Esta ley crea el Fideicomiso de Financiamiento Empresarial para Comunidades Especiales (FFECE), adscrito al Banco de Desarrollo Económico, con el fin de proveer financiamiento a iniciativas empresariales de individuos, familias y grupos en comunidades de bajos ingresos. Establece su estructura, funciones de la Junta de Directores y fuentes de fondos, buscando fomentar la creación de empleos y reducir problemas sociales asociados al desempleo crónico en estas comunidades.
(Approved September 23, 2004)
To create the Special Communities Business Financing Trust Act (FFECE, in Spanish), attached to the Economic Development Bank, to draft regulations to govern its operations and to coordinate the execution thereof.
The financing of production activities in the economy of Puerto Rico has been characterized by the crucial participation of foreign capital, particularly originating from the United States, while internal sources of capital funds have been relatively scarce. This reality does not respond to the absence of a Puerto Rican entrepreneurial class or of other sectors, such as cooperativism, which have contributed to the development of our economy, but rather to the institutional framework in effect since mid $20^{ ext {th }}$ Century, which has favored foreign capital.
The closing of manufacturing businesses, which depend almost totally on this foreign capital, as well as the process of deceleration which Puerto Rican economy has gone through during the past months, require innovative measures that establish the foundation for the creation of unconventional job sources. In view of the state of deceleration currently faced by Puerto Rican economy, it is the duty of the Legislature to facilitate the creation of innovative production initiatives, especially those originating from sectors that, at present, do not have the mechanisms for the channeling of their skills and talents.
In several countries of the modern world - especially developed nations of middle income - experience confirms that very successful efforts have been made
in the past two decades that have resulted in the creation of many individual, family, community and cooperative businesses in different sectors of production (in both agriculture and manufacturing) and of services of a different nature. In all cases, the creation of businesses has resulted in thousands of jobs and the consequent reduction of the unemployment rate in the workforce of the region or municipality favored by the government initiatives that were set into motion. On the other hand, the increase in economic activity has indeed contributed to the reduction of the social problems associated with chronic unemployment situations.
Puerto Rico does not have a financial and tax incentives plan directed to the development of entrepreneurial skills of our low-income population. In spite of the private banking programs (especially those directed to small and middle businesses, better known as PYMES, Spanish acronym) and the efforts of some government agencies, the financing of projects initiated in our low-income wards is practically null.
The Legislature recognizes the negotiations conducted by the Office of the General Coordinator for Socio-Economic Financing and Self-Management of Special Communities, created by Act No. 1 of March 1, 2001, with the so called special communities that constitute the most impoverished urban and rural sectors of the Island. However, in order to take a definite step toward the construction of a more promising future for these communities, financial and tax incentives that allow for the development of entrepreneurial, technical and artisanry techniques that abound in most of the low-income urban and rural wards must be added to the referred negotiations.
The purpose of this measure is to establish the institutional foundations for the creation of a permanent fund directed to the financing of economic activities that arise as entrepreneurial initiatives by individuals, families and groups of families in the so called special communities. For such purposes, the legislation introduced
herein directs the Economic Development Bank to create a Special Communities Business Financing Trust and to establish the pertinent regulations.
Section 1.- This Act shall be known as the "Special Communities Business Financing Trust Act."
Section 2.- The public fund trust to be known as the "Special Communities Business Financing Trust," is hereby created, with independent juridical personality, nonprofit, irrevocable and with perpetual existence, attached to the Economic Development Bank. The funds of the Trust shall be maintained separate from other funds in the custody of the Bank and shall be kept in the bank or wherever the Board of Directors of the Trust establishes pursuant to the powers granted to it by this Act.
Section 3.- The powers of the Special Communities Business Financing Trust shall be exercised by a Board of Directors composed of nine (9) members; to wit, the Secretary of the Department of Economic Development, the Director of the Office for the Financing and Self-Management of Special Communities, the Director of the Cooperative Development Administration, the Secretary of the Department of Labor and Human Resources, the President of the Planning Board, the Administrator of the Regulations and Permits Administration (ARPE, Spanish acronym), two (2) community leaders who reside in special communities and not members of any other government board of directors and one (1) representative of the public interest. The latter members shall be appointed by the Governor for a term of five (5) years with the advice and consent of the Senate of the Commonwealth of Puerto Rico and shall remain in office until their successors are appointed. In the case of resignation or vacancy in any of these three (3) designations, the substitute shall be appointed in the same manner, but only to hold the position for the remainder of the term of the substituted member. Only the
Board members who are not public employees shall be entitled to receive compensation, which shall consist of a basic per diem equal to that established for members of the Legislature pursuant to Act No. 97 of June 19, 1968, as amended.
Section 4.- The Board of Directors shall have the following duties:
(a) To act as the governing entity of the Trust.
(b) To draft all pertinent regulations to govern the internal procedures of the Board and to comply with the purposes of this Act within sixty (60) days of its establishment.
(c) To authorize the accounting and disbursements of funds and other administrative operations of the Trust.
(d) To determine the eligibility of the enterprises to be financed with the funds of the Trust pursuant to the directives established in this Act and the regulations drafted by the Board to such effects.
(e) To appoint an Executive Director and assign by regulation the powers, duties and responsibilities that are compatible with the purposes of this Act.
(f) To delegate any faculty or power of the Board, - with the exception of the approval, amendment or revocation of regulations - to the Executive Director, to a Committee composed of Board members or designated thereto pursuant to the regulations thereof.
(g) To contract the use of the support personnel it deems necessary to carry out its functions with the Economic Development Bank.
(h) To establish work plans geared toward the creation of businesses with, at least, some of the following characteristics:
The Board of Directors shall regulate the quantitative criteria it deems pertinent to comply with the objectives of these work plans, taking into consideration giving priority to those businesses that shall impact the communities that have the worse poverty indicators.
(i) To negotiate with the Special Communities Perpetual Trust the conditions for receiving funds from said entity, obtain securities for loans, receive loans and perform all financial transactions that are compatible with the laws of Puerto Rico and the purposes of this Act.
(j) To establish the pertinent agreements with the Office of the General Coordinator for Special Communities Socioeconomic Financing and Self Management to receive information on the status of these communities periodically, as well as comments on the priority that should be given to businesses that apply for financing under the provisions of this Act. The agreement or the regulation to be established shall allow the Office to evaluate the financing applications without limiting the Trust for the time that it may take or for its particular opinion of them.
(k) To enter into contracts with any other Government agency for matters pertinent to the processing of the granting of financing to businesses that comply with the purposes of this Act. (1) To exercise all the powers and faculties conferred by the law and necessary to comply with the provisions of this Act.
Section 5.- The Special Communities Business Financing Trust, in its capacity as trustee, shall have the authority to sue and be sued as a trustee and in representation of the Trust created by this Act.
Section 6.- The Special Communities Business Financing Trust, in its capacity as trustee, shall have the faculties and powers expressly conferred upon the trustees in Sections 834 to 874, inclusive, of the Civil Code of Puerto Rico.
Section 7.- The Trust, whose creation is authorized by this Act, shall be entitled to receive public and private funds through the issue and sale of any instrument that serves as evidence of participation in the investment, pursuant to the regulations established pursuant to this Act.
Section 8.- All the exemptions granted by Act No. 176 of August 11, 1995, to the Public Funds Investment Trusts shall apply to this Trust.
Section 9.- The authorization contained in Section 9 of Act No. 176 of August 11, 1976, granted to all public instrumentalities mentioned therein in order for them to invest in the Trust, shall apply to this Trust.
Section 10.- The Trust shall receive funds from, among others, the Fund for the Socioeconomic Development of Special Communities of Puerto Rico, investments, reinvestments and contributions from individuals, private or public local, state, and international entities, as well as from the Legislature.
Section 11.- The Trust created through this Act shall render a report every one hundred eighty (180) days after the approval of this Act in which, in addition to the financial report and the financial statement, it shall report the financing requests
received, those that have been approved or denied and those in which there is a conflict between the decision made by the Trust and the recommendation of the Office of the Coordinator for the Socioeconomic Financing and Self-management of Special Communities. It shall identify the communities that shall be potentially impacted and, when the information allows for it, the jobs generated thereby. Said report shall be made public and shall be presented to the Governor and the Legislature.
Section 12.- If any section, subsection, clause, paragraph, subparagraph or any other part of this Act were declared unconstitutional by a court with competent jurisdiction, said ruling shall not affect, impair or invalidate the remaining provisions thereof and its effect shall be limited to the section, subsection, clause, paragraph, subparagraph or part of this Act that has been ruled unconstitutional.
Section 13.- This Act shall take effect as of July 1, 2005.
I hereby certify to the Secretary of State that the following Act No. 457 (S.B. 2361) of the $7^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to create the Special Communities Business Financing Trust Act (FFECE, in Spanish), attached to the Economic Development Bank, to draft regulations to govern its operations and to coordinate the execution thereof, has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $15^{ ext {th }}$ of April of 2006.
Francisco J. Domenech Director