.

This, in turn, could disrupt the investment climate in Puerto Rico, when new entrepreneurs and investors perceive that doing business in Puerto Rico is not safe. This is due to the constant changes to the laws made by the government, and this causes them to withdraw from investing in the Island. Under both laws (Act 22 and Act 60), approximately 2,600 decrees have been issued to date.

“Several changes were made over the years to Acts 20 and 22. Although in Act 60 of 2019 it had been pointed out that those already included in Acts 20 and 22 could manage a grandfather clause that exclude from certain effects or restrictions prior to the date of the new law. This clause could be managed until December 31, 2019,” Ortiz Álvarez said.

He denounced retroactive changes. For example, he stated that the administrative fee was originally $300 and now it’s $5,000, under the premise that the additional $4,700 will be destined to the Puerto Rico General Fund.

"A decree is a contract and its impairment raises a serious constitutional question. The Society and its members have no problem with possible changes in the law if they are applied prospectively. In this way, new investors will know in advance the amount that they will have to pay. Although an increase of such magnitude could be considered deficient in terms of public policy, the prospective treatment is not being questioned in the lawsuit,” Ortiz Álvarez clarified.

According to a study prepared by the firm Estudios Técnicos and published by the Department of Economic Development and Commerce (DDEC by its Spanish acronym), between 2015 and 2019, the incentive programs under Acts 20 and 22 proved to have been beneficial to Puerto Rico’s economy, resulting in:

— More than 36,200 direct, indirect and induced jobs

— $169 million for the treasury and municipalities

— $141 million in consumption of goods and services in Puerto Rico

— 68 percent of the participants of the decree of Act 22 have bought a property in Puerto Rico

— An estimated $ 678 million of capital investment

— 35 percent of the decrees of Act 20 were local firms

— The basic salary paid by Act 20 companies is $36,000 annually. Meanwhile, the estimated median income of residents of Puerto Rico is around $19,775 annually.

— The investment of the participants of the decree of Act 20 is around $ 1.2 billion.

— The investment in real estate that Act 22 participants have made is $1.3 billion.

— The tax income derived from the property contribution is $8.8 million.

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