Puerto Rico News Digest For July 17, 2017

WEEKEND BLOODBATH

12 DEAD BETWEEN FRIDAY AND SUNDAY ACROSS PUERTO RICO

Twelve people across Puerto Rico died in suspected homicides between Friday morning and Sunday morning, according to police. Three separate murders were registered in Río Piedras, Humacao and the Hato Rey area of San Juan on Friday. The Humacao victim has been identified as 27-year-old Luis O. Fontanez  López. On Saturday, one murder each took place in Toa Alta and in the Puerto Nuevo section of San Juan. In the Toa Alta case, three masked men in a white car gunned down Ángel Joel Vázquez Hernández age 34, killing him. The victim's 13-year-old daughter was also injured in the brazen attack. Later that day, a decomposing body was found in a field in Caguas, near Road 175.

On Sunday, two young men were executed just past midnight near the Liborio Ortiz housing project in Aibonito, while another man was shot to death less than two hours later at a basketball court in the Piñones sector of  the town of Loíza. The victim was identified as César Orlando González Correa, age 32. He had just left a niece's birthday party at the court; several individuals followed him out to the facility's parking lot and shot him with various firearms, including an assault rifle, over 70 times. Another murder took place at 3:28 that same morning in Ponce, where the bullet-riddled body of  Walter Sánchez de Jesús was found inside a car.

Daylight provided no respite from the parade of horrors, as a woman's body was found in a field close to 10:00 AM on the grounds of Maria Auxiliadora Church in Santurce's gritty Cantera neighborhood. The victim's body showed signs of head trauma, and a bloodied cinderblock was found nearby. Scarcely half an hour after this gruesome discovery, a bullet-riddled body was found inside a white Acura SUV in the Jardines de Country Club neighborhood of Carolina. The victim was identified as Eduardo Luis Mercedes Carrión, a 27-year-old man from San Juan. The murder tally for the year now totals 361, one more than at this time last year.

ECONOMIC CRISIS HITS MAYAGÜEZ ZOO

From Caribbean Business:

"The economic crisis afflicting Puerto Rico for the last decade has also taken a toll on the island’s only zoo, with critics saying it is sorely understaffed and struggling to care for its animals on a limited budget..."

EPA PROPOSES CLEANUP FOR UTUADO SUPERFUND SITE

From News Is My Business:

"The U.S. Environmental Protection is proposing a cleanup plan to address sources of chemical contamination at the Papelera Puertorriqueña Inc. Superfund site, a paper and plastic goods manufacturer in Utuado, the agency confirmed..."

BOARD APPROVES LIQUIDATION OF GDB

From Reuters:

"Puerto Rico's financial oversight board late on Friday approved a plan to wind down the island's Government Development Bank (GDB), bringing the defunct fiscal agent a step closer to settling more than $5 billion in debt..."

Puerto Rico News Digest For May 1, 2017

MAY DAY! 

ENRAGED PROTESTERS VENT THEIR ANGER

Photo by @Tatymailine

As part of the massive general strike which was called for May 1st, scores of citizens took to to the streets across Puerto Rico today -- mainly in the San Juan metro area -- to protest the brutal austerity measures sought by the Financial Control Board and the administration of Governor Rossello, as they deal with the island's debt crisis. Labor, academic, religious, feminist, student and other groups took part in the demonstrations, which took place at the University of Puerto Rico in Rio Piedras, La Fortaleza in Old San Juan, Luis Muñoz Marín International Airport and other locations. At the latter, protesters blocked the entrance to the airport early this morning. Several of the marches around San Juan converged around noon at Hato Rey's "Milla de Oro" financial district, where some protests turned violent. Many protesters converged in front of the Seaborne Building, where the Financial Control Board is based. Several buildings in the area were vandalized, with Banco Popular's building taking the brunt of it, as protesters threw rocks, broke glass and had confrontations with building security staff. Police dispersed protesters with tear gas and rubber bullets.

Photo by @carlaamarie


Later in the afternoon, Plaza Las Americas closed the mall's parking facilities as a safety measure. On nearby Roosevelt Avenue, protesters blocked the road with large stones and other debris, while on Muñoz Rivera Avenue, someone started a small fire in a lane of traffic. Some individuals on Muñoz Rivera refused to vacate the roadway despite the Police's barrage of gas and rubber bullets. SWAT teams, along with regular Police, had been deployed all over the area throughout the day. Various businesses in Hato Rey, including a CVS pharmacy, shut down due to the situation. Some of them were vandalized with graffiti or had their windows broken. Rocks were also thrown through the windows of the old headquarters of the New Progressive Party. Close to 5 PM, Police were able to retake Muñoz Rivera Avenue, after several arrests were made. At around this time, Governor Rossello took part in a press conference at La Fortaleza, in which he condemned the "violent incidents".

Puerto Rico News Digest For July 8, 2016

ICE SEIZES COUNTERFEIT GOODS IN OSJ

From ICE:

"Special agents with U.S. Immigration and Customs Enforcement's (ICE)
Homeland Security Investigations (HSI) seized $6.5 million in counterfeit
merchandise Wednesday in Old San Juan with assistance from U.S. Customs
and Border Protection (CBP) and the U.S. Postal Inspection Service...During
the operation, HSI special agents and partner law enforcement officers target-
ed 14 retailers of counterfeit goods infringing on the trademarks of Gucci, Mi-
chael Kors, Prada, Channel, Ray Ban, Coach, Dolce & Gabbana, Oakley, Nike,
Ray Ban and the National Basketball Association. They also executed five sear-
ch warrants. The total manufacturer's suggested retail value (MSRP) of the sei-
zed goods is approximately $6.5 million. First time offenders of violating intell-
ectual property laws were served with a notification of a violation of law. In the
case of reoffenders, HSI will present their cases for prosecution..."

SCIENTISTS OPPOSE LA PARGUERA BILL

From The San Juan Daily Star:

"Opposition to Senate Bill 1621, which would permit the permanence of summer 

houses illegally constructed on public land on the La Parguera shorefront in Lajas, 

is growing as more than 50 experts in oceanography, ecology, geology, planning 

and other disciplines related to natural and environmental science signed a letter 

directed to Gov. Alejandro García Padilla asking him to veto the bill that was pas-

sed by the Puerto Rico Legislature last week..."

MELBA ACOSTA RESIGNS AS GDB PRESIDENT

From Caribbean Business:

"On Thursday, La Fortaleza announced the resignation of Government Develop-

ment Bank (GDB) President & Chairwoman Melba Acosta, effective July 31. In 

her resignation letter dated July 6, she says it is time to refocus her professional 

career, after 12 years of public service, three of which took place under the Alej-

andro García Padilla administration...With Acosta’s exit, the GDB would have 

four of its seven director posts vacant. Although it didn’t publicly announce it,

La Fortaleza filled on May 17 two vacancies with the appointment of Rafael Vé-

lez Pérez and Carlos Bonilla Agosto..."

PRASA TO START SEEKING EXTERNAL FINANCING

From News Is My Business:

"Puerto Rico Aqueduct and Sewer Authority Executive Director Alberto Lázaro 

confirmed Thursday the agency is waiting for the governor to sign the law that 

will allow it to pursue external financing to begin talking to creditors next month. 

Once the PRASA Revitalization Act is signed, the public corporation will have 

the leverage it needs to approach potential creditors for some $900 million in new 

funding to cover infrastructure improvements, payments due to contractors and 

other expenses, Lázaro said, during the monthly luncheon sponsored by the Ass-

ociated General Contractors..."

PR Treasury Reports Revenues $76.2 Million Above Estimates

Press Release

Government Development Bank


PUERTO RICO TREASURY REPORTS GENERAL FUND NET REVENUES
TOTALED $1.28 BILLION IN APRIL, $76.2 MILLION ABOVE ESTIMATES

Sales and Use Tax totaled $207.9 million, $87.8 million above April 2015


(San Juan, Puerto Rico) – Treasury Secretary Juan Zaragoza Gómez reported that 
net revenues recorded by the General Fund in April 2016 totaled $1.28 billion, $76.2 
million above revised estimates, and $47.7 million below net revenues in April 2015.

Corporate income taxes were the main revenue driver in April with $409.2 million in 
collections, a year-over-year increase of $32.5 million, or 8.6%, representing 31.9% 
of total revenues for the month, and exceeding revised estimates by $69.7 million. 
A majority of corporate income tax revenues are collected in April, as most corpora-
tions’ returns, as well as the first estimated tax payments for the tax year, are due
in April.

Individual income taxes were another important revenue category with $302 million 
in collections, a $57.4 million year-over-year decrease. One of the reasons for this 
decrease is that collections in April 2015 included $29 million in non-recurring reve-
nues from special laws. April 2016 Sales and Use Tax (“SUT”) revenues totaled 
$207.9 million, $87.8 million above April 2015 receipts. The difference is the result 
of the increase in the state SUT rate to 10.5% from 6% and the 4% tax on designa-
ted business-to-business and professional services (known as B2B).

B2B collections totaled $12.6 million in April. SUT revenues were allocated as foll-
ows: $197.7 million to the General Fund; $9.9 million, or 0.5%, to the Municipal Ad-
ministration Fund; and $270,000 to the Film Industry Fund.

Excise tax categories registered both upward and downward year-over-year chan-
ges. Foreign excise taxes and motor vehicle excise taxes increased by $4.8 million 
and $4 million, respectively,while alcoholic beverages and cigarette excise taxes de-
creased by $1 million and $8.8 million, respectively.

Finally, in April the category known as “Other” registered a $130.8 million decrease. 
This difference is the result of revenues in April 2015 that were non-recurring this 
year. Act 44-2015 allowed the pre-payment of a special tax on certain transactions. 
These transactions included a pre-payment, at a reduced rate of 5%, of taxes on 
corporate dividends for future distributions of accrued benefits and profits. Reven-
ues from prepaid taxes on dividends, which are classified under the category of 
Other, were $111 million in April 2015.

Fiscal year-to-date (July-April) revenues totaled $7.54 billion, a year-over-year incre-
ase of $213.3 million, or 2.9%, $45.7 million above revised estimates, and $238.5
million below estimates included in the original FY 2016 budget. Treasury Secretary 
Zaragoza Gómez noted that based on revenue behavior up to April, estimates inclu-
ded in the revised $9.29 billion budget for FY 2016 are expected to be met.

GDB Creditors Agree To 53% 'Haircut'

Press Release

Government Development Bank


GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO
ANNOUNCES FRAMEWORK OF INDICATIVE TERMS FOR
RESTRUCTURING WITH GDB AD HOC GROUP OF CREDI-
TORS

Creditors Agree on 53% Haircut for Global Restructuring and Forbea-
rance From Exercising Remedies 

Announcement Follows Declaration of Moratorium by Governor on
Obligations of GDB 

GDB Will Pay Interest on May 1 


San Juan, P.R. – The Government Development Bank for Puerto Rico (“GDB”)
announced today that it has negotiated a framework of indicative terms for a
restructuring of GDB bonds with a group of bondholders (known as the “Ad
Hoc Group”) holding approximately $900 million of GDB’s outstanding notes
(the “Old Notes”). The framework includes an understanding with the Ad Hoc
 Group regarding key terms for a restructuring of a portion of GDB’s Old Notes
 held by the group and a path forward to a broader restructuring of all of GDB’s
Old Notes. The agreement on key terms will provide a framework for GDB and
 the Ad Hoc Group to continue negotiations over the coming weeks with a view
 to enter into an agreement in principle that would memorialize in full the terms
 and conditions of the proposed restructuring. As part of the understanding rea-
ched today, the Ad Hoc Group and GDB intend to negotiate related terms over
the next 30 days and forbear from pursuing legal action related to the May 1st
debt service payment during such negotiations.

 The agreed key terms contemplate a two-step restructuring of GDB’s obliga-
tions, in which all holders of the Old Notes (including the Ad Hoc Group) wo-
uld first exchange (an “Interim Exchange”) their current holdings for new notes
at GDB (the “Interim Notes”), to be followed by an exchange of such Interim
Notes as part of a future global restructuring of the Island’s debt that includes
 GDB’s debt (the “Global Restructuring”). As part of the agreed key economic
terms, creditors would agree to haircut of 43.75% of the face amount of their
 Old Notes in the first-step exchange. In addition, as part of the transaction,
 bondholders would agree to the proposed treatment for their notes, in a sec-
ond step exchange as part of a Global Restructuring, that would result in an
agreed haircut of 53% of the face amount of their Old Notes. The agreed fra-
mework of key economic and structural terms for the Interim Exchange and
treatment in the Global Restructuring is set forth more fully in Annex A here-
to. As noted in Annex A, many important terms of the transaction remain sub-
ject to further negotiation between the parties. In addition, the transaction wo-
uld be subject to several conditions, which would need to be met over the co-
ming months before the deal could proceed.

Importantly, the proposed terms of the Interim Exchange require 100% partici-
pation by all bondholders, including, in addition to the Ad Hoc Group, the state-
chartered credit unions in Puerto Rico (or “cooperativas”) and other large insti-
tutional groups on island. As a result, the proposed transaction is being designed
to take into account the varied interests of all its creditors, and GDB and the Co-
mmonwealth plan on continuing discussions with such groups over the coming
weeks to ensure that any agreement in principle reflects their concerns in a debt
restructuring. Similarly, as a comprehensive deal for all GDB stakeholders, the
transaction contemplates providing a path forward to depositors, including by
providing collateral for their deposits, as GDB works through its challenges.

Without federal restructuring legislation, including the tools to bind non-con-
senting creditors, the transaction would be highly unlikely to reach the requi-
red participation levels. In the absence of federal legislation, the GDB would
not be able to complete the deal as proposed, and the Commonwealth as a wh-
ole would not be able to move towards a comprehensive restructuring of the
island’s debt.

The announcement of this framework of indicative terms with the Ad Hoc Gro-
up follows the declaration of the Governor of the Commonwealth of Puerto Ri-
co of a moratorium on debt service obligations of GDB. Consistent with the te-
rms of the Governor’s executive order, GDB intends to pay interest on its bonds
due May 1.

“The agreement on key terms with the GDB Ad Hoc Group is the result of ma-
ny weeks of negotiations and discussions between us and the Ad Hoc Group. We
appreciate the good faith and patience they have shown throughout this process
the work both they and Commonwealth officials have put into ensuring that the
interests of all Commonwealth stakeholders are respected going forward. While
we have many steps to go before we reach a full agreement on a deal and that
deal can be consummated, this agreement represents a vital first step in the Co-
mmonwealth’s path to economic recovery,” said GDB President Melba Acosta
Febo.

“To be very clear, this is but one piece in a complicated process that will require
every Commonwealth creditor to participate. The time necessary to reach even an
agreement on key terms with 1/4 of a single issuer’s bondholders demonstrates
 that, in the absence of federal legislation that gives Puerto Rico the tools it needs,
 the island will be condemned to a quagmire of economic stagnation with no relief,
 for which both 3.5 million American citizens and our creditors will bear the con-
sequences.”

$1.2M Building Bought By Corrections Now Abandoned

Press Release

Puerto Rico Comptroller's Office 

Translated from Spanish

A special report of the Comptroller of Puerto Rico reveals that the Puerto
Rico Corrections Administration has never used a building in Rio Piedras 
which it acquired on October 31, 2008 and which was federally funded to 
the tune of $1.2 million to create a social adaptation home for inmates. The 
building located at 873 Avenida Muñoz Rivera is vandalized, in a total state 
of neglect and is partially burned. This case demonstrates that there was no 
prior control as established by Act No. 230 for government operations and 
expenses are not made within the framework of utility and austerity...Fur-
thermore, with respect to this transaction the Administration could not su-
pply our evidence how auditors made the payment of attorney's fees of 
$13,114.

Additonally, the report notes that of the 9 contracts and 45 amendments for 
$ 34.7 million formalized from 2004 to 2008 for the construction of fences 
in correctional complexes in Bayamón, El Zarzal in Rio Grande and La Pica
in Jayuya, the Administration did not submit 22 amendments of $ 3.2 milli-
on to the Office of the Comptroller and neither did it maintain complete cons-
truction project records. This situation is contrary to Law 18 and Regulation
33 on registration of contracts.

The opinion of the Comptroller is partially adverse and covers the period 
from 1 July 2012 to 30 June 2015.


(Full report in Spanish is available here).

GDB Rejects Shutdown & Privatization Rumors

Press Release

Government Development Bank

April 1st, 2016


Today, Melba Acosta Febo, President of the Government Development Bank
for Puerto Rico ("GDB" or the “Bank”), issued the following statement in res-
ponse to several rumors recently reported in the media:

“The Government Development Bank became aware of rumors claiming that
a bill will be introduced today to shut down the Bank. This rumor is false – the
GDB will neither shut down nor be privatized.

This irresponsible rumor is damaging to the Bank as an institution, as well as
needlessly harmful to our employees and their families. Bank management has
met with employees and informed them that, due to the fragility of the Bank’s
liquidity, all available options are currently being reviewed. These options will
responsibly address the issues facing the Bank and will not involve the dismi-
ssal of public employees. As we have for weeks, GDB representatives continue
to engage with a considerable group of our creditors about the restructuring of
the GDB’s debt. As we have stated publicly, the Government is also considering
additional measures to address this situation, such as declaring a temporary mo-
ratorium on payments, and amending the GDB charter.

I, and representatives of the Puerto Rico Electric Power Authority (“PREPA”),
were recently in London attending meetings regarding the GDB’s and PREPA’s
soon-to-expire insurance policies. This was a long scheduled trip – though these
policies are active, we are in the process of negotiating their renewal. During the-
se meetings, I provided an overview on the Commonwealth’s finances, covering
the Krueger report, the Fiscal Adjustment Plan, the public offer made to bondhol-
ders and the status of the Commonwealth’s and PREPA’s debtrestructuring nego-
tiation processes.

As I have stated publicly on multiple occasions, including this week, it is impor-
tant that everyone in Puerto Rico understand that the GDB’s fiscal standing, as
well as the Commonwealth’s fiscal standing, is delicate due to the fiscal crisis we
are confronting. For this reason, the GDB’s Board of Directors and management
continue to urgently evaluate all available options to safeguard public finances.
We will continue to move forward on several initiatives simultaneously as no
final decisions have been made at this time.”

Working Group Releases Restructuring Proposal

Press Release

Government Development Bank


THE WORKING GROUP FOR THE FISCAL AND ECONOMIC
RECOVERY OF PUERTO RICO RELEASES RESTRUCTURING
PROPOSAL

Comprehensive Voluntary Exchange Proposal Would Reduce the Common-
wealth’s Mandatorily Payable, Tax-Supported Debt from $49.2 Billion to
$26.5 Billion, Cap Annual Debt Payments at 15% of Government Revenues
and Provide Creditors the Opportunity to Recover the Principal Amount of
Their Investments by Making Them Partners in the Island’s Future Growth
San Juan, P.R. – Today, the Working Group for the Fiscal and Economic Re-
covery of Puerto Rico released details of the comprehensive voluntary exchan-
ge proposal presented to advisors to the Commonwealth’s creditors last week.
The proposal seeks to reduce the Commonwealth’s mandatorily payable tax-
supported debt and nearterm debt payments, providing the Island time to im-
plement the Fiscal and Economic Growth Plan (FEGP) and to stimulate real
economic growth. Together with the FEGP, the proposed debt restructuring, if
accepted by the Commonwealth’s creditors, will ensure the Commonwealth has
sufficient resources to provide essential services to all Puerto Rican residents,
pay back its suppliers and taxpayers, rebuild depleted cash resources and fund
its retirement systems.

With the Commonwealth facing financing gaps in both the  near and long term,
the Working Group developedthe FEGP, which includes a comprehensive set
of measures designed to put the Island back on a path to economic growth and
long-term sustainability. The implementation of the expense and revenue measu-
res in the FEGP – totaling approximately $20.6 billion in revenue increases and
$13.8 billion in expenditure reductions over the next ten years – are projected to
reduce the Commonwealth’s projected cumulative fiscal deficit for the next deca-
de to approximately $34.0 billion.

However, during the next ten years, the Commonwealth faces more than $33
billion of payments on its tax supported debt. The voluntary exchange offer is
intended to restructure those payments to allow the Commonwealth to catch up
withits stretched suppliers and taxpayers and implement the FEGP’s fiscal and
economic initiatives and, over the long term, make its tax-supported debt sustai-
nable. In addition, the Commonwealth is instituting a fiscal control board to pro-
vide necessary oversight and ensure the Commonwealth complies with the FEGP
and the terms of the exchange offer.

“Last June, we began to directly address the Commonwealth’s fiscal and econo-
mic crisis through the development of a comprehensive set of solutions to grow
the Island’s economy while protecting the health, welfare and safety of the people
of Puerto Rico,” said Victor A. Suarez, Secretary of State. “This proposal is a re-
flection of our commitment to work with our creditors on a sustainable solution
that does not place the burden on one stakeholder group alone. A crisis of this
magnitude must be addressed in concert, otherwise we risk our ability and the
opportunity to escape the spiral of a stagnating economy, endless deficits and in-
creasing debt.”

Specifically, the restructuring proposal contemplates that creditors will exchange
their existing securities for two new securities: a “Base Bond,” with a fixed rate
of interest and amortization schedule, and a “Growth Bond,” which is payable
only if the Commonwealth’s revenues exceed certain levels. The new securities
would also provide creditors with enhanced credit protections, such as a Common-
wealth Guarantee and statutory liens and pledges with respect to certain revenues.

Under this proposal, the $49.2 billion of tax-supported debt would be exchanged
into $26.5 billion of newly issued mandatorily payable Base Bonds and $22.7 bi-
llion of newly issued Growth Bonds. Interest payments on the Base Bonds would
begin in January 2018, scaling up to 5% per annum by FY 2021, when principal
payments would begin. The Growth Bonds would be payable only to the extent
the Commonwealth’s revenues exceed its current baseline projections as a result
of real economic growth on the Island. By sharing in the Island’s economic reco-
very, creditors would have the opportunity to recover the principal amount of
their investments. The first such payments, if any, would be made beginning in
the tenth year after the close of the exchange offer. In any given year in which the
Growth Bond would be payable, creditors would receive payment of up to 25%
of such revenues.

The proposal also seeks to lower the Commonwealth’s debt service-to-revenue
on tax-supported debt to approximately 15%, a level consistent with the debt li-
mit contemplated by the Constitution of Puerto Rico, from the current unsustai-
nable ratio of 36%. Although at a ratio of approximately 15% Puerto Rico would
still remain at levels exceeding the most heavily indebted of the U.S. states, debt
service on the Base Bonds has been structured to give the Commonwealth the
opportunity to further reduce that ratio as a result of economic growth and deve-
lop into a stronger credit over time. A successful exchange offer, along with the
implementation of the measures recommended in the FEGP, should improve the
Commonwealth’s credit-worthiness, and, if the Commonwealth’s economy is able
to grow in line with the growth assumed for the United States, investors will be
able to recover the full principal amount of their investments through payments
on the Growth Bonds.

The exchange offer is predicated upon a number of key assumptions, including
very high participation levels from the creditor groups as well as the U.S. Federal
Government maintaining at least its current percentage levels of programmatic su-
pport for the Commonwealth. If very high participation levels cannot be achieved
or the U.S. Fe-deral Government allows the level of programmatic support for Pu-
erto Rico to materially decline, then the terms of the exchange offer will have to be
revisited and creditor recoveries adjusted accordingly. The Commonwealth of Puer-
to Rico, the Government Development Bank and the Working Group acknowledge
and value the active participation of the Commonwealth’s creditors in the restruc-
turing process. Further, the Commonwealth recognizes the continuing contribution
of the cooperatives in the ongoing discussions regarding Puerto Rico’s Fiscal and
Economic Growth Plan. Those discussions have focused on the terms of the restruc-
turing and the key role the cooperatives play in promoting social and economic de-
velopment on the Island.

The proposal is available at http://www.bgfpr.com/.

Puerto Rico News Digest For October 30, 2015

GOVERNOR DENIES NOT RUNNING IN 2016

From The San Juan Daily Star:

"Gov. Alejandro García Padilla denied through his Twitter account on
Wednesday rumors that he will not seek re-election under the Popular
Democratic Party (PDP) banner. Sources told the STAR that the Gover-
nor was planning to announce this week through a televised message that
he was not seeking re-election. “He is seriously thinking about not runn-
ing, in part because of the economy,” a source said..."

GDB CASH RESERVES DWINDLING

From Fox News Latino:

"The government bank responsible for issuing Puerto Rico's bonds said
Wednesday that its liquidity has dropped below $1 billion as concerns
grow it won't be able to make a large upcoming bond payment amid the
U.S. territory's economic crisis. The Government Development Bank said
its liquidity stood at $875 million at the end of September...Investors and
economists are now questioning whether the bank will be able to meet a
$355 million bond payment due Dec. 1 given its dwindling funds..."

USDA GIVES PR $120K FOR RURAL HOUSING

From News Is My Business:

"Agriculture Secretary Tom Vilsack announced today that USDA is in-
vesting $3.7 million to help rural families repair and rehabilitate their ho-
mes across 46 states and Puerto Rico, where 10 towns will equally split
$120,280. The funds are being awarded through the Housing Preserva-
tion Grant program to support the renovation of 1,147 units, the federal
agency said..."

NEW FARMERS MARKETS IN TRAIN STATIONS

From Caribbean Business:

"Gov. Alejandro García Padilla said Thursday that various Urban Train
stations and Maritime Transport Authority boat terminals will be trans-
formed into urban markets for the sale and purchase of Puerto Rico-made
products. The public will be able to buy hand-made products and locally
harvested produce at the Martínez Nadal, Sagrado Corazón, Deportivo and
Bayamón train stations, as well as at the Cataño and Fajardo boat termi-
nals. The farmers markets will be held from 8 a.m. to 3 p.m. on Oct. 30,
Nov. 20, Dec. 18, Jan. 29 and Feb. 26. A market for women entrepreneurs
will be held from 12 p.m. to 5 p.m. on Nov. 13 and Dec. 15..."

Working Group Proposes Establishment of Puerto Rico Fiscal Oversight and Economic Recovery Board

Press Release

Government Development Bank for Puerto Rico

Independent, Non-Political Body Will Ensure Compliance with Fiscal 

and Economic Growth Plan

San Juan, P.R. – The Working Group for the Fiscal and Economic Reco-

very of Puerto Rico (the “Working Group”) today announced that Gover-

nor Alejandro Garcia Padilla has presented to the legislature the Puerto 

Rico Fiscal Responsibility and Economic Revitalization Act (the “Act”), 

which will establish the Puerto Rico Fiscal Oversight and Economic Re-

covery Board (the “Board”). The Act and the establishment of the Board 

will support Puerto Rico’s efforts to address its immediate fiscal crisis by 

seeking to restore public confidence in the Commonwealth, while also re-

maining incompliance with the Commonwealth’s constitution. Along with 

the Working Group, the Board will facilitate a return to long-term fiscal 

sustainability and economic growth and provide Puerto Rico’s creditors 

with assurance that conditions agreed to as part of any comprehensive debt 

restructuring agreement, as well as compliance with the Working Group’s

Fiscal and Economic Growth Plan (“FEGP”), will be monitored by an inde-

pendent, non-political body.

The Board will be comprised of five members appointed by the Governor 

and approved by the Senate. The members will select a chairperson from 

amongst themselves. The Board will have fiscal oversight authority over 

“Covered Entities,” which include: the Commonwealth; each individual 

department and agency of the Commonwealth; and each public corporation

or instrumentality, other than the Puerto Rico Electric Power Authority and 

the Puerto Rico Aqueduct and Sewer Authority, unless they are designated 

as a Covered Entity by the Governor. In order to respect their constitutiona-

lly protected independence, the judicial branch, the legislative branch, and

the Office of the Comptroller are not Covered Entities under the Act. The 

Government Ethics Office and the Office of the Special Independent Prose-

cutor are also not considered Covered Entities. The Act will require the 

Working Group to submit a proposed Commonwealth-wide, consolidated 

five‐year fiscal and economic growth plan to the Board for approval at the 

later of the end of the second quarter of 2016 or after all of the members of 

the Board shall have taken office. The Board will then be required to deter-

mine whether the Working Group’s plan complies with the objectives set 

forth in the Act, including:

* Implementing structural reforms with the goal of restoring economic 

growth and competitiveness in the Commonwealth

* Eliminating, over time, of the financing gaps and reducing of the debt 

burden of the Covered Entities to sustainable levels; and

* Improving institutional credibility across all government entities through 

improved budget formulation and execution, and data transparency.

If the Board concludes that the proposed fiscal and economic growth plan 

meets the objectives of the Act, the Working Group will submit the plan

to the Governor for review and approval. If the Board withholds approval,

it may provide recommendations for revisions to the proposal in order for

the plan to meet the objectives of the Act.

Further, under the Act, each entity must submit a proposed annual budget 

to the Board by no later than March 1 or such later date determined by the 

Board, in its sole discretion. The proposal must be accompanied by a report 

from the Office of Management and Budget identifying the individual mea-

sures of revenue increase and expense reductions included in the budget 

that conform to the approved Fiscal and Economic Growth Plan for that 

fiscal year. The Board shall have 30 days after the receipt of each budget 

to determine if the proposal complies with the Fiscal and Economic Gro-

wth Plan. The Board will be provided with information gathering authority 

in order to monitor each entity’s compliance with the Fiscal and Economic 

Growth Plan, and to approve annual budgets and monitor their compliance. 

The Act also imposes certain automatic expense control mechanisms and 

other measures to address non-compliance with approved budgets and with 

the Plan generally.

Finally, the Act amends certain provisions of the Organic Act of the Office

of Management and Budget and the Government Accounting Act for the 

purpose of, among other things, (a) implementing the requirement that the 

revenue estimates used to prepare the Commonwealth’s budget must be 

certified by an independent third-party selected by the Board, (b) providing

 that the Commonwealth’s budget shall identify certain appropriations, to be 

known as "Sequestered Appropriations,” representing 2.5% of the total app-

ropriations for operating expenses and special appropriations included in the

Commonwealth’s budget, which Sequestered Appropriations shall be relea-

sed or cancelled in accordance with the Act, and (c) implementing other mea-

sures aimed at ensuring sound fiscal and accounting practices. 

Puerto Rico News Digest For September 16, 2015

GDB, TREASURY OUT OF MONEY BY YEAR END

From The San Juan Daily Star:

The Puerto Rico Treasury Department’s single cash account and the Go-
vernment Development Bank (GDB) are each expected to exhaust their
liquidity before the end of calendar year 2015. The information was con-
tained in a liquidity update report by Conway-MacKenzie (CM) and in
the island government’s fiscal adjustment plan. Both documents were
made public last week. The Treasury has a treasury single account (TSA)
in which it deposits and disburses amounts related to the General Fund,
certain federal funds, government agencies, general obligation debt issu-
ances (GOs) and payments, net pension benefits, and other items.

PRASA REACHES DEAL WITH US GOVERNMENT

From Caribbean Business:

Under a settlement with the U.S. Department of Justice and the Environ-
mental Protection Agency (EPA), the Puerto Rico Aqueduct and Sewer
Authority (Prasa) has agreed to make major upgrades, improve inspecti-
ons and cleaning of existing facilities within the Puerto Nuevo system and
continue improvements to its systems island-wide, according to the Justice
Department. The Puerto Nuevo sewer system serves the municipalities of
San Juan, Trujillo Alto, and portions of Bayamón, Guaynabo and Carolina.
The settlement updates and expands upon legal settlement agreements rea-
ched with Prasa in 2004, 2006 and 2010.

COCAINE FOUND ON EAST PR COAST

From Caribbean News Now:

US Customs and Border Protection (CBP) Office of Air and Marine Agents
on Friday night recovered 114 pounds (51.7 kilos) of cocaine inside four back-
packs that were ditched by smugglers on the east coast of the island. The esti-
mated value of the seized contraband is $1.4 million.  CBP units near Ceiba,
Puerto Rico found 30 individually wrapped bricks of cocaine inside two pie-
ces of luggage. “Our marine units patrol work with law enforcement partners
to detect and intercept criminal organizations that seek to introduce illegal nar-
cotics,” stated Johnny Morales, director of air operations for CBP’s Caribbean
Air and Marine Branch (CAMB). “This seizure is evidence that our persistence
 is fruitful.”

SALES TAX REVENUE OVER ESTIMATES

From News Is My Business:

Puerto Rico sales and use tax (SUT) revenues collections totaled $190.7 mi-
llion in August, the first month the new 10.5 percent rate was in effect, ex-
ceeding projections by $22.2 million, or 13.2 percent, Treasury Secretary
Juan Zaragoza said Monday. August 2015 estimates took into account the
possible effect of purchases made in advance of the rate increase. Neverthe-
less, the monetary values of the tax base subject to the SUT were very simi-
lar for August 2015 and August 2014, Zaragoza said.