Newsletter – Oct/Nov 2023

Approval of P3A, HTA and Puerto Rico TollRoads LLC Agreement

The Oversight Board approved the $2.85 billion concession agreementbetween the Puerto Rico Public-Private Partnerships Authority (P3A) and the Puerto Rico Highways and Transportation Authority (HTA), and Puerto Rico TollRoads LLC to operate, maintain, and improve the Puerto Rico toll roads currently managed by HTA. The agreement is a critical element to improve Puerto Rico’s roads by providing a clear incentive for more efficient maintenance of toll-roads and significant new funding for investments in non-toll roads.
 
The concession fee will enable HTA to pay off its outstanding debt of about $1.6 billion, including a loan from the Government of Puerto Rico for roughly $360 million. In addition, it will provide an estimated $1.1 billion in new funding for road maintenance and long-term investments for non-toll roads.

Robert F. Mujica Jr. at the SESA Summit 2023

Robert Mujica Discusses Renewable Energy at the 2023 SESA Summit

Oversight Board Executive Director Robert Mujica participated in the 2023 Solar + Energy Storage Association of Puerto Rico (SESA) Summit, where he discussed how the Oversight Board is supporting the implementation of renewable energy projects on the island, including making sure that renewable contracts are fair to developers and the people of P.R. over the long term.
 
Puerto Rico is far behind in large-scale renewable projects, Mujica said. “Goals are great but lighting these projects is what matters. Moving to renewable energy is not about signing contracts, it’s about building facilities and generating energy.”
 
Meanwhile, “Puerto Rico is making progress in renewable energy: 1,000 MW have been approved, solar is added to 4,000 rooftops each month,” Mujica said.
 
Click here to read more about the Oversight Board’s work to advance renewable energy projects in Puerto Rico.

The Oversight Board’s Recommendation on Tax Reform

The Legislature passed House Bill 1839, one of the largest tax cuts in Puerto Rico’s recent history coming only a year after emerging from bankruptcy. The bill would reduce Government revenues by about $750 million this fiscal year and by almost $3 billion over five years. It would push the Government’s budget back into deficit.

The Oversight Board is willing to work with the Governor and the Legislative Assembly to identify the resources to provide for a potential one-time tax relief to benefit personal-income tax filers this fiscal year and remains open to assisting the Government of Puerto Rico in identifying a tax reform plan that is affordable, promotes growth, and adequately funds services for the people of the island.

The Oversight Board’s Recommendation on Inventory Tax

The Oversight Board recommended a temporary cap of the inventory tax at the level of current payments. Although the Legislative Assembly did not pass House Bill 1798, which would have allowed for this temporary cap, the Oversight Board firmly believes that the inventory tax hurts Puerto Rican families and the economy because it leads to higher prices and lower inventories, including during natural disasters when supplies are critical for survival. Ultimately, the inventory tax prioritizes municipal revenues over Puerto Rican taxpayers and the island’s recovering economy.

Before the Senate’s decision to not consider the bill, Executive Director Robert Mujica explained in media interviews and to Senate leadership that a temporary cap on the inventory tax would make more goods available and accessible. The cap would ensure that municipal finances would not suffer a decline in revenue while businesses could increase their inventory and investments without an additional tax burden.

The Oversight Board continues to explore, identify, and provide alternatives to offset municipal government revenues to reduce the impact of the eventual elimination of this negative tax. Further, the proposed cap would not have affected other taxes.

Click here to read more about the Oversight Board’s recommendation.

PREPA Plan of Adjustment Supplemental Disclosure Statement Confirmed

PREPA’s Plan of Adjustment is moving forward. Getting PREPA out of bankruptcy is key for economic development. U.S. District Judge Laura Taylor Swain rejected bondholder objections to the Oversight Board’s supplemental disclosure statement. The Plan of Adjustment hearings are scheduled to take place in March 2024.

The Plan of Adjustment reduced PREPA’s debt by almost 80% and will save the people of Puerto Rico about $15 billion in principal and interest payments. The plan is a breakthrough: it enables PREPA to remain a sustainable utility, continue critical investments, and complete the transformation of Puerto Rico’s energy system.

Robert F. Mujica Jr. at the Puerto Rico Hospital Association 2023 Convention

Healthcare: Creating a Better System for All the People of Puerto Rico

During his participation in the Puerto Rico Hospital Association’s 2023 Convention “Uniting the Health of Puerto Rico” on October 18, Executive Director Robert Mujica spoke of the importance of working together to create a better healthcare system for P.R.
 
“So many different people have to work together to keep us healthy and help us recover from illness – doctors, nurses, direct care workers, scientists, insurers, hospital administrators, educators and even drug manufacturers,” said Mujica during his speech at the event. “All work with one end goal: helping patients. You asked me today to visualize a better healthcare system for Puerto Rico. This is exactly how: all the people, professions, and businesses pulling together on one rope.”
 
The Fiscal Plan includes more than $100 million in new investments for health care, that range from structural improvements for urgent care clinics to the purchase of medical equipment and the installation of air conditioning and purification systems. The Fiscal Plan currently includes funding for projects at public hospitals and last year it required a 20% salary increases for medical residents who are part of the UPR residency programs, which represents a $2.5 million annual investment to help keep medical students in Puerto Rico. In fiscal year 2021, the Oversight Board and the Government of Puerto Rico agreed to expand coverage of Medicaid to more than 200,000 Puerto Ricans during the COVID-19 pandemic.
 
These are just several of the ways the Oversight Board has supported the healthcare system in P.R. The Oversight Board will continue to work with the government to bring all the healthcare sectors and stakeholders together to continue to improve the healthcare system on the island through a united roadmap.

Engagement with Stakeholders

November 28, 2023

Oversight Board Executive Director Robert Mujica spoke with students who are completing internships at the Puerto Rico Office of Management and Budget. Mujica and the group discussed managerial and fiscal topics that impact Puerto Rico.

November 21, 2023

During a full day of engagement with stakeholders, Executive Director Robert Mujica met with firefighters in San Juan, the leadership of the Financial Analysts’ Society of Puerto Rico, and representatives of the Association of Hematology and Medical Oncology of Puerto Rico. He also visited the Leap Steam + E Academy of San Juan.

November 2, 2023

Executive Director Robert Mujica visited the municipality of Bayamón to discuss infrastructure projects to foster growth, promote economic development in urban centers, and improve the government’s permitting process.

October 24, 2023

Oversight Board Executive Director Robert Mujica and Resident Commissioner for P.R. in Washington, D.C., Hon. Jenniffer González Colón, held a routine meeting in which they discussed issues that impact P.R. residents, and that are currently in discussion at the nation’s capital. These issues included Medicare funding for Puerto Rico residents, ongoing renewable energy initiatives and infrastructure projects, among others. The Oversight Board remains committed to collaborating with the P.R. Resident Commissioner on matters that require the attention of the Federal Executive and Congress.

October 21, 2023

Oversight Board Executive Director Robert Mujica attended a panel at the Asociación de Alcaldes de Puerto Rico’s “Cities, Innovation, Governance, and Future” event, where he invited mayors to work together with the Oversight Board and to turn recovery and investments into lasting economic growth and prosperity for Puerto Rico. “We must figure out together how we can best move forward. I have an open door,” Mujica said at the event. “We need to focus, and we need to act. It is up to us: the central government; you, the mayors; and the business community.

October 17, 2023

Oversight Board Executive Director Robert Mujica met with the Chairman of the Finance, Federal Affairs & Oversight Board Committee of the Senate of P.R., Hon. Juan Zaragoza to discuss his thoughts and concepts regarding a potentially viable tax reform. The Oversight Board believes that tax reform is essential for Puerto Rico’s return to sustainable economic growth. An effective tax reform must be comprehensive, holistic, and for the long term.

October 17, 2023

Oversight Board Executive Director Robert Mujica visited Juncos to meet with mayor Alfredo Alejandro Carrión to discuss economic development initiatives and crucial infrastructure projects aimed at enhancing services for the town’s residents.

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