Ley 164 del 2001
Resumen
Esta ley requiere que varias corporaciones públicas y otras entidades gubernamentales reestructuren y refinancien sus deudas con el Banco Gubernamental de Fomento para Puerto Rico, limitando los pagos anuales agregados de principal e interés a no más de $225,000,000. Autoriza las asignaciones presupuestarias necesarias para honrar estos pagos y prohíbe al Banco Gubernamental de Fomento otorgar préstamos a entidades gubernamentales cuyo repago dependa de futuras asignaciones del Fondo General sin la aprobación legislativa, con ciertas excepciones. También enmienda varias leyes existentes.
Contenido
(No. 164)
(Approved December 17, 2001)
AN ACT
To require that various public corporations and other government entities execute their advances and repayment pledges and restructure and refinance their debts with the Government Development Bank for Puerto Rico, subject to the limitation that the annual aggregate principal and interest payments and other payments related to such debts, shall not exceed two hundred twenty-five million (225,000,000) dollars; to authorize the budget appropriations needed to honor the principal and interest payments and other payments related to such debts; to prohibit the Government Development Bank for Puerto Rico from granting loans to any government entities whose repayment depends on future budget appropriations from the General Fund without said appropriations having been approved by the Legislature, subject to certain exceptions; and to amend Act No. 12 of June 12, 1992, Act No. 41 of July 19, 1997, Act No. 189 of September 5, 1996, Act No. 95 of June 8, 2000, and Act No. 179 of August 18, 2000.
STATEMENT OF MOTIVES
One of the most important functions of the Government Development Bank for Puerto Rico, hereinafter the Government Development Bank, is to provide interim financing to the Commonwealth of Puerto Rico, its agencies and public corporations while they negotiate permanent financing through capital markets. Furthermore, the Government Development Bank acts as the financial reserve of the Commonwealth of Puerto Rico, providing liquidity in emergencies.
In compliance with this function, the Government Development Bank has granted advances or financing to several departments, agencies and
public corporations, hereinafter government entities of the Commonwealth of Puerto Rico, to cover or finance their capital improvements and operational deficits, among other purposes. The poor financial situation of said government entities required that the Government Development Bank provide them with financial aid as a temporary measure, although there was no source of repayment for most of these financings.
The Department of Health is one of the departments that has obtained advances from the Government Development Bank. In addition to the loans granted to the Health Services and Facilities Administration (AFASS, Spanish acronym), the payment of which became the responsibility of the Department of Health upon the elimination of AFASS, the Department of Health obtained an advance from the Bank of two hundred fifty million (250,000,000) dollars to defray the operating costs of its public health facilities. These advances to cover the operating costs were essential to continue the operations of our public health facilities so that they would remain accessible to our people, particularly to low-income families and communities.
In order for the Government Development Bank to continue operating effectively, it is imperative that it maintain its liquid capital. The practice of approving financing without a repayment source permanently encumbers the capital of the Government Development Bank, reduces its liquidity, and jeopardizes its financial solidity and its credit classification.
By June 30, 2001, the Government Development Bank had maintained in its portfolio advances or loans to, or obligations and repayment pledges from government entities with an estimated balance of two billion, four hundred forty-three million, five hundred and seventy-eight thousand (2,443,578,000) dollars. Budget appropriations had not been approved for
many of these. In order to establish an orderly repayment mechanism, consolidate those budget appropriations previously approved for the repayment of some of these loans and to approve the repayment source for those advances, pledges, loans and obligations that lacked a repayment source, it is convenient that the Legislature require said government entities to execute their obligations and restructure and refinance (more than once, if necessary) these obligations or loans, and that for a thirty (30)-year term, it annually appropriate, in the General Budget of the Commonwealth of Puerto Rico, the amounts needed to amortize the principal and pay the interest on, and amortize any other payment related to, these obligations and loans, provided the aggregate annual appropriation for the payment of the principal, the interest and any other amount concerning all these debts not exceed two hundred twenty-five million (225,000,000) dollars. By establishing a fixed and reliable repayment source, this Act shall allow the Government Development Bank to place these obligations and loans with investors, be it directly or through the issue of bonds by the Bank or by the Puerto Rico Public Financing Corporation, among others. Through these placements or bond issues, the Government Development Bank may be able to rescue its capital and increase its liquidity and financial solidity.
Furthermore, for the purpose of protecting the liquidity and financial solidity of the Government Development Bank, this Act prohibits the Government Development Bank from granting future loans to departments, agencies or public corporations of the Commonwealth whose repayment source consists of future budget appropriations from the General Fund without said budget appropriations having been approved by the Legislature. However, as an exception to this prohibition, this Act allows the Government Development Bank, with the written authorization of the
Governor and the Office of Management and Budget, to grant loans, from time to time, of up to one hundred million (100,000,000) dollars to departments, agencies or public corporations of the Commonwealth of Puerto Rico, whose repayment source consists of budget appropriations from the General Fund which have not been approved by the Legislature. The proposals for the appropriation of funds for the repayment of these loans shall be submitted for the consideration of the Legislature during the next legislative session following the approval of the loan. Once the budget appropriation has been approved, the amount of said loan shall be included in the one hundred million (100,000,000)-dollar limit of the total number of loans lacking a repayment source that the Bank may have in its portfolio from time to time. As another exception to the general prohibition and to the one hundred million (100,000,000)-dollar limit, this Act allows the Government Development Bank, under any circumstances, to grant loans to those government entities that are unable to honor the payment of the principal and the interest on their obligations towards bond holders or financial entities other than the Government Development Bank, in order to protect the credit of the Commonwealth of Puerto Rico and its government dependencies, and to grant any type of loan to the Secretary of the Treasury.
BE IT ENACTED BY THE LEGISLATURE OF PUERTO RICO:
Section 1.-It is hereby required that all departments, agencies, instrumentalities and public corporations of the Commonwealth of Puerto Rico identified in Column A of Section 2 of this Act and their successors, negotiate and execute with the Government Development Bank for Puerto Rico, the agreements, promissory notes or finance contracts necessary to establish, recognize and formalize, restructure and/or refinance the advances, repayment pledges, obligations and/or loans of said government institutions
with the Government Development Bank itemized in Column B of Section 2 of this Act. The effectiveness of said agreements, promissory notes or finance contracts shall be retroactive to July 1, 2001. Said advances, pledges, obligations and loans may be restructured and refinanced more than once, if necessary. Each of these government entities are further authorized to pay or to include as part of the principal on their advances, pledges, obligations and/or loans all expenses related to said restructuring and/or refinancing, including, but without it being understood as a limitation, the expenses incurred by said government entity or the Government Development Bank to carry out said restructuring or refinancing or when disposing of said obligations and loans, the expenses concerning any bond issue relative to the placement of said obligations and loans, including the bonds of the Puerto Rico Public Financing Corporation, the amounts that may be necessary to deposit in the reserve accounts established to assure the repayment of any of said bonds, the premiums for any financial guarantee, bond insurance or letter of credit obtained, and all interest accrued to the date of the approval of this Act. Said restructured or refinanced obligations shall provide that, in addition to the payment of the principal and the interest, these government entities are under the obligation to make the payments that are necessary pursuant to the interest rates swaps related to Puerto Rico Public Financing Corporation bonds, payments for termination or breach of investment contracts or interest rates swaps related to said bonds, payments required to be deposited in any reserve account for the benefit of said bonds, payments of redemption premiums on said bonds, payments to any trustee of said bonds, payments to any provider of a letter of credit or liquidity facility for the benefit of all or part of said bonds and any other payments payable under said bonds or pursuant to the trust
agreement for said bonds. The total annual payment of the principal, the interest and any other payment under said advances, pledges, obligations and loans shall not exceed two hundred twenty-five million (225,000,000) dollars.
Section 2.-The advances, pledges, obligations and/or loans that may be executed, restructured and/or refinanced and the estimated amounts thereof to June 30, 2001, including accrued interest to be paid up to June 30, 2001, and the debt service for the Fiscal Year 2002, including therein the interest to be accrued from July 1, 2002 (effective date of the restructuring), are itemized in Columns B, C and D, respectively, of this Section. The balance thereof and the annual payments corresponding to the principal and the interest and other expenses allowed under Section 1 to be paid or added to the principal may be greater or lesser than the amounts that appear in Columns C and D, respectively, of this Section, provided the total annual payment of the principal, the interest and any other payment under said obligations does not exceed two hundred and twenty-five million (225,000,000) dollars. For those loans or obligations in process of being disbursed, the Government Development Bank shall establish segregated accounts in which the amounts pending disbursement shall be deposited for their future disbursement, without affecting the limit established by this Act regarding the maximum amount of the payment of the principal, the interest and other payments on all these debts.
| A | B | C | D | |
|---|---|---|---|---|
| Amount to June 30, 2001 | Debt Service Fiscal Year 2002 (000 omitted) | |||
| Entity | Line of Credit/Loan | (000 omitted) | ||
| 1. | Land Administration | No. 2-20-1 for $10,000,000 | $3,480 | $871 |
| 2. | Health Facilities and Services Administration/ Department of Health | No. 2-16-8 for $204,000,000 | 248,567 | 22,080 |
| No. 2-16-9 for $250,000,000 | 290,807 | 25,832 | ||
| No. 2-16-7 for $332,000,000 | 217,210 | 19,294 | ||
| 3. | Department of Health | Advance for 250,000,000 approved by GDB (BGF) Resolution No. 7576 of March 21, 2001 | 250,000 | 22,207 |
| 4. | Infrastructure Financing Authority | No. 2-69-3 for $10,000,000 (RC 725/2000) | 10,333 | 1,540 |
| 5. | Land Authority | No. 2-21-12 for $8,000,000 | 12,733 | 1,898 |
| 6. | Housing Bank | No. 2-53-10 for $20,000,000 | 18,386 | 2,740 |
| 7. | Tourism Company/ Hotel Development Corporation | No. 2-49-2/4 for $165,200,000 | 125,000 | 11,103 |
| 8. | Sugar Corporation | No. 2-32-29 for $112,500,000 | 107,938 | 9,588 |
| 9. | Secretary of the Treasury | No. 2-25-4 for $23,587,277 | 29,573 | 4,407 |
| Budget Deficiency of Fiscal Year 2001 | 268,000 | $-0-$ | ||
| Repayment Pledge related to the Sale of Tax Debts | 103,222 | 15,383 | ||
| 10. | Solid Waste Authority | No. 2-23-8 for $21,400,000 | 21,745 | 3,241 |
| 11. | National Guard Institutional Trust | No. 2-48-1 for $6,500,000 | 3,445 | 863 |
| 12. | Puerto Rico Police | No. 4-02-01 for $20,500,000 | 22,171 | 3.304 |
| 13. | Aqueduct and Sewer Authority | No. 2-14-21 for $22,060,000 | 2,468 | 618 |
| No. 2-14-27/28 for $150,000,000 | ||||
| (Act 95/2000) | 158,344 | 14,065 | ||
| No. 2-14-25/26 for $180,000,000 | ||||
| (Act 179/2000) | 177,622 | 15,778 | ||
| No. 2-14-20 for $30,000,000 | ||||
| (Act 179/2000) | 32,821 | 4,891 |
| $\underline{ ext { A }}$ | $\underline{ ext { B }}$ | $\underline{ ext { C }}$ | $\underline{ ext { D }}$ |
|---|---|---|---|
| Amount to June 30, 2001 (000 omitted) | Debt Service Fiscal Year 2002 (000 omitted) | ||
| Entity | Line of Credit/Loan | ||
| No. 2-14-22 for $32,000,000 (Act 179/2000) | 37,124 | 5,533 | |
| No. 2-14-32 for $68,000,000 (Act 179/2000) | 70,316 | 10,479 | |
| No. 2-14-19 for $100,000,000 | 103,135 | 9,161 | |
| No. 2-14- for $112,000,000 | |||
| (Collective Bargaining Agreement) | 27,400 | 4,083 | |
| 14. Land Authority | Several Loans* | 101,738 | 9,037 |
| $217,996 |
⁰Section 3.-The Commonwealth of Puerto Rico shall honor, through budget appropriations made by the Legislature in the operating budgets for each fiscal year for the next thirty (30) years, beginning with fiscal year 2001-2002, the payments of the principal, the interest and any other payment allowed in Section 1 concerning the advances, pledges, obligations and loans identified in Section 2 of this Act, as they are restructured and/or refinanced pursuant to the provisions of this Act. Pursuant to this purpose, the Director of the Office of Management and Budget shall include in the operating budgets of the Commonwealth of Puerto Rico submitted annually by the Governor of the Commonwealth of Puerto Rico to the Legislature, beginning with the budget for fiscal year 2001-2002, the amount needed to meet the payment of the principal, the interest and any other payment related thereto. The budget appropriation may not exceed two hundred twenty-five million
⁰: * Includes several financings granted: No. 2-21-2 for $493,242.87, No. 2-21-7 for $17,216,155.85, No. 2-21-9 for $28,703,126.72, No. 2-21-10 for $2,549,877.39, No. 2-21-13 for $8,983,923.82, No. 2-21-14 for $19,117,909.1, No. 2-21-16 for $8,295,531.94, No. 2-21-111 for $16,008,077.38, No. 2-21-18 for $369,717.13.
(225,000,000) dollars each year, and said annual appropriation shall be made for the term that is necessary to settle the same, but said term shall not exceed thirty (30) fiscal years. The budget appropriations for the payment of the principal and the interest on the loan related to the budget deficiency for fiscal year 2001, which is included in Section 2, shall be included in the operating budget beginning with fiscal year 2002-2003.
Section 4.-The budget appropriations provided under this Act shall be used solely for the payment of these advances, pledges, obligations and loans and may not be used for other purposes, nor shall they be subject to claims from other creditors of the government entity.
Section 5.-The Secretary of the Treasury is hereby authorized to advance the funds needed for the payment of the principal, the interest and any other payment related to said advances, pledges, obligations and loans. Any amount advanced shall be reimbursed to the Secretary of the Treasury through the budget appropriations authorized under this Act.
Section 6.-The Secretary of the Treasury shall deposit in a special account in the Government Development Bank, or in any other banking entity, the amount needed to meet the payment of the principal, the interest and other payments allowed by this Act, prior to each date on which the principal and the interest are to be paid.
Section 7.-The Government Development Bank may sell, transfer or otherwise dispose of any advance, pledge, obligation or loan covered by the provisions of this Act to any financial institution and/or subsidiary of the Government Development Bank, or dispose thereof in the capital markets.
Section 8.-After the effective date of this Act, the Government Development Bank is hereby prohibited from granting a loan to any government entity, other than a subsidiary of the bank, whose repayment
source, as determined by the Board of Directors of the Government Development Bank, consists of future budget appropriations from the General Fund, without said budget appropriations having been approved by the Legislature of Puerto Rico. Notwithstanding this prohibition, the Government Development Bank may, from time to time, lend and maintain in its portfolio up to one hundred million (100,000,000) dollars in one or more loans whose repayment source consists of future budget appropriations from the General Fund without these having been approved by the Legislature, provided the Bank obtains the written approval of the Governor and the Director of the Office of Management and Budget. The budget appropriation proposals for the repayment of said loans shall be submitted to the Legislature for its consideration in the next legislative session following the granting of the loan. Once the budget appropriation has been approved, the amount of said loan shall be included in the one hundred million (100,000,000)-dollar limit of the total number of loans lacking an approved repayment source that the Bank may have in its portfolio, from time to time. Notwithstanding the prohibition that appears in the first sentence of this Section and the one hundred million (100,000,000)-dollar limitation that appears in the second sentence of this Section, the Government Development Bank is hereby authorized, under any circumstances, to grant loans to any government entity that is unable to honor the payment of the principal or the interest on its obligations towards bond holders or financial entities, other than the Government Development Bank, and to grant any type of loan to the Secretary of the Treasury, pursuant to Act No. 1 of June 26, 1987, as amended, and to Act No. 183 of July 23, 1974, as amended, and any other legislation approved to authorize the Secretary of the Department of the Treasury to borrow for similar purposes.
Section 9.—Acts No. 12 of June 12, 1992, No. 41 of July 19, 1997, No. 189 of September 5, 1996, No. 95 of June 8, 2000, and No. 179 of August 18, 2000, are hereby amended to the degree that they may be in conflict with the provisions of this Act, in order to prevent the duplication of the payment source and in conflict with the terms and conditions established in this Act.
Section 10.—Except as provided in Section 9, this Act shall not be construed to repeal or amend any other previous Act of the Legislature of Puerto Rico authorizing any government entity to execute loans with the Government Development Bank.
Section 11.—Any person who grants financing payable from the General Fund of the Commonwealth of Puerto Rico without the authorization established herein shall be personally liable and in violation of this Act. To such effects, said person shall be guilty of a felony entailing penalties of up to three (3) years of imprisonment.
Section 12.—If any competent court finds any item, paragraph or Section of this Act to be unconstitutional, such finding shall not impair the effectiveness of the remainder thereof as approved.
Section 13.—This Act shall take effect immediately after its approval.
February 26, 2002
Rolando Quevedo-Motta, Esq., Director of the Office of Legislative Services of the Legislature of Puerto Rico, hereby certifies to the Secretary of State that he has duly compared the English and Spanish texts of Act No. 164 (H.B. 1932) of the 1st Session of the $14^{ ext {th }}$ Legislature of Puerto Rico, entitled:
AN ACT to require that various public corporations and other government entities execute their advances and repayment pledges and restructure and refinance their debts with the Government Development Bank for Puerto Rico, subject to the limitation that the annual aggregate principal and interest payments and other payments related to such debts, shall not exceed two hundred twenty-five million (225,000,000) dollars; etc., and finds the same are complete, true and correct versions of each other.