After prolonged discussions, and a threat from Governor Alejandro Garcia Padilla to shut down public transport services, both Puerto Rico's House of Representatives and Senate have now approved a controversial 68 percent hike in oil tax to stop a possible worsening of the territory's debt problems. The increased revenues, worth some USD178m per year, will be used by Puerto Rico's Infrastructure Financing Authority to assume and refinance the debt of the Highways and Transportation Authority, which is in financial difficulty, and support the issue up to USD2.9bn in bonds. The territory's oil excise tax will rise by USD6.25 per barrel, to USD15.50 per barrel, from March 2015. The delay to the increase has been agreed to give time for the Government and lawmakers to look for other replacement revenue sources that could be less of a burden on families and small businesses. In addition, Puerto Rico's Senate has imposed other conditions on its approval. In particular, an 8.5 percent interest rate cap has been placed on the proposed bond sale, an inflation link to the oil tax rate has been eliminated, and the rate increase has been linked to progress on tax reform in the territory. The Treasury Department is now intended to complete a study on a tax reform framework before January 31, 2015. Those reforms could reduce Puerto Rico's dependence on the collection of direct taxes by, for example, raising individual income tax thresholds and transforming the present sales and use tax into a broad-based value added tax.
by Mike Godfrey
Puerto Rico Finally Approves Oil Tax Hike
Thursday, December 11, 2014
Friday, December 05, 2014
U.S. Economy Added 321,000 Jobs in November; Unemployment Rate Is 5.8% - NYTimes.com
Government statisticians also revised upward the number of jobs added in September and October by 44,000, another good sign. Significantly, average hourly earnings surged 0.4 percent in November, twice what economists had been expecting and a sign the healthier economy is finally translating into wage gains for ordinary workers. Over the last 12 months, however, earnings are up only 2.1 percent.
Wall Street had been expecting payrolls to grow by 230,000 in November, with the unemployment rate remaining unchanged. November’s gain was the largest monthly jump in payrolls in nearly three years.
Despite the deep economic frustration many Americans feel, evident in everything from public opinion surveys to water cooler chats to last month’s Congressional elections, the American economy has made significant progress this year. In November 2013, for instance, the unemployment rate was 7 percent, and the jobless rate five years ago this month was 9.9 percent.
A Federal Reserve survey of economic conditions across the country released Wednesday reported healthier consumer spending in many regions, likely as a result of lower gas prices, as well as gains in hiring.
Last month, average gasoline prices in the United States fell below $3 a gallon for the first time since 2010, amid a global plunge in crude prices. Crude oil has kept dropping since then, to about $66 a barrel, which suggests prices at the pump have further to drop.
As of Monday, gas prices in the United States averaged $2.77 a gallon, according to the Energy Information Administration, compared with $3.26 in December 2013. If gas prices stay where they are, the typical household will save roughly $600 over the next 12 months.
The overall expansion of the economy, as measured by the annual rate of growth in gross domestic product per quarter, has also been picking up steam.
In late November, the Commerce Department revised upward its estimate of the growth rate in the third quarter to 3.9 percent from an initial figure of 3.5 percent. Output rose at annual rate of 4.6 percent in the second quarter, a snapback from the contraction in the first few months of the year.
Wall Street, too, has been surging, with stocks hitting highs repeatedly in recent weeks.
Finally, the section of the economy that helped lead the way down — housing — has made an impressive recovery, at least in terms of home values, if not new construction.
The real estate sector could be dealt a setback if the Federal Reserve raises interest rates next year, as is widely expected, but in more affluent areas in particular, surging home prices have already helped restore much of the confidence that was shattered in the financial crisis of 2008 and the deep recession that followed.
So why the persistent gloom, not to mention anger?
Part of the problem is that even though employment is back above pre-recession levels — the eight million jobs lost between 2008 and 2010 have been more than made up since then — millions of new workers have joined the work force over that period.
What’s more, wage gains for the vast majority of Americans who kept their jobs throughout the downturn and then the recovery been very modest. The 2 percent wage increase over the last year is barely enough to keep up with inflation or rising costs for many services, like education, insurance and health care.
For wages to show meaningful gains over a sustained period of time, as was the case in the 1990s, the unemployment rate would likely have to drop below 5 percent, said Diane Swonk, chief economist at Mesirow Financial in Chicago.
For some highly skilled workers in sectors like technology and finance, wages have been rising sharply, as have stock holdings and 401(k) portfolios.
But unlike in the 1990s, the gains for the broad mass of middle-skilled and low-skilled workers have been scant, Ms. Swonk said.
“Some boats were lifted up more than others in the 1990s, but all boats did go up some back then,” she said. “That hasn’t been the case lately.”
U.S. Economy Added 321,000 Jobs in November; Unemployment Rate Is 5.8%
Thursday, December 04, 2014
Royal Caribbean's new mega ship to visit Puerto Rico
Royal Caribbean International's newest mega cruise ship, Quantum of the Seas, will visit Puerto Rico for the first time this week with some 5,000 people aboard.
Quantum of the Seas sailed from Cape Liberty, New Jersey, earlier this week and will stop at the port of San Juan for six hours late afternoon Thursday, Royal Caribbean representative Chase Arlen told Efe.
The vessel, launched last month, has 4,160 double-staterooms and an additional 794 rooms.
Though it is Royal Caribbean's latest addition, Quantum of the Seas is not the company's largest cruise ship, as Oasis of the Seas and Allure of the Seas each have around 6,000 staterooms.
After docking in Puerto Rico, the ship will sail on to St. Martin, Martinique, Barbados and St. Kitts and Nevis, before returning to New Jersey on Dec. 12.
The arrival of Quantum of the Seas coincides with the opening of dock number 3 in Old San Juan, designed to receive mega ships.
In November 2013, Gov. Alejandro Garcia Padilla announced that Royal Caribbean had scheduled nine visits to Puerto Rico for the 2014-2015 season, bringing more than 33,000 people to the Caribbean island. EFE
Royal Caribbean's new mega ship to visit Puerto Rico
Wednesday, December 03, 2014
Banco Popular De Puerto Rico Recognized as “Bank of the Year” by Leading Magazine “The Banker”
SAN JUAN, Puerto Rico--(BUSINESS WIRE)--Popular, Inc. (NASDAQ: BPOP) today announced its banking subsidiary, Banco Popular de Puerto Rico, received the prestigious “Bank of the Year Puerto Rico for 2014” award from The Banker, an international banking magazine published by The Financial Times. The Banker is read in 180 countries and was founded in 1926.
The awards are the industry’s most widely used index of global banking, and are internationally recognized as the definitive guide to the soundness, strength and profitability of banks, according to The Banker. Banks are assessed by Tier 1 capital, with secondary rankings by assets, capital/asset ratio, real profit growth, profit on average capital, and return on assets.
Richard L. Carrión, Chairman and CEO of Popular, Inc. said, “We are honored to be recognized by The Banker for the significant strides Banco Popular has made in generating strong revenue growth and securing operational efficiencies in challenging economic times. The core values that have guided the bank for over 120 years helped us chart a course on which we aspire to continue. We are proud to share this award with our employees, customers, shareholders and the communities we are privileged to serve.”
The award from The Banker is based on several key accomplishments. In 2013, the price of the stock of Popular, Inc. rose 38%, the commercial loan portfolio increased by 3%, the bank repaid $935 million in outstanding TARP funds, and U.S. operations consolidated into two key regions, New York/New Jersey and South Florida. Also considered in the award, were the thousands of hours that Popular employees devoted to community service in 2013, and the nearly $2 million donated to non-profit organizations, 80% of which were in education, and 20% focused on economic development.
Banco Popular de Puerto Rico is the leading financial institutions in the following categories: credit cards with 52% of the market, 40% in lending, 32% in mortgage, 38% in commercial and construction lending, 31% in personal loans, and 37% in overall lending. The company is also recognized for its online banking platform, “Mi Banco Online” and mobile app, “Mi Banco Mobile”, leading digital platforms in Puerto Rico.
About Popular, Inc.
Founded in 1893, Popular, Inc. (NASDAQ: BPOP) is the leading banking institution by both assets and deposits in Puerto Rico and ranks among the top 50 U.S. banks by assets. In the United States, Popular has established a community-banking franchise that does business as Popular Community Bank, providing a broad range of financial services and products, with branches in Florida, New York and New Jersey.
For more information, visit http://www.popular.com.
Teruca Rullán, 787-281-5170 or 917-679-3596 (mobile)
Senior Vice President, Corporate CommunicationsAward Is Internationally Recognized as the Definitive Guide to the Soundness, Strength and Profitability of Banks; BPPR Named 2014 Puerto Rico Bank of the Year
Banco Popular De Puerto Rico Recognized as “Bank of the Year” by Leading Magazine “The Banker”
The Bank of the Year Awards, now in its 15th year, recognizes the top financial institutions in the world. Winners were announced at an exclusive event at The Intercontinental Hotel, Park Lane, London on November 27.“Bank of the Year Puerto Rico for 2014”
The awards are the industry’s most widely used index of global banking, and are internationally recognized as the definitive guide to the soundness, strength and profitability of banks, according to The Banker. Banks are assessed by Tier 1 capital, with secondary rankings by assets, capital/asset ratio, real profit growth, profit on average capital, and return on assets.
Richard L. Carrión, Chairman and CEO of Popular, Inc. said, “We are honored to be recognized by The Banker for the significant strides Banco Popular has made in generating strong revenue growth and securing operational efficiencies in challenging economic times. The core values that have guided the bank for over 120 years helped us chart a course on which we aspire to continue. We are proud to share this award with our employees, customers, shareholders and the communities we are privileged to serve.”
The award from The Banker is based on several key accomplishments. In 2013, the price of the stock of Popular, Inc. rose 38%, the commercial loan portfolio increased by 3%, the bank repaid $935 million in outstanding TARP funds, and U.S. operations consolidated into two key regions, New York/New Jersey and South Florida. Also considered in the award, were the thousands of hours that Popular employees devoted to community service in 2013, and the nearly $2 million donated to non-profit organizations, 80% of which were in education, and 20% focused on economic development.
Banco Popular de Puerto Rico is the leading financial institutions in the following categories: credit cards with 52% of the market, 40% in lending, 32% in mortgage, 38% in commercial and construction lending, 31% in personal loans, and 37% in overall lending. The company is also recognized for its online banking platform, “Mi Banco Online” and mobile app, “Mi Banco Mobile”, leading digital platforms in Puerto Rico.
About Popular, Inc.
Founded in 1893, Popular, Inc. (NASDAQ: BPOP) is the leading banking institution by both assets and deposits in Puerto Rico and ranks among the top 50 U.S. banks by assets. In the United States, Popular has established a community-banking franchise that does business as Popular Community Bank, providing a broad range of financial services and products, with branches in Florida, New York and New Jersey.
For more information, visit http://www.popular.com.
Contacts
Popular, Inc.Teruca Rullán, 787-281-5170 or 917-679-3596 (mobile)
Senior Vice President, Corporate Communications
Banco Popular De Puerto Rico Recognized as “Bank of the Year” by Leading Magazine “The Banker”
Puerto Rico's House passes bill to increase crude oil tax
Puerto Rico's House of Representatives passed a bill to increase a tax on crude oil by around 68 percent on Tuesday, in a move that helps facilitate a crucial bond sale of up to $2.9 billion.
After more than a week of political wrangling, the House passed the bill with 26 votes in favor, 18 against, and one abstention, according to the House of Representatives official report. Six representatives did not vote.
Puerto Rico's House passes bill to increase crude oil tax
After more than a week of political wrangling, the House passed the bill with 26 votes in favor, 18 against, and one abstention, according to the House of Representatives official report. Six representatives did not vote.
Puerto Rico's House passes bill to increase crude oil tax
Tuesday, December 02, 2014
Puerto Rico House Plans Vote on $2.9 Billion Borrowing Plan
Puerto Rico’s House of Representatives is set to vote as soon as tomorrow on a $2.9 billion borrowing plan that would bolster the Government Development Bank and fund public transportation.
House members recessed until tomorrow after discussing amendments to a bill that would raise the junk-rated commonwealth’s petroleum tax to $15.50 per barrel, from $9.25, with some of the additional revenue going to back bonds.
Lawmakers are debating whether the increase would take effect at the same time as an anticipated tax overhaul in 2015 and how the steeper levy would be enforced, said Danny Hernandez, a spokesman for Jaime Perello Borras, the chamber’s president. Approval in the House would send the measure to the Senate, Hernandez said.
“Some of them are asking about when the tax reform is going to be implemented,” Hernandez said in a telephone interview from San Juan.
The bill would allow the Infrastructure Financing Authority to sell as much as $2.9 billion of debt backed by oil-tax revenue. Proceeds would repay $2.3 billion of Highways & Transportation Authority obligations, most of which is owed to the Government Development Bank, which handles debt sales for the U.S. territory.
The proposed tax increase would also support public buses and trains. Governor Alejandro Garcia Padilla had threatened to stop bus and rail service after lawmakers last month failed to pass the bill at the end of the regular legislative session. Last night, the governor called off the planned transit shutdown.
For Related News and Information: Puerto Rico Said to Pick Barclays to Lead $2.9 Billion Offer Puerto Rico Governor to Call Special Session on Bond Bill Puerto Rico Plans Infrastructure Agency Bonds by March 31
To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net
To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, Alan Goldstein
By Michelle Kaske
Puerto Rico House Plans Vote on $2.9 Billion Borrowing Plan
House members recessed until tomorrow after discussing amendments to a bill that would raise the junk-rated commonwealth’s petroleum tax to $15.50 per barrel, from $9.25, with some of the additional revenue going to back bonds.
Lawmakers are debating whether the increase would take effect at the same time as an anticipated tax overhaul in 2015 and how the steeper levy would be enforced, said Danny Hernandez, a spokesman for Jaime Perello Borras, the chamber’s president. Approval in the House would send the measure to the Senate, Hernandez said.
“Some of them are asking about when the tax reform is going to be implemented,” Hernandez said in a telephone interview from San Juan.
The bill would allow the Infrastructure Financing Authority to sell as much as $2.9 billion of debt backed by oil-tax revenue. Proceeds would repay $2.3 billion of Highways & Transportation Authority obligations, most of which is owed to the Government Development Bank, which handles debt sales for the U.S. territory.
The proposed tax increase would also support public buses and trains. Governor Alejandro Garcia Padilla had threatened to stop bus and rail service after lawmakers last month failed to pass the bill at the end of the regular legislative session. Last night, the governor called off the planned transit shutdown.
For Related News and Information: Puerto Rico Said to Pick Barclays to Lead $2.9 Billion Offer Puerto Rico Governor to Call Special Session on Bond Bill Puerto Rico Plans Infrastructure Agency Bonds by March 31
To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net
To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, Alan Goldstein
By Michelle Kaske
Puerto Rico House Plans Vote on $2.9 Billion Borrowing Plan
Bond for Pilot Detained With Cash in Puerto Rico
A judge ordered the release on bond of a pilot and CEO who was arrested in Puerto Rico after authorities found more than $600,000 in undeclared cash inside his plane, his lawyer said Monday.
The federal court judge approved bond of $100,000 for Khamraj Lall while a grand jury decides whether to indict him, defense attorney Rafael Castro Lang said.
Lall, 47, is the CEO Exec Jet Club LLC, a company based in Gainesville, Florida, that has flown the president of his native Guyana on official trips. The businessman will be allowed to leave Puerto Rico and return home to Ringwood, New Jersey under the terms of the bond.
Lall was the co-pilot on a flight to Guyana when U.S. federal agents searched the aircraft during a refueling stop in Puerto Rico. He and the two others on board reported carrying about $12,000, but agents found $620,588 in plastic bags inside the plane, according to court documents.
U.S. law requires amounts over $10,000 to be declared. Lall was jailed on suspicion of intent to evade currency reporting.
Following his arrest in the U.S. island territory, the government of Guyana said in a statement that Lall's company has transported delegations led by President Donald Ramotar on three official trips overseas.
Bond for Pilot Detained With Cash in Puerto Rico
Monday, December 01, 2014
Puerto Rico gov: buses, trains won't be paralyzed
Puerto Rico's governor said late Sunday that lawmakers have reached a last-minute agreement on a proposed oil tax increase and that public transportation will not be paralyzed as previously planned.
"It's the least burdensome solution of all," he said.
The measure also aims to help the government sell up to $2.9 billion in bonds and refinance at least $1 billion in loans made to the Highway and Transportation Authority, which owes $2.2 billion to the island's Government Development Bank, about 21 percent of the bank's loan portfolio.
Prior to Garcia's announcement, Puerto Ricans had been bracing for what officials warned would be an indefinite suspension of buses and trains that serve an estimated 75,000 people. Officials had said that public work projects would be suspended and that the Department of Transportation did not have enough money to pay salaries with the tax boost.
Some agencies within that department operate on quarterly spending plans instead of a yearly budget because of their precarious fiscal situation.
"It's time to face our problems," Garcia said. "We have to tighten the belt on all public corporations without layoffs."
The tax boost is not expected to affect power bills in Puerto Rico, which on average are more than twice those on the U.S. mainland. However, consumers will see an increase in other areas because the private sector will pass along that cost, said economist Gustavo Velez.
The tax increase comes as the island of 3.67 million people struggles through a nearly decade-long economic slump.
Puerto Rico gov: buses, trains won't be paralyzed
The announcement, made in a televised address, followed a flurry of meetings with legislators this weekend regarding a bill that would increase the excise tax on a barrel of crude oil from $9.25 to $15.50 and help generate $178 million a year.
Garcia has said the increase is needed to boost a debt-ridden transportation agency amid bankruptcy concerns."It's the least burdensome solution of all," he said.
The measure also aims to help the government sell up to $2.9 billion in bonds and refinance at least $1 billion in loans made to the Highway and Transportation Authority, which owes $2.2 billion to the island's Government Development Bank, about 21 percent of the bank's loan portfolio.
Prior to Garcia's announcement, Puerto Ricans had been bracing for what officials warned would be an indefinite suspension of buses and trains that serve an estimated 75,000 people. Officials had said that public work projects would be suspended and that the Department of Transportation did not have enough money to pay salaries with the tax boost.
Some agencies within that department operate on quarterly spending plans instead of a yearly budget because of their precarious fiscal situation.
"It's time to face our problems," Garcia said. "We have to tighten the belt on all public corporations without layoffs."
The tax boost is not expected to affect power bills in Puerto Rico, which on average are more than twice those on the U.S. mainland. However, consumers will see an increase in other areas because the private sector will pass along that cost, said economist Gustavo Velez.
The tax increase comes as the island of 3.67 million people struggles through a nearly decade-long economic slump.
Velez said his biggest concern is that the government plans to issue more bonds soon with help from the new tax.
"We cannot keep going further into debt, and we cannot keep approving taxes to artificially maintain corporations alive," he said.
By DANICA COTOPuerto Rico gov: buses, trains won't be paralyzed
Puerto Rico braces for public transport shutdown
Puerto Rico's capital braced for a public transportation shutdown Monday, as lawmakers and administration officials held last-ditch talks to approve a crude oil tax hike that could keep San Juan's metropolitan area buses and commuter train running.
The shutdown would impact an estimated 75,000 people who use the government's Metropolitan Bus Authority, the privately run MetroBus, the Tren Urbano commuter train service as well as a bus rapid transport (BRT) that brings commuters from west of San Juan, Transportation Secretary Miguel Torres Diaz said in written comments provided to Reuters Sunday.
It would impact 2,800 workers who work for the Highway & Transportation Authority as well as private companies contracted to service the private bus line, commuter train and BRT system. It would impact road repairs across the island and halt improvement work about to begin on major highways in San Juan and on the islands west and east coast, he added.
Senate Finance Committee Chairman Jose Nadal Power told Reuters that negotiations between the House leadership and Governor Alejandro Garcia Padilla's office were continuing Sunday.
"The governor's office is working with leaders to come up with a solution tomorrow. Aside from the main topic, the oil tax, we must come up with a solution even it if is temporary,” Nadal Power said. "We are facing an emergency situation in terms of public transportation and a solution must be found."
In what would be a major escalation of Puerto Rico's debt crisis, the local government is planning to shut down its bus and city train service after lawmakers were unable to agree to raise its oil tax by 68 percent to back a $2.9 billion bond sale.
"I depend on the bus for everything," said Mercedes Ortiz, 84, waiting at a bus stop in downtown San Juan to travel to a pharmacy to buy prescription medicine. "I'm against raising the oil tax because it will be a big blow to a lot of people, but I hope the governor does not stop the buses. I don't think its necessary."The shutdown would impact an estimated 75,000 people who use the government's Metropolitan Bus Authority, the privately run MetroBus, the Tren Urbano commuter train service as well as a bus rapid transport (BRT) that brings commuters from west of San Juan, Transportation Secretary Miguel Torres Diaz said in written comments provided to Reuters Sunday.
It would impact 2,800 workers who work for the Highway & Transportation Authority as well as private companies contracted to service the private bus line, commuter train and BRT system. It would impact road repairs across the island and halt improvement work about to begin on major highways in San Juan and on the islands west and east coast, he added.
Senate Finance Committee Chairman Jose Nadal Power told Reuters that negotiations between the House leadership and Governor Alejandro Garcia Padilla's office were continuing Sunday.
"The governor's office is working with leaders to come up with a solution tomorrow. Aside from the main topic, the oil tax, we must come up with a solution even it if is temporary,” Nadal Power said. "We are facing an emergency situation in terms of public transportation and a solution must be found."
Mayors of San Juan, Bayamon, Carolina and Catano were establishing contingency plans for municipal buses and trolleys to provide service for some major routes. Private public cars will also be allowed to pick up passengers on established bus routes. Union and management employees planned a protest outside the capital on Monday morning.
(Reporting by Reuters in Puerto Rico; Editing by Megan Davies, Bernard Orr)
Puerto Rico braces for public transport shutdown
Saturday, November 29, 2014
U.S. government warns Puerto Rico of funding loss if transit shuts
The U.S. Department of Transport warned Puerto Rico that it could jeopardize future funding if it goes ahead with a planned shutdown of its public transit network on Monday, as a local union leader urged bus drivers to show up for work as normal.
In what would be a major escalation of Puerto Rico's debt crisis, the local government is planning to shut down its bus and suburban train service after lawmakers were unable to agree to hike its oil tax by 68 percent, to back a vital bond sale of up to $2.9 billion. Buses and the suburban Tren Urbano serve 75,000 people daily.
The U.S. government pays billions of dollars annually to Puerto Rico for items such as grants for transport projects, healthcare and social security. The warnings apply to transport-related financing.
Two letters from the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA) warned Miguel Torres, Puerto Rico's transport secretary, that the shutdown could breach commitments to maintain a basic level of operations needed to carry out safety and security duties.
"Failure to fulfill these capacity obligations or your responsibility to properly protect federal assets could jeopardize future federal funding or potentially result in a debt to the federal government," the FTA said in a letter dated Wednesday, Nov. 26.
The letters were posted on local news website Noticel. The FHWA and the FTA could not immediately be reached for comment.
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For links to the letters:
here documents/1d9283058ff742eebc4abb7196595555.pdf
here
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Adding to potential confusion on the scheduled day of shutdown, the president of the United Workers Metropolitan Bus (TUAMA) Authority, Antonio Diaz Lopez, urged employees to report to work on Monday, according to local press reports. He said workers could be paid retroactively if authorities did not have funds to pay salaries in mid-December.
Governor Garcia Padilla has said that the Metropolitan Bus Authority and the Tren Urbano will stop Dec. 1 because there is no money to pay salaries on Dec. 15. The Highway and Transportation Authority is also planning to cease operations on Monday, according to the FHWA letter.
The FHWA warned that the federal government would not meet any claims resulting from contracts canceled due to the shutdown and said it was "deeply concerned that if PRHTA (Puerto Rico Highways and Transportation Authority) ceases operations, it may be unable to meet these federal requirements."
Puerto Rico is struggling with over $70 billion in debt and its economy has been in or near recession for the last eight years. It is in the process of restructuring its electric power authority PREPA, which could lead to a writedown to over $9 billion in debt.
(Reporting by Reuters; Writing by Edward Krudy; editing by Megan Davies and Bernard Orr)
U.S. government warns Puerto Rico of funding loss if transit shuts
In what would be a major escalation of Puerto Rico's debt crisis, the local government is planning to shut down its bus and suburban train service after lawmakers were unable to agree to hike its oil tax by 68 percent, to back a vital bond sale of up to $2.9 billion. Buses and the suburban Tren Urbano serve 75,000 people daily.
The U.S. government pays billions of dollars annually to Puerto Rico for items such as grants for transport projects, healthcare and social security. The warnings apply to transport-related financing.
Two letters from the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA) warned Miguel Torres, Puerto Rico's transport secretary, that the shutdown could breach commitments to maintain a basic level of operations needed to carry out safety and security duties.
"Failure to fulfill these capacity obligations or your responsibility to properly protect federal assets could jeopardize future federal funding or potentially result in a debt to the federal government," the FTA said in a letter dated Wednesday, Nov. 26.
The letters were posted on local news website Noticel. The FHWA and the FTA could not immediately be reached for comment.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For links to the letters:
here documents/1d9283058ff742eebc4abb7196595555.pdf
here
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Adding to potential confusion on the scheduled day of shutdown, the president of the United Workers Metropolitan Bus (TUAMA) Authority, Antonio Diaz Lopez, urged employees to report to work on Monday, according to local press reports. He said workers could be paid retroactively if authorities did not have funds to pay salaries in mid-December.
Governor Garcia Padilla has said that the Metropolitan Bus Authority and the Tren Urbano will stop Dec. 1 because there is no money to pay salaries on Dec. 15. The Highway and Transportation Authority is also planning to cease operations on Monday, according to the FHWA letter.
The FHWA warned that the federal government would not meet any claims resulting from contracts canceled due to the shutdown and said it was "deeply concerned that if PRHTA (Puerto Rico Highways and Transportation Authority) ceases operations, it may be unable to meet these federal requirements."
Puerto Rico is struggling with over $70 billion in debt and its economy has been in or near recession for the last eight years. It is in the process of restructuring its electric power authority PREPA, which could lead to a writedown to over $9 billion in debt.
(Reporting by Reuters; Writing by Edward Krudy; editing by Megan Davies and Bernard Orr)
U.S. government warns Puerto Rico of funding loss if transit shuts
Thursday, November 27, 2014
Cruise ships to make rare stop in Puerto Rico city
SAN JUAN, Puerto Rico (AP) — Cruise ships are returning to Puerto Rico's second-largest city for the first time in three years.
The mayor of the southern coastal city of Ponce says seven luxury ships operated by Monaco-based Silversea Cruises are expected through 2016.
Maria Melendez said Wednesday that each arrival is expected to generate some $70,000 in revenue. The first ship carrying 540 tourists is scheduled to arrive on Friday.
Puerto Rico overall has seen a 10 percent increase in cruise ship passenger arrivals this year with nearly 860,000 people visiting the U.S. territory through August.
Cruise ships to make rare stop in Puerto Rico city
FBI investigation does not affect rating of Puerto Rico's PRASA
An investigation by the U.S Federal Bureau of Investigation into activities at the Puerto Rico Aqueduct and Sewer Authority (PRASA) will not impact the agency's credit rating, Standard & Poor's said on Wednesday.
The FBI launched a surprise raid at PRASA on Tuesday. The head of the commonwealth agency said the probe was focused on a single case and not the entire agency.
S&P's comments come as PRASA, which the agency rates BB-minus, is preparing a bond sale of at least $770 million in the first half of 2015, $500 million of which will be new money intended for investments.
"We will continue to monitor the situation for materiality, especially as it relates to PRASA's ability to renew or otherwise extend its committed lines of credit, and possibly convert draws on those lines to long-term debt," S&P said in a statement.
PRASA has about $3.4 billion in senior-lien revenue bonds, according to S&P. It also has nearly $280 million in rated debt, plus another $870 million in unrated debt that is backed by the Commonwealth of Puerto Rico, S&P said. (Reporting by Edward Krudy; Editing by Leslie Adler)
FBI investigation does not affect rating of Puerto Rico's PRASA -S&P
The FBI launched a surprise raid at PRASA on Tuesday. The head of the commonwealth agency said the probe was focused on a single case and not the entire agency.
S&P's comments come as PRASA, which the agency rates BB-minus, is preparing a bond sale of at least $770 million in the first half of 2015, $500 million of which will be new money intended for investments.
"We will continue to monitor the situation for materiality, especially as it relates to PRASA's ability to renew or otherwise extend its committed lines of credit, and possibly convert draws on those lines to long-term debt," S&P said in a statement.
PRASA has about $3.4 billion in senior-lien revenue bonds, according to S&P. It also has nearly $280 million in rated debt, plus another $870 million in unrated debt that is backed by the Commonwealth of Puerto Rico, S&P said. (Reporting by Edward Krudy; Editing by Leslie Adler)
FBI investigation does not affect rating of Puerto Rico's PRASA -S&P
Puerto Rico threatened with transit shutdown in political spat
Puerto Rico's public transit system will shut down on Monday if lawmakers do not increase a tax on oil, the U.S. commonwealth's Government Development Bank said, accusing politicians of taking an "irresponsible" gamble on the island's economy.
The possible shutdown of Puerto Rico's buses and commuter train services, affecting 75,000 commuters, would be a major escalation of the island's debt crisis and would threaten its fragile economy.
It would come as a further blow to residents already facing budget cuts and paying among the highest electricity costs in the United States.
The move is scheduled to come when citizens return from their Thanksgiving break and ramps up the pressure on politicians to resolve their wrangling over the tax hike, which was to back a loan for its highways authority.
"It is irresponsible to continue playing with (Puerto Rico's) economic and fiscal stability," the GDB said in a statement. "The immediate consequences of these actions are already evident: public employees out of work and citizens on foot in the height of the holiday season."
Puerto Rico is struggling with a debt load of more than $70 billion and an economy that has been in or near recession for eight years. The latest data showed economic activity continued to slide last month and is the lowest in 20 years.
Governor Alejandro Garcia Padilla has been unable to convince enough members of his party to back a 68 percent increase to a tax on crude oil, which was expected to be passed last week. He convened a special session of the legislature on Monday, but lawmakers called a recess until Dec. 1.
The governor, whose popularity is sinking in the polls ahead of elections in 2016, appears to be just one vote short despite attempts this week to rally lawmakers. Some of them want to wait to pass the measure with a package of tax reforms expected in early 2015 to lessen the political hit from unpopular tax measures.
Padilla has been losing support after delivering an austerity budget that cut spending by $1.4 billion.
With opposition lawmakers voting against the unpopular tax measure, the bill needs support from 26 of the 28 members of the Popular Democratic Party members in the House. At least three members remain opposed, with a fourth vowing to abstain, according to local news reports.
TRANSIT THREATENED
While the transit links only serve a small proportion of Puerto Rico's 3.6 million population, the closure would be a indictment of the government's ability to run basic services.
The shutdown would immediately affect rail and bus services, but boats could be threatened in the future.
"The Metropolitan Bus Authority will stop Dec. 1 because there is no money to pay salaries on Dec. 15. That's the same situation with the Tren Urbano. The Maritime Transportation Authority has a few more months. We don't have money for payroll," Padilla said at a press conference on Monday. Tren Urbano is a commuter train service.
The island's Highways and Transportation Authority does not have sufficient income or liquidity to meet its payroll obligations for December, the bank said in a statement, adding that meant public transport services will close on Monday.
Puerto Rico has delayed a bond sale of up to $2.9 billion until early 2015 which it had been aiming to complete this year using the proceeds of the oil tax increase. The government planned to increase its tax on crude oil by $6.25 per barrel, to $15.50, to raise $178 million a year to back the bonds.
Without proceeds from the bond sale, the island could also lack the liquidity to meet government emergencies in 2015, the GDB said. It has contingency plans to postpone loans for public works and stop disbursement of municipal and government loans, it said.
Ratings agency Moody's Investors Service said the island faces financial trouble next year if it is unable to complete the transaction.
(The story corrects third paragraph from bottom to state that planned oil tax increase was by $6.25, not from $6.25)
(Reporting by Edward Krudy in New York; Editing by Megan Davies, Chris Reese and Lisa Shumaker)
By Edward Krudy
Puerto Rico threatened with transit shutdown in political spat
The possible shutdown of Puerto Rico's buses and commuter train services, affecting 75,000 commuters, would be a major escalation of the island's debt crisis and would threaten its fragile economy.
It would come as a further blow to residents already facing budget cuts and paying among the highest electricity costs in the United States.
The move is scheduled to come when citizens return from their Thanksgiving break and ramps up the pressure on politicians to resolve their wrangling over the tax hike, which was to back a loan for its highways authority.
"It is irresponsible to continue playing with (Puerto Rico's) economic and fiscal stability," the GDB said in a statement. "The immediate consequences of these actions are already evident: public employees out of work and citizens on foot in the height of the holiday season."
Puerto Rico is struggling with a debt load of more than $70 billion and an economy that has been in or near recession for eight years. The latest data showed economic activity continued to slide last month and is the lowest in 20 years.
Governor Alejandro Garcia Padilla has been unable to convince enough members of his party to back a 68 percent increase to a tax on crude oil, which was expected to be passed last week. He convened a special session of the legislature on Monday, but lawmakers called a recess until Dec. 1.
The governor, whose popularity is sinking in the polls ahead of elections in 2016, appears to be just one vote short despite attempts this week to rally lawmakers. Some of them want to wait to pass the measure with a package of tax reforms expected in early 2015 to lessen the political hit from unpopular tax measures.
Padilla has been losing support after delivering an austerity budget that cut spending by $1.4 billion.
With opposition lawmakers voting against the unpopular tax measure, the bill needs support from 26 of the 28 members of the Popular Democratic Party members in the House. At least three members remain opposed, with a fourth vowing to abstain, according to local news reports.
TRANSIT THREATENED
While the transit links only serve a small proportion of Puerto Rico's 3.6 million population, the closure would be a indictment of the government's ability to run basic services.
The shutdown would immediately affect rail and bus services, but boats could be threatened in the future.
"The Metropolitan Bus Authority will stop Dec. 1 because there is no money to pay salaries on Dec. 15. That's the same situation with the Tren Urbano. The Maritime Transportation Authority has a few more months. We don't have money for payroll," Padilla said at a press conference on Monday. Tren Urbano is a commuter train service.
The island's Highways and Transportation Authority does not have sufficient income or liquidity to meet its payroll obligations for December, the bank said in a statement, adding that meant public transport services will close on Monday.
Puerto Rico has delayed a bond sale of up to $2.9 billion until early 2015 which it had been aiming to complete this year using the proceeds of the oil tax increase. The government planned to increase its tax on crude oil by $6.25 per barrel, to $15.50, to raise $178 million a year to back the bonds.
Without proceeds from the bond sale, the island could also lack the liquidity to meet government emergencies in 2015, the GDB said. It has contingency plans to postpone loans for public works and stop disbursement of municipal and government loans, it said.
Ratings agency Moody's Investors Service said the island faces financial trouble next year if it is unable to complete the transaction.
(The story corrects third paragraph from bottom to state that planned oil tax increase was by $6.25, not from $6.25)
(Reporting by Edward Krudy in New York; Editing by Megan Davies, Chris Reese and Lisa Shumaker)
By Edward Krudy
Puerto Rico threatened with transit shutdown in political spat
Wednesday, November 26, 2014
Mass transit shutdowns around corner as oil tax hike still stuck in Capitol
Puerto Rico lawmakers were called back to the Capitol for a special session Monday as Gov. Alejandro García Padilla pushes for passage of a step hike in the petroleum tax to bail out the debt-ridden and cash-strapped Highways & Transportation Authority and keep mass transit systems in operation. However, both the House of Representatives and Senate recessed until December 1 without taking up the legislation.
Mass transit shutdowns around corner as oil tax hike still stuck in Capitol
The bill would need 26 of the 28 PDP votes in the House, but some members of the majority delegation still oppose the tax hike. García Padilla said Monday he needs just one more vote, but sources said the measure is still several votes short of exiting the lower chamber.
The session was called as administration officials ramp up pressure for passage of the tax increase, saying mass transit services could skid to a halt if the HTA doesn’t get bailed out. The government has resorted to placing advertisements in local Spanish-language media outlets warning of dire consequences of not passing the legislation including broken roads and laid workers.
García Padilla said Monday that HTA and the Integrated Transport Authority would shut down next Monday due a lack of liquidity to cover payrolls.
“The Metropolitan Bus Authority and the Urban Train will shut down December 1 because they don’t have money for payroll,” the governor said in a radio interview.
The Maritime Transit Authority, which operates the ferries to offshore island towns of Vieques and Culebra, has “several more months,” García Padilla said.
The special session comes after the legislation hit a wall when the House of Representatives and the Senate pushed through separate last-minute bills that failed to exit the Capitol before the deadline earlier this month. In light of the impasse over the tax hike in the House, legislation to give the HTA a short-term shot of up to $45 million for payroll and operational costs was filed and approved by the lower chamber on the last day of the regular session. The money would come from cigarette taxes and feed a new fund managed by the Government Development Bank. The measure wasn’t taken up by the Senate before the close of the legislative term and was rejected by La Fortaleza.
La Fortaleza has said the House “didn’t finish the job” of considering a bill to surge the petroleum excise tax from $9.25 to $15.50 per barrel. The levy had been increased from $3 just last year.
García Padilla and other administration officials have said consumers will not feel the tax hike when fueling up their automobiles. Gasoline retailers have said the higher levy could drive up pump prices despite falling oil prices.
La Fortaleza has said the legislation is needed to “move forward on infrastructure projects that are necessary for the island’s economic development.”
Many investors and analysts believe the HTA will follow the Puerto Rico Electric Power Authority in moving to restructure its long-term debt, but government officials insist they are working to resolve the public corporation’s fiscal challenges without resorting to the Recovery Act.
Puerto Rico government officials had detailed plans last month to borrow up to $2.5 billion in a bond deal backed by a proposed new hike in the crude oil and petroleum products tax. The issue is now expected to reach up to $2.9 billion and the target has been pushed up to this month instead of early next year.
As reported previously by CARIBBEAN BUSINESS, the move is being undertaken to erase a $1.9 billion loan from the books of the GDB in light of its dwindling cash reserves.
The $1.9 million loan on the GDB’s books was made to the HTA, mostly for public works, but market conditions and the public corporation’s own fiscal problems have prevented it from returning to the market to undertake a bond issue to pay off the GDB loan.
The bill would transfer the loan to the Infrastructure Financing Authority (PRIFA) along with the means to pay for it via revenue produced by hikes in the crude oil and petroleum products that were undertaken in June 2013. The new bill increases these taxes further to cover operational budget gaps in the HTA, including its mass transit assets that are being spun off into a new public corporation.
The bill adjusts the excise tax on the barrel of crude oil, at a time when oil prices has decreased significantly; the increase will be bring this excise tax to $15.50 per barrel. This tax is expected to generate an additional $178 million per year. The taxes would be distributed as follows: $6.00 per barrel for the PRHTA to cover its operational costs and debt service obligations, $8.25 per barrel for the PRIFA to cover debt service, and $1.25 per barrel to finance the new Integrated Transportation Authority, which comprises the Metropolitan Bus Authority bus services, the ferry services (Maritime Transportation Authority) and the Urban Train system, once their transferred is completed.
GDB officials say the tax hike will provide funding to operate Puerto Rico’s highways network, protect thousands of public and private jobs, and continue to provide maintenance to the road network, the Urban Train operation, and the bus and ferry services.
The measure explicitly excludes the taxation of crude oil and its by products used by the Puerto Rico Electric Power Authority to generate electricity, as well as those that are exported from Puerto Rico; those used by local refineries and petrochemical companies in the oil refining process; and those used as lubricants or fuel for aircrafts and shipping vessels traveling by air or sea between Puerto Rico and other places; among other exclusions.
The transfer to PRIFA is needed because, “it is necessary to identify an entity that has better access to the market to assume the HTA’s debt and, in this way, repay the debt to the GDB,” GDB officials said.
The legislation also provides additional guarantees and legal protections to investors to make the bonds offering more appealing.
Puerto Rico bonds have been hit by a series of downgrades since the enactment last June of the Puerto Rico Public Corporations Debt Compliance & Recovery Act (Recovery Act), which outlines a local bankruptcy-like procedure for most public corporations to restructure their debts. When the bill to transfer the debt to PRIFA from HTA was first filed, it caused alarm among some analysts and investors who saw it as clearing the way for the HTA to restructure its nearly $5 billion in outstanding bond debt without harming the GDB. Both GDB and PRIFA are barred from restructuring its debts under the Recovery Act.
Mass transit shutdowns around corner as oil tax hike still stuck in Capitol
o Rico lawmakers were called back to the Capitol for a special session Monday as Gov. Alejandro García Padilla pushes for passage of a step hike in the petroleum tax to bail out the debt-ridden and cash-strapped Highways & Transportation Authority and keep mass transit systems in operation. However, both the House of Representatives and Senate recessed until December 1 without taking up the legislation.
Mass transit shutdowns around corner as oil tax hike still stuck in Capitol
The bill would need 26 of the 28 PDP votes in the House, but some members of the majority delegation still oppose the tax hike. García Padilla said Monday he needs just one more vote, but sources said the measure is still several votes short of exiting the lower chamber.
The session was called as administration officials ramp up pressure for passage of the tax increase, saying mass transit services could skid to a halt if the HTA doesn’t get bailed out. The government has resorted to placing advertisements in local Spanish-language media outlets warning of dire consequences of not passing the legislation including broken roads and laid workers.
García Padilla said Monday that HTA and the Integrated Transport Authority would shut down next Monday due a lack of liquidity to cover payrolls.
“The Metropolitan Bus Authority and the Urban Train will shut down December 1 because they don’t have money for payroll,” the governor said in a radio interview.
The Maritime Transit Authority, which operates the ferries to offshore island towns of Vieques and Culebra, has “several more months,” García Padilla said.
The special session comes after the legislation hit a wall when the House of Representatives and the Senate pushed through separate last-minute bills that failed to exit the Capitol before the deadline earlier this month. In light of the impasse over the tax hike in the House, legislation to give the HTA a short-term shot of up to $45 million for payroll and operational costs was filed and approved by the lower chamber on the last day of the regular session. The money would come from cigarette taxes and feed a new fund managed by the Government Development Bank. The measure wasn’t taken up by the Senate before the close of the legislative term and was rejected by La Fortaleza.
La Fortaleza has said the House “didn’t finish the job” of considering a bill to surge the petroleum excise tax from $9.25 to $15.50 per barrel. The levy had been increased from $3 just last year.
García Padilla and other administration officials have said consumers will not feel the tax hike when fueling up their automobiles. Gasoline retailers have said the higher levy could drive up pump prices despite falling oil prices.
La Fortaleza has said the legislation is needed to “move forward on infrastructure projects that are necessary for the island’s economic development.”
Many investors and analysts believe the HTA will follow the Puerto Rico Electric Power Authority in moving to restructure its long-term debt, but government officials insist they are working to resolve the public corporation’s fiscal challenges without resorting to the Recovery Act.
Puerto Rico government officials had detailed plans last month to borrow up to $2.5 billion in a bond deal backed by a proposed new hike in the crude oil and petroleum products tax. The issue is now expected to reach up to $2.9 billion and the target has been pushed up to this month instead of early next year.
As reported previously by CARIBBEAN BUSINESS, the move is being undertaken to erase a $1.9 billion loan from the books of the GDB in light of its dwindling cash reserves.
The $1.9 million loan on the GDB’s books was made to the HTA, mostly for public works, but market conditions and the public corporation’s own fiscal problems have prevented it from returning to the market to undertake a bond issue to pay off the GDB loan.
The bill would transfer the loan to the Infrastructure Financing Authority (PRIFA) along with the means to pay for it via revenue produced by hikes in the crude oil and petroleum products that were undertaken in June 2013. The new bill increases these taxes further to cover operational budget gaps in the HTA, including its mass transit assets that are being spun off into a new public corporation.
The bill adjusts the excise tax on the barrel of crude oil, at a time when oil prices has decreased significantly; the increase will be bring this excise tax to $15.50 per barrel. This tax is expected to generate an additional $178 million per year. The taxes would be distributed as follows: $6.00 per barrel for the PRHTA to cover its operational costs and debt service obligations, $8.25 per barrel for the PRIFA to cover debt service, and $1.25 per barrel to finance the new Integrated Transportation Authority, which comprises the Metropolitan Bus Authority bus services, the ferry services (Maritime Transportation Authority) and the Urban Train system, once their transferred is completed.
GDB officials say the tax hike will provide funding to operate Puerto Rico’s highways network, protect thousands of public and private jobs, and continue to provide maintenance to the road network, the Urban Train operation, and the bus and ferry services
The measure explicitly excludes the taxation of crude oil and its by products used by the Puerto Rico Electric Power Authority to generate electricity, as well as those that are exported from Puerto Rico; those used by local refineries and petrochemical companies in the oil refining process; and those used as lubricants or fuel for aircrafts and shipping vessels traveling by air or sea between Puerto Rico and other places; among other exclusions.
The transfer to PRIFA is needed because, “it is necessary to identify an entity that has better access to the market to assume the HTA’s debt and, in this way, repay the debt to the GDB,” GDB officials said.
The legislation also provides additional guarantees and legal protections to investors to make the bonds offering more appealing.
Puerto Rico bonds have been hit by a series of downgrades since the enactment last June of the Puerto Rico Public Corporations Debt Compliance & Recovery Act (Recovery Act), which outlines a local bankruptcy-like procedure for most public corporations to restructure their debts. When the bill to transfer the debt to PRIFA from HTA was first filed, it caused alarm among some analysts and investors who saw it as clearing the way for the HTA to restructure its nearly $5 billion in outstanding bond debt without harming the GDB. Both GDB and PRIFA are barred from restructuring its debts under the Recovery Act.
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